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Guide to Correcting ACA Reporting Mistakes

It can happen to anyone: you complete your Affordable Care Act (ACA) reporting for the year, but you later realize that there are errors that need to be corrected.

Or worse, the Internal Revenue Service (IRS) has sent you the Employer Shared Responsibility Penalty Assessment Letter 226J proposing a penalty based on incorrect information on your prior ACA reporting filing. Applicable large employers (ALEs) with at least 50 full-time employees (and full-time equivalents) can use this guide to help identify and correct common ACA reporting mistakes. For more information to make ACA reporting easy, view the ACA reporting cheat sheet.

Common ACA Reporting Mistakes

  • Failure to Enter a Safe Harbor Code on Form 1095-C Line 16

    The 2 series codes for Form 1095-C Line 16 are used to communicate to the IRS 1) whether the employee enrolled in coverage or waived coverage, 2) why the employer did not offer coverage to the employee, and/or 3) whether the coverage offered was affordable. In most instances, an employer must enter a 2 series code on Line 16 of the 1095-C to avoid being assessed the (b) penalty for failure to offer minimum essential coverage that is affordable and provides minimum value.

  • Incorrectly Indicated Failure to Offer Coverage to Substantially All Full-Time Employees on Form 1094-C, Part III, Column (a)

    ALEs must offer group health coverage to substantially all (95% after 2015) of their full-time employees and their dependent children up to age 26 (including the month in which they turn 26) or pay a penalty. An ALE must indicate whether it has satisfied this requirement on Form 1094-C, Part III, Column (a). Many employers have found on prior years’ reporting that it erroneously indicated “no” it did not offer coverage to substantially all of its full-time employees, when, in fact, it did.

  • Failure to Indicate Transitional Relief on Form 1094-C, Part II, Line 22 and Part III, Column (e)

    If an employer qualifies for transitional relief, the employer must indicate that it wants to take advantage of that transitional relief by checking the appropriate box on Form 1094-C, Part II, Line 22 and noting the appropriate code in Part II, Column (e).

    Qualifying Offer Method – the ALE Member can certify that it made a Qualifying Offer (affordable based on FPL and minimum value) to one or more of its full-time employees for all months during the year in which the employee was a full-time employee.

    98% Offer Method – the employer can certify that, taking into account all months during which the individuals were employees of the ALE Member and were not in a Limited Non-Assessment Period, the ALE Member offered affordable health coverage providing minimum value to at least 98% of its employees for whom it is filing a Form 1095-C, and offered minimum essential coverage to those employees’ dependents.

  • Self-Insured Plan Failure to Report on All Covered Individuals with Taxpayer Identification Number (TIN)

    The employer shared responsibility provision does not apply to part-time employees working less than 30 hours per week or non-employees, such as independent contractors, owners and other non-employees. There is no reporting requirement for non-employees under section 6056. However, under section 6055, self-insured plans must report on any covered non-employees. Thus, a self-insured plan must complete the Form 1095-C, Part III by checking all months that the employee/former employee, employee’s spouse, or employee’s dependent was covered for at least one day of the month, including the TIN for each. Alternatively, a self-insured plan may complete Forms 1094-B and 1095-B for these covered individuals.

  • Failure to File and Furnish ACA Reporting Forms in a Timely Manner

    An ALE is required to complete its ACA reporting and provide it to the IRS by February 28 or March 28 (electronically) and to the employee by March 1. Failure to meet these deadlines could result in costly penalties for an ALE that are separate from and in addition to any potential employer shared responsibility penalties for failure to offer coverage. An employer that fails to file and furnish returns by the applicable deadlines may be subject to a per return penalty. In determining the assessment of penalties, the IRS will look to whether the employer corrected the failure promptly after discovery. Accordingly, if an employer is late completing its ACA reporting, the employer should prioritize correcting any issues and failures with ACA reporting as soon as possible.

  • Failure to Complete Forms 1094-C and/or 1095-C

    All applicable large employers (ALEs) must file Forms 1094-C and 1095-C with the IRS and furnish a copy of the 1095-C to all full-time employees. The insurance carrier for a fully insured plan must complete Forms 1094-B and 1095-B. Generally, only employers that are non-ALEs with a self-insured plan will complete Forms 1094-B and 1095-B. The Internal Revenue Service (IRS) has started to send letters to employers that, according to IRS records, may have been an Applicable Large Employer (ALE), during the prior calendar year(s) but failed to complete the ACA reporting as required under Sections 6055 and 6056. Recipients of this letter must mail a response to the IRS within 30 days of the date of the letter outlining its ALE or non-ALE status and the status of its ACA reporting.

How to Correct ACA Reporting Mistakes

The Form 1094-C and 1095-C instructions provide that “a corrected return should be filed as soon as possible after an error is discovered.” An employer must make any corrections to Forms 1094-C or 1095-C in accordance with the IRS instructions outlined below.

  • Correction to Form 1094-C

    If correcting information on the Authoritative Transmittal (identified on Part I, line 19, as the Authoritative Transmittal, one (and only one) of which must be filed for each ALE Member reporting aggregate employer-level data for all full-time employees and employees of the ALE Member), file a standalone, fully completed Form 1094-C including the correct information and enter an “X” in the “CORRECTED” checkbox. Do not file a return correcting information on a Form 1094-C that is not the Authoritative Transmittal. Do not file any other documents (e.g. Form 1095-C) with the corrected Authoritative Transmittal.

  • Corrections to Form 1095-C

    If correcting information on a Form 1095-C that was previously filed with the IRS, file a fully completed Form 1095-C including the correct information and enter an “X” in the “CORRECTED” checkbox. File a Form 1094-C (do not mark the “CORRECTED” checkbox on Form 1094-C) with corrected Form(s) 1095-C. Furnish the employee a copy of the corrected Form 1095-C, unless the ALE Member was and continues to be eligible for and used the alternative method of furnishing under the Qualifying Offer Method for that employee for that year’s furnishing.

    Forms 1095-C filed with incorrect dollar amounts on line 15, Employee Required Contribution, may fall under a safe harbor for certain de minimis errors. The safe harbor generally applies if no single amount in error differs from the correct amount by more than $100. If the safe harbor applies, you will not have to correct Form 1095-C to avoid penalties. However, if the recipient elects for the safe harbor not to apply, you may have to issue a corrected Form 1095-C to avoid penalties. For more information, see Notice 2017-9, 2017-4 I.R.B. 542, at 2017-04 IRB/ar11.html.

    Note. Enter an “X” in the “CORRECTED” checkbox only when correcting a Form 1095-C previously filed with the IRS. If you are correcting a Form 1095-C that was previously furnished to a recipient, but not filed with the IRS, write, type, or print “CORRECTED” on the new Form 1095-C furnished to the recipient.
    You are not required to file corrected returns for missing or incorrect TINs if you meet the reasonable cause criteria. For additional information, see Pub. 1586, Reasonable Cause Regulations and Requirements for Missing and Incorrect Name/TINs.

  • Electronic Filing of Corrected Forms

    If you are required to file 250 or more information returns, you must file electronically. For example, if you have 150 Forms 1095-C to correct, you may file the corrected returns on paper because they fall under the 250 threshold. However, if you have 300 Forms 1095-C to correct, they must be filed electronically. The electronic filing requirement does not apply if you apply for and receive a hardship waiver. The IRS encourages you to file electronically even though you are filing fewer than 250 returns. For additional information about filing corrections electronically, see section 7.1 of Pub. 5165.

To stay on top of your ACA obligations, view the latest ACA reporting cheat sheet and check out our blog post about the IRS' 2025 ACA Pay or Play Penalties.