Employer Filing Obligations and Penalty Exposure for Late or Missing Affordable Care Act Forms

The Affordable Care Act (ACA) subjects “applicable large employers” (ALEs) to information reporting rules and employer shared responsibility provisions (ESRP). ALEs should verify that they are prepared to comply with ongoing ACA reporting obligations. The IRS continues to actively enforce the requirements for timely filing and furnishing of Form 1095 C, Employer-Provided Health Insurance Offer and Coverage, and penalties for noncompliance can escalate quickly, often into six or seven figures for larger employers.

A reminder of who must comply, what is required, key deadlines, and potential penalty exposure follows.

Key Deadlines Employers Need to Track

Employee Statements

The deadline for furnishing the annual information return to full-time employees is January 31, with an automatic 30-day extension (typically to February 28, but the weekend rule may move the deadline even further -- for example, 2025 Forms 1095 C had to be furnished to employees by March 2, 2026).

The IRS now permits an alternative furnishing method: employers may satisfy the requirement by posting a clear notice on its website that employees can request a copy, provided the form is furnished within 30 days of request. Also, the employer must comply with the following requirements:

• Form 1095-C must be made available by the due date for furnishing Form 1095-C, including the automatic 30-day extension. 
• The website notice must be “clear and conspicuous,” and placed in a location on the employer’s or insurer’s website that is reasonably accessible to all impacted individuals. 
• The employer must state that individuals can receive a copy of Form 1095-C upon request and explain the process for doing so.
• The employer must include an email address, a physical address to which a request for Form 1095-C is to be sent, and a telephone number that individuals may use to contact the employer or insurer with any questions. 
• The notice must be written in plain, non-technical terms and letters must be in a font size large enough to call the viewer’s attention to the information.  

IRS Filing

Electronic filing of Forms 1095-C and 1094-C -- typically due March 31 -- is required if the employer is required to file 10 or more information returns in aggregate, including W 2s and 1099s. Paper filing is typically due February 28, but is available only to employers who file fewer than 10 information returns.

Employers may request a 30 day automatic extension for IRS filing using Form 8809, Application for Extension of Time to File Information Returns, but this extension does not apply to the deadline for furnishing Form 1095-C to employees.

Penalties for Late or Missing Forms

Failure to timely file Form 1095-C with the IRS or to furnish the form to employees can result in separate penalties for each failure. Penalties apply per return, so that exposure increases quickly with workforce size.

For the 2025 reporting year, penalties for failing to file Form 1095-C with the IRS range as follows (assuming no intentional disregard):

• $60 per form (if filed within 30 days after the due date), with a cap of $220,500 for small employers (businesses with average annual gross receipts of $5 million or less) and $630,500 for large employers (businesses with average annual gross revenue of over $5 million);
• $130 per form (if corrected more than 30 days after the due date but before August 1), with a cap of $630,500 for small employers and $1,891,500 for large employers;
• $340 per form if not corrected before Aug 1 (with a cap of $1,366,000 for small employers and $4,098,500 for large employers).

Penalty amounts are adjusted annually for inflation.

Separate penalties apply for failure to file Form 1095-C with the IRS and failure to furnish a copy of Form 1095-C to employees. Failing to do both would essentially double the penalty.

Reasonable Cause Relief Is Available, but Not Automatic

The IRS may waive penalties if an employer can demonstrate the failure was due to reasonable cause and not willful neglect. This typically requires showing:

• Ordinary business care and prudence were exercised; and
• The failure was corrected promptly upon discovery.

Employers often first learn of potential exposure through IRS notices (such as letters requesting confirmation of whether filings were made or proposing penalties). Timely, well documented responses are critical to preserving penalty relief opportunities. Generally, the IRS does not accept “first time abatement” for ACA penalties.

Action Items for Employers

To manage risk and avoid unnecessary penalties, employers should:

• Confirm ALE status annually, especially in controlled group or acquisition scenarios
• Align HR, payroll, benefits, and vendors early each filing season
• Track and respond quickly to IRS ACA notices

Form 1095 C is a key enforcement tool for the IRS. Late or missing filings remain one of the most common — and costly — ACA compliance failures. Employers that approach 1095 C reporting as a year round process rather than a seasonal task are best positioned to limit penalty exposure.

Penalty Exposure Can Quickly Escalate

Because IRS penalties apply per Form 1095 C, employers often underestimate how rapidly exposure can grow. 

For midsize and large employers, ACA reporting penalties often exceed the cost of compliance many times over. Even modest delays or administrative breakdowns can result in material, unbudgeted expenses, particularly when issues are discovered only after IRS notices are issued.