Missing the deadlines for ACA reporting in 2025 can result in severe IRS penalties and damaged reputation.

When you’re focused on securing funding, hiring top talent, and refining your product-market fit, the last thing you’re thinking about is filing forms like the Form 1095 C or Form 1094 C. Yet these are the forms that matter for compliance and to avoid avoidable penalties.

For the 2024 tax year (reporting in 2025), you must provide employee copies of Form 1095-C by March 3, 2025 (the automatic extension of the January 31 deadline) and file the Form 1094-C (with copies of the 1095-Cs) electronically with the IRS by March 31, 2025.

Founders often overlook ACA compliance because they’re focused on growth, product, and hiring, not necessarily regulatory minutiae. But the cost of overlooking this section of your operations can be steep.

In this guide, we’ll discuss how to stay ahead of the ACA 1095-C/1094-C reporting deadlines and what you must know about ACA reporting in 2025.

What is ACA Reporting?

Under the Affordable Care Act (ACA), employer reporting is a compliance process designed to provide the IRS with detailed information about the health-coverage offers made by employers.

It serves two purposes:

• To enforce the employer-mandate provisions (where certain employers must offer minimum essential coverage or face penalties) and,
• To support the premium-tax-credit system by enabling the IRS and its partner agencies to verify if employees were eligible for subsidized coverage because their employer did not offer affordable or minimum-value plans.

An Overview of Forms 1095-C and 1094-C

Form 1095-C (Employer-Provided Health Insurance Offer and Coverage) must be provided by each applicable large employer (ALE) to every full-time employee. It records whether the employer offered health insurance, the lowest cost to the employee, and the months of coverage or offer.

Employees use it when filing individual returns, and the IRS uses it to assess employer compliance.

Form 1094-C (Transmittal of Employer-Provided Health Insurance Offer and Coverage Information Returns) is the summary form an ALE sends to the IRS along with all the 1095-C forms. It reports aggregate data for the employer (or ALE member), including the total number of full-time employees, full-time equivalents, and offers of coverage.

Together, these forms ensure the IRS has individual-level and employer-level data on coverage offers and acceptance, so even if an employer offers no coverage, the reporting obligation still applies.

2025 ACA Reporting Deadlines Founders Miss Most

January 31, 2025

For companies that qualify as an ALE, one of the most important early deadlines is distributing Form 1095 C to each full-time employee (and in some cases their dependents) by January 31, 2025.

The deadline for furnishing this form to employees has always been January 31 of the year following the calendar year of coverage. However, for the 2024 coverage year, research shows that the due date was moved to March 3, 2025, for many employers.

Despite changes, many founders still mark January 31 as the main “furnish” date because state-level mandates (for example, in California) require employee copies by Jan 31.

The following must be distributed:

• 1095-C to each full-time employee, showing the months during which coverage was offered, and whether the employee enrolled (if self-insured) under the Employer Shared Responsibility rules (IRC §6056).
• If the employer sponsors a self-insured plan, then the form may include dependents and non-employees under Part III of 1095-C.

The acceptable delivery methods include:

• Physical paper mailing to the employee’s last known address.
• Electronic delivery is allowed if the employee gives affirmative consent (and the employer complies with certain electronic-consent requirements).
• In 2025, under the Paperwork Burden Reduction Act and Notice 2025- 15, employers may instead post a “clear, conspicuous, and accessible” notice that employees may request a copy of their 1095-C, rather than furnishing automatically to each employee, but this relief is more limited for ALEs with self-insured plans.

March 31, 2025

After distributing employee copies, the next milestone is filing with the IRS via the ACA Information Returns (AIR) system. The transmittal form is Form 1094 C, and the individual employee forms are 1095-C.

Employers must file electronically if they are required to file 10 or more information returns (including 1094-C/1095-C plus other forms) under the current aggregation rule. If filing by paper (rare for ALEs), the paper deadline is February 28, 2025. The electronic filing deadline is March 31, 2025.

Here are tips for avoiding rejections via the AIR system:

• Validate all employee SSNs, names, and offer codes before transmission: the IRS will reject records with invalid identifiers.
• Use an ACA-reporting vendor or integrated HR/payroll system with built-in business rules; spreadsheets alone often lead to failed filings.
• Submit test files early in the window to identify formatting issues.
• Monitor your AIR system acknowledgment: a “rejected” status means the file did not reach the IRS properly and must be resubmitted by the deadline.

Extension Options

If you foresee difficulty meeting the filing deadline, you may request an automatic 30-day extension for the filing (not furnishing) deadline by submitting Form 8809, Application for Extension of Time to File Information Returns.

Here’s when and why extensions are rejected:

• If the request is submitted after the original due date, or if the employer hasn’t complied with earlier required steps (like furnishing employee copies), the extension may be denied.
• An extension applies only to filing, not to the furnishing requirement; you cannot delay distribution to employees unless alternative furnishing relief applies.
• Some resources suggest that if you used the alternative notice method under Notice 2025-15 to furnish, you must ensure the posting occurred by the original deadline. Otherwise, the extension could be questioned.

