Critical Deadline Alert for 2026
ACA forms for the 2025 tax year are due by March 2, 2026 (Furnish copies to employees) and March 31, 2026 (electronic filing to IRS). Penalties for non-compliance have increased significantly for 2026. Missing these deadlines can result in substantial financial penalties.
The Affordable Care Act (ACA) requires Applicable Large Employers (ALEs) to report health insurance coverage information to the IRS and employees annually. Failure to file these forms correctly and on time results in significant penalties under IRC Sections 6721 and 6722. For the 2026 tax year, penalties have been explained in detail below.
These penalties are separate from the Employer Shared Responsibility (ESR) penalties under IRC Section 4980H, which apply when employers fail to offer adequate coverage. Understanding both types of penalties is essential for comprehensive ACA compliance.
Table of Contents
ACA Forms Overview
Four primary forms are involved in ACA reporting, each serving a specific purpose in demonstrating compliance:
1094-C
Transmittal of Employer-Provided Health Insurance Offer and Coverage Information Returns
1094-B
Transmittal of Health Coverage Information Returns
Who Must File?
- Forms 1094-C and 1095-C: Required for ALEs (50+ full-time equivalent employees in prior year) to report coverage offers made to full-time employees.
- Forms 1094-B and 1095-B: Required for self-insured employers of any size to report actual coverage provided.
Types of ACA Penalties for 2026
1. Information Reporting Penalties (IRC §6721 & §6722)
These penalties apply to failures in filing information returns and furnishing statements to employees. The amounts are adjusted annually for inflation.
| Large Businesses with Gross Receipts of More Than $5 Million | ||||
|---|---|---|---|---|
| Time of correct filing | Not more than 30 days late | 31 days late - August 1 | After August 1 | Intentional disregard |
| Due 01-01-2026 through 12-31-2026 | $60 per return or statement $683,000 maximum | $130/ return or statement $2,049,000 maximum | $340 per return or statement $4,098,500 maximum | $680 per return or statement No limitation |
| Due 01-01-2025 through 12-31-2025 | $60 per return or statement $664,500 maximum | $130per return or statement $1,993,500 maximum | $330 per return or statement $3,987,000 maximum | $660 per return or statement No maximum |
| Due 01-01-2024 through 12-31-2024 | $60 per return or statement $630,500 maximum | $120/ per return or statement $1,891,500 maximum | $310 per return or statement $3,783,000 maximum | $630 per return or statement No maximum |
| Due 01-01-2023 through 12-31-202 | $50 per return or statement $588,500 maximum | $110 per return or statement $1,766,000 maximum | $290 per return or statement $3,532,500 maximum | $580 per return or statement No maximum |
| Small Businesses with Gross Receipts $5 Million or Less | ||||
|---|---|---|---|---|
| Time of correct filing | Not more than 30 days late | 31 days late - August 1 | After August 1 | Intentional disregard |
| Due 01-01-2026 through 12-31-2026 | $60 per return or statement $239,000 maximum | $130 per return or statement Maximum - $683,000 | $340 per return or statement Maximum - $1,366,000 | $680 per return No maximum |
| Due 01-01-2025 through 12-31-2025 | $60 per return or statement Maximum -$232,500 | $130 per return or statement Maximum - $664,500 | $330 per per return or statement Maximum - $1,329,000 | $660 per return No maximum |
| Due 01-01-2024 through 12-31-2024 | $60 per return or statement $220,500 maximum | $120per return or statement $630,500 maximum | $310 per return or statement $1,261,000 maximum | $630 per return or statement No maximum |
| Due 01-01-2023 through 12-31-202 | $50 per return or statement $206,000 maximum | $110 per return or statement $588,500 maximum | $290 per return or statement $1,177,500 maximum | $580 per return or statement No maximum |
2. Employer Shared Responsibility Penalties (IRC §4980H)
These penalties apply when ALEs fail to offer affordable, minimum value coverage, and at least one full-time employee receives a premium tax credit through the Health Insurance Marketplace.
1095-C4980H(a) - No Offer Penalty
$2,900
Per full-time employee (minus first 30) annually if coverage not offered to 95% of FTEs
4980H(b) - Inadequate Coverage
$4,350
Per full-time employee receiving premium tax credit if coverage is unaffordable or lacks minimum value
Combined Penalty Risk
Employers can face both information reporting penalties AND employer shared responsibility penalties simultaneously.
For example, failing to file 1095-C forms while also not offering adequate coverage could result in compounding penalties totaling tens or hundreds of thousands of dollars
Important Filing Deadlines for 2026
Learn about the aca forms deadline 2025 Tax Year
| Action Required | Deadlines |
|---|---|
| Furnish to 1095-C Employees | March 2, 2026 |
| Furnish to 1095-B covered Individuals | March 2, 2026 |
| Paper Filing with IRS | March 2, 2026 |
| E-Filing with IRS | March 31, 2026 |
Don’t Miss Your ACA Deadlines
Need more time to file your ACA forms? Submit your extension request correctly and avoid costly IRS penalties.
Need more time to furnish employee copies?
If you require a 30-day extension to provide statements to recipients, you can request additional time by filing Form 15397.
Common Filing Mistakes
Understanding the most frequent errors can help you avoid costly penalties:
- Incorrect or Missing Taxpayer Identification Numbers (TINs): Employee Social Security Numbers must exactly match IRS records. Even minor discrepancies cause penalties.
- Wrong Code Entries: Using incorrect codes in Part II of Form 1095-C (Lines 14-16) to indicate offers of coverage, safe harbors, or coverage status.
- Inaccurate Employee Classification: Incorrectly classifying employees as part-time when they should be considered full-time under ACA rules (averaging 30+ hours/week).
