What to Watch for After ACA Filings

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The Affordable Care Act (ACA) requires certain employers to distribute Form 1095-C to employees and submit an annual 1094-C transmittal to the IRS. These forms confirm whether the employer offered health insurance coverage to eligible employees and whether that coverage met ACA requirements.

While distributing 1095 forms and submitting the IRS filings may feel like the final step in your ACA compliance process, there are important follow-up activities that HR and benefits teams should focus on in the months that follow. Taking proactive steps now will help reduce the risk of penalties, improve data accuracy, and ease the burden of next year’s reporting.

1. Respond to Employee Questions and Correction Requests Once employees receive their 1095-C forms, many may have questions such as: Why did I receive this form?
2. Do I need this form to file my taxes?
3. Why is my coverage marked as waived or not offered?

Be prepared to answer these common questions. It’s helpful to communicate that the 1095-C is an informational form that employees do not need to submit with their tax return but should keep for their records.

You may also receive requests for corrections. If an employee notices incorrect information—such as an incorrect Social Security Number, name, or coverage period—you should update your records. Additionally, you may need to submit corrected filings.

4. Monitor IRS Notices Several months after transmitting your ACA filings, the IRS may send the following notices: Letter 226J: This notice proposes an employer shared responsibility payment (penalty) if the IRS believes you did not comply with ACA requirements.
5. TIN Validation Errors: These notices identify discrepancies between employee names and Social Security Numbers reported on your filings.
6. Information Request Letters: The IRS may request clarification or additional data about your reporting.

It’s important to monitor for these notices and respond quickly. Failure to respond can result in costly penalties and additional compliance scrutiny.

7. Keep Employee Data Accurate and Up-to-Date One of the most effective ways to reduce ACA reporting errors is to maintain accurate and current employee data year-round. HR teams should regularly review and update: Employee names, Social Security Numbers, and dates of birth
8. Employment status (full-time, part-time, terminated, leave of absence)
9. Coverage elections and waiver information
10. Hire and termination dates

Timely updates to demographic and coverage information will minimize the need for corrections during reporting season and ensure that employees’ 1095 forms are accurate.

11. Track Employee Hours for Full-Time Designation Accurate tracking of employee hours throughout the year is essential for ACA compliance. Employers subject to the employer mandate are required to offer coverage to full-time employees, defined as those working 30 or more hours per week (or 130 hours per month). To ease future reporting, HR and payroll teams should: Track hours of variable-hour, seasonal, and part-time employees.
12. Maintain records of measurement periods and look-back periods used to determine full-time status.
13. Communicate with managers and supervisors about the importance of accurate time reporting.
14. Monitor employees approaching full-time thresholds.

This ongoing tracking will simplify your year-end determination of who is eligible for coverage and avoid unexpected penalties.

15. Document Employee Coverage Decisions Maintain records of all: Coverage elections and waivers
16. Enrollment effective dates
17. Termination dates and COBRA offers
18. Notices provided to employees (Summary of Benefits, Marketplace notices, etc.)

Having this documentation readily available will help resolve any employee disputes, assist with IRS inquiries, and ensure compliance in future years.

19. Plan Ahead for Next Year’s Reporting To make next year’s ACA reporting process smoother: Review your internal processes now to identify areas for improvement.
20. Conduct periodic audits of employee data and payroll records.
21. Confirm your measurement method (monthly or look-back) and ensure it is applied consistently.

Final Reminder

ACA reporting is not just a once-a-year activity. Staying proactive throughout the year—by maintaining accurate records, tracking employee status, and responding to IRS notices—can reduce stress, avoid penalties, and ensure compliance with federal requirements.

If you would like information about BAS’ ACA data collection and reporting services, contact your account manager or solutions@basusa.com.