ACA Reporting Penalties for 2025: What You Need to Know

As we look ahead to 2025, organizations must be aware of significant updates regarding ACA information reporting penalties. The IRS has recently revised these penalties under Revenue Procedure 2023-34, imposing stricter consequences for non-compliance with the Affordable Care Act’s (ACA) requirements outlined in Internal Revenue Code Sections 6055 and 6056. 

With the 2024 filing deadlines now behind us, it’s crucial to focus on preparing for next year’s filings and understanding the implications of these updated penalties. These changes will affect the information returns and statements due in 2025, emphasizing the importance of timely and accurate reporting.

Understanding General Reporting Penalties under ACA Sections 6055 and 6056

Entities failing to meet the reporting requirements of ACA Sections 6055 and 6056 may incur penalties under the general guidelines, including:

1. Failure to File Correct Information Returns

Penalties under Code Section 6721 may apply if information returns (e.g., Form 1095) are not filed accurately or on time.

2. Failure to Furnish Correct Payee Statements

Penalties under Code Section 6722 apply when statements (e.g., Form 1095-C) require corrections before the deadline for individuals.

Understanding Waivers and Reductions of ACA Penalties

Penalties for ACA reporting may be eligible for waivers under reasonable cause and not willful neglect.

Additionally, penalties can be reduced if reporting entities correct errors within a specified timeframe.

Adjusted Penalty Amounts for 2025 Reporting

Penalties for filing information returns and providing individual statements in 2025, based on 2024 data, have been adjusted:

• Failing to file or provide a statement now incurs a penalty of $330 per return or statement, up from $310.
• Corrections made within 30 days of the due date remain at $60 per return or statement.
• Corrections made after 30 days but before August 1, 2025, will result in a penalty of $130 per return or statement, up from $120.
• Intentional disregard now carries a penalty of $660, increased from $630, or 10% of the total required to be reported, whichever is greater. 

Penalty limits vary by business size, with small businesses facing lower maximum penalties, except for intentional disregard cases, which can exceed other penalties based on the violation’s severity. These adjustments underscore the importance of complying with ACA reporting requirements under Sections 6055 and 6056.

2025 Deadlines for 2024 Information Returns

The deadlines for furnishing individual statements for the 2024 calendar year are as follows:

Individual Statement Furnishing Deadline: March 3, 2025

Statements must be furnished within 30 days of January 31, 2025. Since January 31 falls on a weekend, the deadline is extended to March 3, 2025.

Electronic IRS Filing Deadline: March 31, 2025

For the 2024 calendar year, electronic IRS returns must be filed by March 31, 2025. These deadlines are critical for entities adhering to reporting requirements under Sections 6055 and 6056 of the Internal Revenue Code. Non-compliance may lead to penalties adjusted for the 2024 filings.

Understanding ACA Premium Tax Credits and Employer Responsibilities

Under the Affordable Care Act (ACA), employees generally do not qualify for premium tax credits to purchase health plans through the Health Insurance Marketplace if their employer-provided health coverage meets affordability and minimum value standards. Minimum value requires that the plan covers at least 60% of allowed costs for benefits, including substantial coverage for hospital and physician services.

For coverage to be deemed affordable, an employee’s contribution for self-only coverage under the lowest-cost plan option cannot exceed 8.39% of their household income for the 2024 tax year. Employers play a crucial role in determining contribution rates and must adhere to ACA affordability rules to avoid penalties. If a full-time employee of an Applicable Large Employer (ALE) receives a premium tax credit due to unaffordable coverage offered by the employer, the employer may face penalties under ACA employer shared responsibility provisions.

Impact on Employers

The newly revised pay-or-play penalty amounts will apply to the 2025 calendar year, necessitating awareness among ALEs. While immediate action may not be required now, it is crucial for ALEs to maintain compliance with ACA regulations throughout the year. This includes accurately identifying full-time employees eligible for affordable coverage to mitigate pay-or-play penalties.

For more detailed information, visit the IRS FAQs page on ACA compliance.

Additionally, the IRS has updated its FAQs document on premium tax credits, providing valuable insights for employees with inquiries about how these credits interact with employer-sponsored health plans.

Still Have Questions?

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