- Missing or Late Employee Statements: Failing to provide 1095-C form or 1095-B to employees by March 2.
- Incomplete Coverage Information: Not reporting all 12 months of coverage information or leaving required fields blank.
- Wrong Filing Method: Filing on paper when electronic filing is required (10+ returns).
- Failure to Aggregate Controlled Groups: Not combining employees across commonly controlled entities when determining ALE status.
- Incorrect Affordability Calculations: Miscalculating whether coverage meets the affordability threshold (9.02% of household income for 2025).
- Not Filing Corrected Returns: Discovering errors but failing to file corrected returns promptly to minimize penalties.
- Missing Forms Entirely: Complete failure to file, often due to not recognizing ALE status or self-insured plan reporting requirements.
Important:
The SSN Verification Problem
One of the most common penalty cause is SSN mismatches. Even if you collected the SSN from the employee correctly, variations in legal names (e.g., "Robert" vs "Bob," hyphenated names; suffixes like Jr. or Sr.) can cause mismatches with IRS records. Always verify employee information against W-2 data and consider using the IRS TIN Matching service before filing
How to Avoid ACA Forms Penalties?
Implementing these best practices will significantly reduce your penalty risk:
- Maintain Comprehensive Records Year-Round
Track all employee hours, coverage offers, and enrollment elections throughout the year—not just at filing time. Use the measurement, administrative, and stability period method consistently. Document all safe harbor calculations and maintain evidence of affordability. - Verify Employee Information Early
Collect and verify SSNs, legal names, and addresses well before the filing deadline. Double-check with W2 information and payroll records. Consider using the IRS TIN Matching Program to identify discrepancies before filing. - Invest in Reliable ACA Software
Use specialized ACA reporting software or partner with an experienced provider. Quality software will validate codes, calculate affordability, track employees across measurement periods, and identify potential errors before submission. - Conduct Internal Audits
Before filing, audit a sample of forms for accuracy. Check the aca codes to match actual coverage offers, employee classifications are correct, and all 12 months of data are reported. Review aggregation rules for controlled groups. - File Electronically and Early
Don't wait until the deadline. Electronic filing through the IRS FIRE system provides immediate confirmation and allows time to correct rejected filings. Aim to file by before the March 31 deadline. - Stay Informed on IRS Guidance
Monitor IRS announcements, FAQs, and instructions for changes. Penalty amounts adjust annually for inflation, and the IRS periodically updates reporting requirements and code definitions. - Consider Professional Assistance
For complex situations—multiple entities, aggregated groups, international employees, or self-insured plans—consider working with ACA compliance specialists, benefits consultants, or tax professionals with specific ACA reporting expertise.
What to Do If You Receive a Penalty Notice?
Common notices include:
- IRS Letter 226J (ESR penalties)
- IRS Notice 972CG (information return penalties)
Steps:
- Review notice carefully
- Compare IRS data with your records
- File corrections immediately if needed
- Respond within 30 days
- Request abatement if applicable
💡First-Time Penalty Abatement (FTA)
If you have a clean compliance history (no penalties in the prior three years) and have filed all required returns, you may qualify for administrative penalty relief under FTA. This can completely eliminate penalties without needing to prove reasonable cause. Request FTA when responding to the penalty notice.
Reasonable Cause Scenarios
- Unavoidable Absence: Serious illness, death, or incapacitation of the person responsible for filing
- Fire, Casualty, or Natural Disaster: Events that destroyed records or made filing impossible
- System Failure: Technology failures beyond your control (must demonstrate the failure and your attempts to mitigate)
- Undue Economic Hardship: Filing would cause significant financial hardship (rarely accepted)
- First-Time Filer: Made a good faith effort to comply but made errors (must show the effort and steps taken)
- Unavailability of Records: Records were unavailable despite reasonable efforts to obtain them.
What Doesn't Qualify
The following are NOT considered reasonable cause: lack of knowledge of the filing requirements, reliance on someone else to file without monitoring their performance, staff turnover, being too busy, software problems if you didn't verify the output, or financial difficulties. The burden of proof is entirely on you to demonstrate reasonable cause.
How Penalties Are Calculated?
Understanding the calculation methodology helps you estimate potential exposure:
| Filing TypeInformation Reporting Penalties (§6721 & §6722) | |
|---|---|
| Calculation Elements | Explanation |
| Count the Violations | Each form is not filed, filed late, or filed incorrectly = 1 violation. Example: 100 missing Forms 1095-C = 100 violations. |
| Determine the Timeline | Identify when the error was corrected:
|
| Apply Per-Return Penalty (2026) | Multiply violations by applicable rate:
|
| Apply Annual Maximum | Total penalty cannot exceed annual cap for that tier (except intentional disregard – no maximum). |
| Separate Calculations Required | Calculate separately for:
|
| Employer Shared Responsibility Penalties (§4980H) | |||
|---|---|---|---|
| Penalty Type | When It Applies | 2026 Annual Amount | How It’s Calculated |
| 4980H(a) – No Offer Penalty | ALE fails to offer coverage to at least 95% of full-time employees | $2,900 per full-time employee | (Total Full-Time Employees – 30) × $2,900 (prorated monthly) |
| 4980H(b) – Inadequate Coverage | Coverage offered but unaffordable or lacks minimum value AND employee receives Premium Tax Credit | $4,350 per affected employee | Number of employees receiving Premium Tax Credit × $4,350 (prorated monthly) |
Stay ACA-Compliant & Avoid IRS Penalties
Whether you’re filing Forms 1094/1095 or managing Employer Shared Responsibility compliance under
Section 4980H, accuracy and timely filing are important.
