2025 Qualified Applicable Large Employer (ALE) Compliance Deadlines

As we move into the 2025 tax year, Applicable Large Employers (ALEs)—those with 50 or more full-time equivalent employees—must prepare for important deadlines related to the Affordable Care Act (ACA) compliance. ALEs are required to offer affordable health coverage to full-time employees and submit detailed information about the coverage they provide. These requirements are critical for avoiding penalties and ensuring compliance with federal regulations.

This blog will help you understand the essential deadlines for ALEs in 2025, what they entail, and tips for staying on top of your ACA responsibilities.

1. Health Coverage Reporting (Forms 1094-C and 1095-C)

One of the most crucial ACA compliance tasks is reporting the health coverage ALEs offer to full-time employees. This is done through Forms 1094-C and 1095-C. These forms must be filed annually to report details about the coverage provided to employees throughout the previous year.

What Are Forms 1094-C and 1095-C?

• Form 1094-C: This is the transmittal form used to submit the 1095-C forms to the IRS. It provides a summary of the employer’s health insurance offer and the number of full-time employees.
• Form 1095-C: This form provides information for each full-time employee about the health insurance coverage offered to them by the employer during the calendar year. It includes details such as whether the employee was offered coverage, the months the coverage was available, and whether the coverage met the ACA’s affordability and minimum value standards.

Deadline for Filing with the IRS:

• Paper Filing: February 28, 2025
• Electronic Filing: March 31, 2025

Why These Deadlines Matter

Filing these forms accurately and on time is essential for avoiding penalties. Inaccurate or late filings may result in penalties under the ACA’s information reporting requirements. Employers with 250 or more forms must file electronically, and it’s crucial to ensure the forms are complete, especially regarding the details about the employee’s health coverage.

How to Stay on Track with Filing Deadlines:

• Keep Detailed Records: Throughout the year, ensure your records are accurate and up-to-date regarding the health insurance coverage offered to employees. This will make the preparation and filing of the forms much easier.
• Use Software Tools: Many payroll and benefits management software programs offer tools that streamline the process of generating and filing the necessary ACA forms.

2. Employee Distribution of Form 1095-C

In addition to submitting Forms 1094-C and 1095-C to the IRS, ALEs must also provide Form 1095-C to their full-time employees. This form serves as a statement to the employee detailing the health insurance coverage offered during the prior year, which they may need when filing their personal tax returns.

Deadline for Providing Forms to Employees:

• March 3, 2025

What You Need to Know About Employee Distribution:

The IRS requires ALEs to provide a copy of Form 1095-C to each full-time employee by the deadline above. Employees will use this form to verify whether they had health insurance coverage and avoid penalties related to the individual mandate, which requires most individuals to have health insurance.

How to Ensure Timely Distribution:

• Mailing and Digital Delivery: Be sure to confirm the address for each employee, and consider digital delivery if your company has an online portal for employees to access these forms.
• Review Forms for Accuracy: Before distributing, double-check the forms for accuracy to avoid the need for corrections later.

Failure to provide these forms by the deadline may result in penalties, so it’s important to ensure timely delivery to employees. Form 1095-C can also help employees in the event they need proof of health coverage when filing their taxes.

3. ACA Penalty Deadlines

The ACA imposes penalties on employers who fail to provide affordable health insurance that meets the minimum value requirements. These penalties are assessed based on whether an employer offers coverage and whether the coverage meets certain standards.

What Happens if You Don’t Comply?

• If an ALE does not offer health coverage to full-time employees or offers coverage that does not meet the ACA’s requirements for affordability or minimum value, they may be subject to two types of penalties:
  • Section 4980H(a) Penalty: This is assessed if the employer does not offer health coverage to at least 95% of full-time employees.
  • Section 4980H(b) Penalty: This is assessed if the employer offers coverage, but the coverage is deemed unaffordable or does not meet minimum value standards.

Deadline for Paying ACA Penalties (If Applicable):

• March 15, 2025 (or earlier, depending on the employer’s filing schedule)

If penalties are owed, employers will need to pay them according to the IRS deadlines. Employers can avoid these penalties by offering affordable, comprehensive health coverage to full-time employees and meeting the reporting requirements.

4. Tips for Staying on Track with Compliance

Meeting ACA deadlines can be overwhelming, especially when dealing with complex reporting requirements and employee coverage standards. However, staying on top of compliance can help you avoid penalties and ensure a smooth process. Here are some tips for staying on track:

• Review Coverage Offerings Early in the Year: To ensure compliance, review your health insurance offerings before the end of the year. Make sure your plans meet the ACA’s affordability and minimum value standards.
• Track Employee Hours: Accurate recordkeeping is essential to determine which employees are full-time under the ACA rules. Be sure to track hours worked, especially for part-time employees who may be classified as full-time under certain circumstances.
• Consult a Benefits Specialist: If you are unsure about your obligations or need help understanding the nuances of ACA compliance, consulting with a benefits expert can help ensure your company is meeting all the requirements.
• Utilize ACA Reporting Software: Many benefits management platforms offer tools for managing and filing ACA forms. These platforms can help streamline the reporting process and keep you on track with deadlines.

Final Notes

Staying compliant with ACA requirements is critical for ALEs to avoid penalties and protect their business. By understanding the deadlines and responsibilities related to health coverage reporting and distribution, you can ensure your business is prepared for the 2025 tax year. Take proactive steps to review coverage, track employee hours, and file the necessary forms on time to keep your company in good standing with the IRS.

With careful planning and attention to detail, you can avoid penalties and stay on track with ACA compliance throughout the year.