Managing Affordable Care Act Reporting Requirements Due in 2026

Affordable Care Act (ACA) reporting has never been a “last-minute” task—but heading into the 2026 reporting year, the stakes are even higher. Updated affordability thresholds, increasingly hybrid workforces, and tighter electronic filing rules mean employers must be more deliberate than ever in how they track, test, and report health coverage data.

For Applicable Large Employers (ALEs)—generally businesses with 50 or more full-time equivalent (FTE) employees—ACA compliance is not just about meeting deadlines. It’s about aligning payroll, benefits, and workforce data year-round to avoid costly penalties and IRS scrutiny.

This guide breaks down what employers need to know now to confidently manage ACA reporting requirements due in 2026.

Why ACA Reporting in 2026 Requires Earlier Planning

If your organization qualifies as an ALE, ACA compliance is unavoidable. What has changed is the complexity of workforce structures and affordability calculations. Remote and hybrid employment models have made hours-tracking more nuanced, while the ACA affordability percentage for 2026 increases to 9.96%, up from 9.02% in 2025.

That shift alone can push previously compliant plans out of safe harbor if employers aren’t actively reviewing contributions and plan design. Waiting until year-end to reconcile payroll and benefits data often leads to rushed filings, data corrections, and preventable penalties.

The most effective strategy is proactive planning—ensuring your payroll and benefits systems remain aligned throughout the year.

ACA Reporting Deadlines Employers Should Know for 2026

Although the IRS had not released final confirmation at the time of this update, the expected ACA reporting deadlines for the 2026 reporting year are as follows:

• March 2, 2026 – Deadline to provide Form 1095-C to eligible employees

• March 31, 2026 – Deadline to electronically file Forms 1094-C and 1095-C with the IRS

• March 2, 2026 – Paper-filing deadline for employers submitting 10 or fewer returns

The IRS permanently allows an automatic 30-day extension beyond January 31 for furnishing Forms 1095-C to employees—meaning no additional extensions are available. Employers filing 10 or more information returns must file electronically.

When deadlines fall on weekends or federal holidays, the due date moves to the next business day.

Who Is Required to Report Under the Affordable Care Act?

ACA reporting requirements apply to Applicable Large Employers (ALEs). An employer qualifies as an ALE if it averaged 50 or more full-time employees, including full-time equivalents, during the prior calendar year.

This determination is critical because only ALEs are subject to the ACA’s Employer Shared Responsibility (ESR) provisions. In practical terms, your 2025 workforce data determines your ACA reporting obligations for 2026.

Understanding ACA Reporting Obligations for ALEs

ALEs must do more than simply offer health coverage. They must also document that coverage meets ACA standards for minimum essential coverage, minimum value, and affordability.

The data required to prove compliance comes directly from payroll and benefits records. Inconsistent tracking—or disconnected systems—can result in reporting inaccuracies that trigger penalties even when coverage was technically offered.

One growing challenge in 2026 is properly calculating FTEs in hybrid or remote environments. Employers with distributed teams must ensure that hours worked are consistently tracked regardless of location or schedule.

How to Calculate Full-Time Equivalents for ACA Reporting

Determining ALE status begins with calculating FTEs using the prior year’s data. The process includes:

• Adding all hours worked by employees averaging less than 30 hours per week

• Capping monthly hours at 120 per employee

• Dividing total part-time hours by 120 to calculate FTEs

• Adding FTEs to the count of full-time employees for each month

• Averaging the total across all 12 months

With hybrid work becoming standard, centralized time-tracking and payroll integration are essential to prevent undercounting that could affect ALE determination.

ACA Coverage Requirements: Affordability and Minimum Value

To remain compliant, ALEs must offer affordable, minimum-value health coverage to at least 95% of full-time employees and their dependents.

Affordability Threshold for 2026

For plan years beginning in 2026, coverage is considered affordable if the employee’s contribution for the lowest-cost, self-only plan does not exceed 9.96% of household income. Because employers rarely know household income, the IRS permits three affordability safe harbors:

• W-2 Safe Harbor

• Rate of Pay Safe Harbor

• Federal Poverty Line Safe Harbor

Each safe harbor applies slightly differently but allows employers to assess affordability using employer-controlled data.

Minimum Value Requirement

Plans must also meet a minimum value (MV) standard—meaning they cover at least 60% of total allowed benefit costs under the plan.

Penalties for Non-Compliance in 2026

Failing to meet ACA requirements can result in significant IRS assessments:

• 4980H(a) Penalty – $3,340 per full-time employee (excluding the first 30) if coverage is not offered to at least 95% of full-time employees and one employee receives a marketplace subsidy

• 4980H(b) Penalty – $5,010 per affected employee if coverage is offered but does not meet affordability or minimum value standards

These penalties are adjusted annually for inflation and can escalate quickly for mid-sized and large employers.

Required ACA Forms: What Employers Must File

ALEs must prepare and distribute two primary ACA forms:

• Form 1095-C – Provided to each full-time employee, detailing coverage offered

• Form 1094-C – Filed with the IRS as a transmittal summary of all 1095-C forms

Accurately completing Lines 14 through 16 on Form 1095-C is one of the most common pain points for employers and often the source of IRS follow-up notices.

Preparing for ACA Year-End Reporting

Successful ACA reporting begins months before forms are due. Employers should verify:

• Monthly full-time employee counts

• Average hours worked

• Coverage eligibility and offer dates

• Employee contributions for lowest-cost self-only coverage

• Accuracy of Social Security numbers and personal details

Beginning this review in the third or fourth quarter allows time to correct discrepancies without pressure.

Simplifying ACA Compliance Through Strategic Support

ACA reporting is resource-intensive, particularly for employers managing complex workforces. Many organizations choose to work with benefits partners that offer integrated compliance support, proactive monitoring, and guidance on affordability testing.

At Taylor Benefits Insurance Agency, we help employers evaluate plan affordability, workforce classification, and compliance exposure—long before reporting deadlines approach—so ACA obligations don’t become year-end emergencies.

Final Thought: Start Early, Stay Compliant

ACA reporting for 2026 demands accuracy, coordination, and foresight. Employers that treat compliance as a year-round process, not a seasonal task, are best positioned to avoid penalties, reduce administrative strain, and maintain confidence in their benefits strategy.

If your organization is reviewing its ACA compliance approach, now is the time to assess whether your current systems—and advisors—are truly supporting your long-term compliance goals.