Step-by-Step ACA 1095-C/1094-C Reporting Process

Gather Employee Data Accurately

Before you touch a form, your data must be error-free. For each full-time or full-time equivalent employee (FTE) under the ACA, you’ll need:

• Total hours worked (to verify full-time status under the look-back or monthly measurement method)
• Whether you offered health coverage, and if so, what months it was available
• The employee’s share of the lowest-cost self-only minimum essential coverage (affordability test)
• Whether and when the employee enrolled, and any dependent/spouse coverage (if you sponsor a self-insured plan)

Startups and rapidly growing companies must verify their ticker for full-time status correctly. Use the look-back method to aggregate hours of part-time and full-time employees. Combining part-time hours into full-time equivalents (FTEs) can trigger ALE status and the related reporting obligations.

Complete Form 1095-C

The Form 1095-C is the employee statement that each full-time employee must receive. It’s divided into three parts:

• Part I: Employer and employee identification information (employer EIN, employee name, social security number, months worked)
• Part II: Offer of coverage/affordability information; for each month, indicate whether coverage was offered, what code applies (Line 14), the employee’s share (Line 15), and any safe-harbor or other relief code (Line 16)
• Part III: Only for employers sponsoring a self-insured plan; details of individuals (employee and dependents) enrolled in coverage.

Common errors include mis-entering the “offer code” on Line 14 (for example, forgetting to use the correct two-digit code for “no offer” vs “offer to dependent only”), or entering a wrong amount on Line 15 (which may trigger IRS queries). Guides such as one by TRUSAIC provide detailed breakdowns of these code errors.

Complete Form 1094-C

The Form 1094 C serves as the employer’s transmittal form to the IRS. It effectively “packages” all of your 1095-C forms and provides summary data: employer name, EIN, total number of 1095-C forms filed, ALE status, and aggregated ALE group if applicable.

Here’s what you should check:

• Ensure the “Authoritative Transmittal” box is properly checked (only one per ALE member).
• Ensure the total number of 1095-C forms you report matches the number you actually file.
• Verify aggregate ALE group information if you are part of a combined group.

Errors on the 1094-C are among the common causes of IRS rejections, so pay attention to your totals, EIN/Name matches, and indicator boxes.

File and Furnish

Once the 1095-Cs are complete, you must furnish each eligible employee a copy. You may deliver electronically, but only if you comply with the electronic consent rules.

Also, submit the 1094-C plus all 1095-Cs to the IRS. As of the current rules, electronic filing through the ACA Information Returns (AIR) system is required for most employers (for example, if you have 10 or more returns). You can read more about the IRS’s electronic filing requirements here.

Recordkeeping Requirements

Once you’ve filed and furnished, keep copies of everything: the 1094-C, all 1095-Cs filed, proof of employee delivery/furnishing, and evidence of electronic or paper filing with the IRS. The IRS instructions generally require retention of at least three years from the due date of the return.

Integrate your HRIS or payroll system with your ACA reporting workflow. This allows you to archive filings, monitor deadlines, store employee consents (for electronic delivery), and support audit readiness. Establish a central compliance folder (cloud or on-premise) with guardrails for access and versioning.

ACA Compliance Challenges for Founders

When you’re scaling teams, onboarding talent, and closing funding rounds, it’s easy to overlook complex IRS rules tied to employer health coverage reporting. Yet the ACA requires precise tracking, accurate coding, and timely filings.

Here are four of the most common ACA compliance challenges founders face, and how to overcome them.

Rapid Growth and Misclassification

One of the biggest compliance challenges for founders leading fast-growing startups is miscalculating the status of your company as an ACA-mandated employer.

If your business averages 50 or more full-time employees (or full-time equivalents) during the prior calendar year, you become an Applicable Large Employer (ALE), and that triggers new obligations.

Growth via funding rounds, mergers and acquisitions (M&A), or a rapid hiring push can push you over that threshold, sometimes mid-year, without clear recognition. When that happens, you may find yourself subject to the employer mandate, required to offer minimum essential coverage and file forms like Form 1095-C and Form 1094-C, and more exposed to penalties.

Data Silos Between HR, Payroll, and Benefits

Another under-recognized risk in ACA compliance is the fragmentation of data across HR systems, time and attendance logs, payroll platforms, and benefits administration. Studies show that when these systems are disconnected (each operating in its silo), data quality drops and errors multiply.

For example, if HR tracks hire dates and eligibility, but payroll has inconsistent hours worked, and benefits miss election changes, you could misreport full-time status or which employees were offered coverage.

Dismantling silos and creating a “single source of truth” is important for smooth operations.

As a founder, you must ensure cross-department integration and data consolidation, especially since ACA codes (lines 14-16 on 1095-C) depend on accurate, timely information.

Relying on Manual Processes

Many startups rely on spreadsheets, manual tracking, and ad-hoc workflows to manage HR and benefits. When it comes to ACA reporting, that approach is high-risk. Manual processes increase the chance of mis-entered hours, missing offer codes, or late delivery of employee statements. The IRS expects accuracy and timeliness.

