ACA Made Simple
The Affordable Care Act (ACA) sets federal requirements for employers that provide group health coverage, including standards for affordability, minimum value, and employer reporting obligations.
For applicable large employers, compliance involves accurately tracking employee eligibility, offering qualifying health coverage to full-time employees, and ensuring that coverage meets ACA requirements. Employers are also responsible for maintaining documentation that supports coverage decisions and demonstrates compliance with federal rules.
Under the ACA, Applicable Large Employers must offer full-time employees affordable Minimum Essential Coverage that meets Minimum Value standards. Coverage is considered affordable if the employee’s cost for the lowest priced employee only plan does not exceed a specific percentage of their household income.
ACA employer reporting is the mechanism the IRS uses to confirm compliance with the law’s coverage requirements. Specifically, it allows the IRS to verify that Applicable Large Employers (ALEs) are offering affordable, minimum essential coverage to full-time employees and their dependents, and that individuals have access to qualifying health coverage.
Essential HR Can Help
ACA reporting is an ongoing requirement, and for many employers, it remains a consistent challenge. Accurate reporting plays a key role in a strong compliance strategy, helping demonstrate good-faith efforts to meet requirements and protect both the organization and its employees in the event of audits or regulatory inquiries.
Essential HR works with employers to understand how ACA requirements apply to their specific situation, whether you’re a growing business approaching Applicable Large Employer (ALE) status or already subject to full ACA reporting obligations.
Frequently Asked Questions
What forms are required for ACA reporting?
IRS Form 1094-C (Transmittal Form)
- Summary cover sheet for all employee filings
- Reports overall employer information and coverage status
- Sent to the IRS
IRS Form 1095-C (Employee Statement)
- Provided to each full-time employee
- Shows whether health insurance was offered, type of coverage, and affordability details
- Also filed with the IRS
Additional Related Forms (if applicable):
Form 1094-B & 1095-B
- Used by insurance providers or smaller employers (not ALEs)
- Reports individuals covered under the health plan
What counts as affordable coverage under the ACA?
Coverage is considered affordable if the employee’s share of the lowest-cost self-only plan does not exceed the IRS-set percentage of household income (or meets approved safe harbor methods such as W-2, rate of pay, or federal poverty level).
Who counts toward ACA requirements?
- Full-time employees
Employees who work 30 or more hours per week (or 130 hours per month) are fully counted. - Full-Time Equivalent (FTE) employees
Part-time employee hours are combined to calculate FTEs (e.g., multiple part-time workers may equal one full-time employee for counting purposes). - Seasonal employees (in certain calculations)
They may be included in the count unless the employer qualifies for the seasonal worker exception
How can Essential HR help employers
Essential HR helps employers track employee eligibility, manage reporting requirements, ensure affordability standards are met, and maintain accurate documentation to reduce compliance risk.