ACA reporting can apply to employers with fewer than 50 full-time-equivalent employees. While many small employers may be able to correctly skip Forms 1094-C and 1095-C, certain health plan arrangements can still create a separate obligation for these small employers to file and furnish IRS Forms 1094-B and 1095-B.
Worth a closer look: Self-insured, level-funded, and ICHRA (Individual Coverage HRA) arrangements may require small employers to report coverage using Forms 1094-B and 1095-B or, for applicable large employers, Form 1095-C.
The responsibility gap
Many employers assume their carrier, third-party administrator, broker, payroll provider, or benefits vendor is handling any applicable reporting. But sometimes no one is. Confirming who will file and furnish the forms is better than assuming they are being handled and finding out too late that no one did.
The penalty risk is real
For information returns due in 2026, the IRS penalty for a return filed after August 1, or not filed at all, is $340. A separate $340 penalty can apply if the corresponding individual statement requirements are not met. If both penalties apply, one missed individual could result in up to $680 in penalties. These penalties are subject to annual caps, but higher penalties for intentional disregard are not capped.
For a small employer with 49 affected individuals, combined exposure could reach $33,320 if both penalties apply. The actual amount depends on the facts, any available relief, and the applicable penalty caps.
State rules can add to the federal requirements. Several jurisdictions with their own coverage mandates, including California, New Jersey, Rhode Island, Massachusetts, and Washington, D.C., may require separate reporting or statements for self-insured coverage.
Questions worth asking
- Are Forms 1094-B and 1095-B required for our specific plan arrangement?
- Who is responsible for preparing, filing, and furnishing the forms?
- What data does the responsible party need from us, and by when?
- Can we get written confirmation once applicable forms have been filed and the individual statement requirements have been met?
Bottom line: being under 50 employees does not settle the question. For a self-insured, level-funded, or ICHRA arrangement, confirm whether Forms 1094-B and 1095-B are required and who will file and furnish them, and get that confirmation in writing before the deadline.
ESB-9862-0926