ACA Reporting Doesn’t Need to Be Scary: A Simple Guide for Employers with 1–100+ Employees
ACA Reporting Doesn’t Need to Be Scary: A Complete 2025 Guide for Employers With 1–100+ Employees
The Affordable Care Act (ACA) is one of the most impactful laws affecting employers today — and also one of the most misunderstood. As businesses grow, cross new employee thresholds, or change health plans, ACA responsibilities can shift quickly. That leads many business owners to ask the same question every year:
“Do I need to file ACA forms, and what happens if I make a mistake?”
Between regulations, employee classifications, affordability formulas, and strict deadlines, ACA reporting can feel overwhelming. But with the right understanding — and the right systems in place — ACA compliance becomes predictable, manageable, and far less stressful.
This guide breaks ACA reporting down by employer size, using clear, plain-English explanations to help owners understand exactly what’s required and how to stay compliant in 2025.
⭐ What the ACA Requires Behind the Scenes
The ACA introduced two core requirements for employers:
1. The Employer Mandate (also called “Shared Responsibility”)
Certain employers must offer affordable, minimum-value health coverage to full-time employees and their dependents.
2. Annual Reporting Requirements (Forms 1094/1095)
All Applicable Large Employers (ALEs), and certain small employers with self-funded or level-funded plans, must submit detailed forms to the IRS and provide employees with copies.
These forms confirm:
Who you offered coverage to
Whether the coverage met affordability
When employees were enrolled
Whether any employee sought subsidized coverage on the marketplace
Failure to offer coverage when required OR failure to report correctly both trigger penalties — and they can add up quickly.
🔍 Understanding Employer Size Groups
Not every employer has the same obligations. ACA rules can be divided into three major groups:
👥 Employers With Under 50 Employees
You’re not considered an Applicable Large Employer (ALE), meaning you are NOT subject to the ACA “employer mandate.” You don’t have to offer health insurance, and there is no penalty if you don’t.
However — many small employers still have ACA responsibilities that often surprise people.
You must file ACA forms if:
You offer a self-funded health plan
You offer a level-funded health plan
These plans typically require you to file:
1095-B forms for each covered individual
1094-B form summarizing the filings
Why this matters:
Level-funded plans are increasingly popular because they reduce premiums and offer potential cost savings, but small businesses often don’t realize these plans trigger reporting requirements.
Common Pitfalls for Sub-50 Employers
❌ Assuming “small employer” means “no reporting needed”
❌ Not realizing dependents also require 1095-B forms
❌ Missing employee coverage details needed for forms
Penalties
$280 per form not filed or not delivered to employees
Penalties apply per individual — these can grow fast
👥 Employers With 50–99 Employees (Applicable Large Employers)
Once you reach 50 full-time or full-time-equivalent employees, you are officially an Applicable Large Employer (ALE). This is a major compliance threshold.
As an ALE, you must:
✔ Offer affordable, minimum-value coverage to at least 95% of eligible full-time employees
✔ Offer coverage to dependents
✔ Report coverage annually using Forms 1095-C and 1094-C
Understanding the 95% Rule
If even one full-time employee receives subsidized marketplace coverage — and your organization offered coverage to only 93% of eligible employees — the penalty applies for the entire group.
Penalties for ALEs
The “A” Penalty (Failure to Offer Coverage):
$2,750 per full-time employee, minus the first 30 employees
Applies if you don’t offer coverage to at least 95% of full-time employees
The “B” Penalty (Coverage Not Affordable):
$4,120 per affected employee (approx., adjusted annually)
Applies only for each employee who receives subsidized marketplace coverage
Reporting Penalties:
$280 per missing/incorrect 1095-C
$280 per form not filed with the IRS
Doubled if considered willful disregard
These penalties can easily hit tens of thousands of dollars.
Why 50–99 Employers Often Struggle
Tracking full-time equivalents
Understanding the affordability calculation
Managing seasonal workers
Knowing when a variable-hour employee becomes full-time
Coding the 1095-C forms correctly
For fast-growing businesses, this is one of the most stressful stages of compliance.
👥 Employers With 100+ Employees
The responsibilities are similar to the 50–99 group — but mistakes get much more expensive.
Larger organizations often need:
Clear measurement method policies
Ongoing monitoring of new hires
Automation to track offer and enrollment dates
Strong internal communication between HR, payroll, and benefits administration
The employer mandate applies fully, reporting is mandatory, and accuracy is critical.
Why Larger Employers Face Extra Challenges
More employee categories (full-time, part-time, variable-hour, seasonal, temporary, interns)
More complex payroll data to integrate
Higher risk if one data field is incorrect
Multiple locations and varying state laws
For 100+ employers, manual reporting is nearly impossible without a robust HRIS or outside partner.
🌟 Common ACA Reporting Mistakes — and Why They Happen
1. Misclassifying employees
Example: treating a variable-hour employee as part-time when they regularly hit 30+ hours.
2. Not tracking measurement and stability periods
The IRS requires employers to measure whether employees qualify as full-time using either:
Monthly measurement
Look-back measurement
Failure to track this accurately causes incorrect 1095-C codes.
3. Missing dependent coverage information
If you offer family coverage, you must include dependent details on ACA forms.
4. Using incorrect affordability calculations
The IRS offers multiple affordability safe harbors:
W-2 wages
Rate of pay
Federal poverty level (FPL)
Many employers pick the wrong one — and don’t realize it until after penalties.
5. Missing deadlines
IRS due dates arrive quickly:
Employee copy (1095s): typically late January
IRS submission: usually February/March depending on filing method
🚀 How Aquila Payroll Services Makes ACA Compliance Simple
ACA compliance isn’t about paperwork — it’s about having the right system and support in place.
Aquila Payroll Services helps employers:
📌 Track eligibility year-round
Our systems automatically monitor hours, full-time status, and coverage offers.
📌 Generate and file 1094/1095 forms accurately
Avoid coding errors, incorrect coverage lines, and missing data.
📌 Stay compliant as your business grows
Crossing the 50-employee threshold? We help you prepare months in advance.
📌 Access expert guidance when rules change
ACA rules shift regularly. We stay updated so you don’t have to.
📌 Use isolved’s powerful HCM tools
You gain access to a top-tier HR/Payroll platform that automates ACA tracking, reporting, and form generation.
We make ACA compliance predictable, penalty-free, and stress-free — so you can focus on running your business, not navigating federal regulations.
