Updates to the ACA Reporting Rules for the 2025 Tax Year
For the 2025 tax year (filing in 2026), the IRS has introduced significant updates to the Affordable Care Act reporting rules, including a major increase in the affordability threshold and a new streamlined method for furnishing employee statements.
2026 Reporting Deadlines (for 2025 Data)
Employers must adhere to the following federal deadlines for filing the transmittal 1094-C and 1095-Cs:
| Requirement | 2026 Deadline | Notes |
| Furnish Form 1095-C to Employees | March 2, 2026 | Permanent 30-day automatic extension from Jan 31. |
| IRS Paper Filing | February 28, 2026 | Only for employers with <10 aggregated returns. |
| IRS Electronic Filing | March 31, 2026 | Required for most employers. |
| Notice of Availability | March 2, 2026 | Deadline to post website notice if using alternative furnishing. |
Note: If you have employees in California, New Jersey, or Rhode Island, you must still furnish physical forms by their specific state deadlines (e.g., California’s furnishing deadline is January 31, 2026).
Key Regulatory Changes for 2026
- Increased Affordability Threshold: For plan years beginning in 2026, the affordability percentage jumps to 96%, up from 9.02% in 2025. This allows employers more flexibility in setting employee contribution rates while remaining compliant with “safe harbor” rules.
- Alternative Manner of Furnishing: Under the Employer Reporting Improvement Act, employers are no longer required to automatically mail Form 1095-C to every Instead, they may:
- Post a “clear and conspicuous” notice on a reasonably accessible website stating the form is available upon request.
- The notice must remain posted until October 15,
- Forms must be provided within 30 days of a written
- Mandatory Electronic Filing: The IRS now requires electronic filing for any employer with 10 or more aggregated returns (including W-2s, 1099s, and ACA forms). This will apply to virtually all Applicable Large Employers (ALEs).
2026 Penalty Increases
The IRS has adjusted penalties for non-compliance for the 2025 tax year (reported in 2026):
- Penalty A (Failure to Offer Coverage): $3,340 per full-time employee (minus the first 30) if coverage is not offered to 95% of the workforce.
- Penalty B (Unaffordable/Inadequate Coverage): $5,010 per full-time employee who receives a marketplace premium tax credit. This is prorated for the months of
- Filing/Furnishing Failures: $340 per return for late or incorrect forms, with a maximum penalty of over $4 million per year for large Intentional disregard carries a minimum penalty of $680 per form with no maximum.
Action Items for Employers
- Audit Safe Harbors: Use the IRS Proc. 2025-25 to verify that your lowest-cost self-only plan meets the 9.96% threshold.
- Determine Furnishing Strategy: Decide whether to mail forms automatically or transition to the “Notice of Availability” method.
- Verify State Requirements: If operating in multiple states, check specific reporting portals for local mandates that override federal furnishing relief.
Passport Software
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