Automated tools or third-party ACA software drastically reduce error rates, centralize data, and ensure deadlines aren’t missed. Automation simplifies tracking full-time equivalent status, coverage offers, and deadlines.

2025 ACA Reporting Updates and Regulatory Changes

New IRS Electronic Filing and Furnishing Requirements

Significant relief for employers comes from two new laws: the Paperwork Burden Reduction Act and the Employer Reporting Improvement Act (both signed December 23, 2024).

Under IRS Notice 2025 15, the requirement to automatically furnish Forms 1095-B or 1095-C to employees is relaxed: employers may now issue a notice of availability and furnish the form only upon employee request.

The federal e-file system for the ACA Information Returns (AIR) Program confirms that for Tax Year 2025 (reporting coverage for 2025), manifest files and data files must use the TY2025 schema.

Paper filing remains available only for very small form counts, and the general e-file deadline for federal forms remains March 31, 2025.

While filing deadlines and form types remain largely unchanged, you should update your process to reflect the new furnishing-on-request model. Make sure your HR/payroll systems can generate the required notice, track employee requests, and prepare for electronic filings under the correct schema.

State-Level ACA Mandates to Watch

Several states continue to impose their own ACA-reporting or health‐coverage mandates, and founders with employees in these jurisdictions must align with both federal and state compliance frameworks.

States with individual health-insurance mandates (and thus additional reporting/coverage responsibilities) include California, New Jersey, Rhode Island, and the District of Columbia. For example, California requires self-funded employers to submit health-coverage data to the Franchise Tax Board via its MEC IR program.

New Jersey mandates that employers report via federal forms or NJ-specific forms (Parts I & III of Form 1095-C suffice) for resident employees, electronically through MFT SecureTransport. Rhode Island and D.C. likewise have employer reporting obligations tied to their individual mandates.

If you employ staff across state lines, build a matrix of state-specific reporting mandates, deadlines, and electronic filing channels (beyond the federal forms). Missing a state requirement can lead to penalties even if federal compliance is met.

IRS Enforcement Trends and Audit Focus

The IRS is signaling increased scrutiny of employer reporting accuracy, especially in full-time employee classification and coverage offers.

Expect more audits and more penalty letters (such as 226-J) targeting reporting errors or “intentional disregard” of filing obligations. The IRS will also focus on the correct use of full-time definitions (30 + hours/week or look-back methods) and ensure employers offering coverage meet the “affordable, minimum value” standard.

Although the federal furnishing obligation has been relaxed, incorrect filings or incomplete forms remain a trigger for penalty exposure.

Maintain a clear audit trail; track hourly employee data, document coverage eligibility decisions, and run periodic internal reviews. Ensuring your system aligns with IRS e-file schemas and stays error-free is now more critical than ever.

Automate Your ACA Reporting in Minutes, Not Months

If you’re struggling with spreadsheets and manual tracking, Chore's integrated platform eliminates the data silos that cause 80% of ACA reporting errors by unifying your HR, payroll, and benefits data in one system.

Here's how we simplify 2025 compliance:

• Real-time FTE tracking automatically monitors your employee count and alerts you before you cross the 50-employee ALE threshold.
• Auto-generated 1095-C and 1094-C forms with built-in IRS code validation ensure accuracy. Our system flags misclassifications, missing offer codes, and affordability miscalculations before filing.
• One-click electronic filing through the AIR system, with pre-submission testing that catches formatting errors the IRS would reject.
• State-specific compliance tracking for California, New Jersey, and other mandate states; all managed from a single dashboard.
• Complete audit trail with 3+ years of automated recordkeeping, so you're always ready for IRS scrutiny.

While you're focused on scaling your startup, Chore handles the regulatory complexity that drains founder energy and triggers $310-per-form penalties.

Schedule a demo and see how Chore turns compliance from a founder nightmare into a solved problem.

FAQs

Who needs to file Forms 1095-C and 1094-C in 2025?

In 2025, ALEs must file Forms 1095-C and 1094-C under the ACA:

• Form 1095-C goes to each full-time employee, detailing health coverage offered.
• Form 1094-C is the transmittal form sent to the IRS summarizing all 1095-Cs.
• This applies to corporations, startups, nonprofits, and government entities that meet the ALE threshold.
• Employers with fewer than 50 employees are exempt unless they’re part of a larger ALE group.

What’s the penalty for missing the ACA filing deadline?

The IRS charges $310 per form for failing to file or furnish Form 1095-C/1094-C on time, with a maximum annual penalty of $3.78 million for each error type. If both filing and furnishing are missed, penalties can reach $620 per employee. Corrections within 30 days or by August 1 can reduce the fines, but intentional disregard raises the penalty to $630 per form with no cap.

How can small startups ensure compliance if they’re under 50 employees?

Small startups under 50 employees aren’t required to file ACA Forms 1095-C or 1094-C, but they should still track employee hours, use HR/payroll tools with ACA features, and stay aware of state-level mandates. Offering affordable coverage and consulting a CPA or payroll provider helps ensure readiness if they cross the 50-employee threshold and protects them from future compliance risks.