ACA reporting

2026 figures at a glance

Key employer figures for 2026

Use this table as a snapshot. The sections below explain how each figure is applied, with a link to the official source.

Applicable large employer status

Who is an applicable large employer?

The IRS decides applicable large employer (ALE) status each calendar year, based on the average size of the workforce in the prior year. If you employed 50 or more full-time employees, including full-time equivalent employees, on average during the prior year, you are an ALE for the current year. ALEs are subject to the employer shared responsibility provisions and to ACA information reporting on Forms 1094-C and 1095-C.

To measure the year, add the number of full-time employees and full-time equivalent employees for each calendar month of the prior year, then divide that total by 12. Count all employees, including seasonal workers, with a narrow seasonal exception described by the IRS: you are not treated as exceeding 50 if the workforce exceeds 50 full-time employees (including FTEs) for 120 days or fewer, and the employees over that threshold were seasonal workers. Employees with medical care through TRICARE or certain veterans’ programs are not counted toward the 50-employee threshold for a month in which they have that coverage.

The 30 hours / 130 hours rule

For any calendar month, a full-time employee is an employee who has, on average, at least 30 hours of service per week during that month, or at least 130 hours of service during that month. That definition is used both to determine ALE status and to identify the employees to whom an ALE must offer coverage in order to avoid a potential employer shared responsibility payment.

How to calculate full-time equivalents

A full-time equivalent employee is not one person. It is a combination of employees who are not full-time, but who together equal a full-time employee. For each month:

1. Add the hours of service of all non-full-time employees for the month, counting no more than 120 hours of service per employee.
2. Divide that total by 120.

For example, three employees who are not full-time and who have 80, 100 and 60 hours of service in a month count as 2 FTEs (240 ÷ 120). FTEs matter only for the 50-employee test. An ALE does not have to offer minimum essential coverage to part-time employees to avoid an employer shared responsibility payment, and a part-time employee’s premium tax credit cannot, by itself, trigger that payment.

Source: IRS, Determining if an employer is an applicable large employer.

Owners of multiple businesses

Controlled groups and common ownership

Companies with a common owner, or that are otherwise related under certain rules of section 414 of the Internal Revenue Code, are generally combined and treated as a single employer when determining ALE status. If the combined number of full-time employees and full-time equivalent employees for the group meets the 50-employee test, each employer in the group is an ALE member and is subject to the employer shared responsibility provisions, even if that company would be under the threshold on its own.

There is an important split in how the rules apply. Aggregation is used to decide whether the group is an ALE. If a payment is owed, the amount is determined from the full-time employees of that ALE member only, not from the other companies in the group. Each ALE member also files its own Forms 1094-C and 1095-C for its own full-time employees.

A simple illustration: two commonly owned companies have 37 and 19 full-time and full-time equivalent employees in the prior year. Viewed alone, neither would be an ALE. Counted together, the group has 56 and is an ALE, and each company is an ALE member. Whether two businesses actually have to be combined depends on the ownership and relationship tests in section 414, including family attribution in some cases. Each ownership situation is unique, so work with your tax advisor before you rely on a count.

To begin an aggregated employer analysis, gather the legal entities that could be related through ownership or a working relationship, each entity’s business structure and start date, and the ownership of each entity. The IRS page on determining ALE status is the starting point for the grouping rules.

Sources: IRS, Determining if an employer is an ALE; IRS, Employer shared responsibility provisions. Talk with your tax advisor about whether your companies are an aggregated group.

Employer shared responsibility

The 4980H(a) and 4980H(b) payments for 2026

If you are an ALE, you may owe an employer shared responsibility payment if at least one full-time employee receives a premium tax credit for Marketplace coverage, and either you do not offer minimum essential coverage to at least 95% of full-time employees (and their dependents), or the coverage you offer is not affordable or does not provide minimum value. You can be liable for only one of the two payments described below, not both. The IRS sets the dollar amounts each year.

For calendar year 2026, under Rev. Proc. 2025-26 (effective for taxable years and plan years beginning after December 31, 2025):

• Section 4980H(a). This payment can apply if you do not offer minimum essential coverage to at least 95% of full-time employees (and their dependents) and at least one full-time employee receives the premium tax credit. The applicable dollar amount for 2026 is $3,340. The payment is computed monthly at 1/12 of that amount, multiplied by your full-time employees for the month after excluding the first 30.
• Section 4980H(b). This payment can apply if you do offer minimum essential coverage to at least 95% of full-time employees (and their dependents), but at least one full-time employee receives the premium tax credit because the coverage is not affordable, does not provide minimum value, or that employee was not offered coverage. The applicable dollar amount for 2026 is $5,010, computed monthly at 1/12, multiplied only by the full-time employees who received the credit. This payment cannot exceed what the section 4980H(a) payment would have been.

These amounts are the IRS indexing adjustments of the statutory $2,000 and $3,000 figures. They are not a bill you automatically owe. A payment is assessed only if the conditions above are met for a given month.

Sources: Rev. Proc. 2025-26; Internal Revenue Bulletin 2025-33; IRS, Employer shared responsibility provisions.

Affordable coverage

The 2026 affordability percentage

For plan years beginning in calendar year 2026, the required contribution percentage under section 36B is 9.96%, as set in Rev. Proc. 2025-25. Employer-sponsored coverage is generally treated as affordable for an employee if that employee’s required contribution for the lowest-cost, self-only coverage that provides minimum value is not more than 9.96% of household income.

Because household income is often not known to the employer, the IRS provides affordability safe harbors, including a W-2 safe harbor, a rate-of-pay safe harbor and a federal poverty line safe harbor. Which safe harbor, if any, fits a particular workforce is a question for your tax advisor.

Source: Rev. Proc. 2025-25, section 3.02 (Required Contribution Percentage for 2026).

Information returns

Forms 1094-C and 1095-C: ACA reporting deadlines

Each ALE member files Form 1094-C as the transmittal and a Form 1095-C for each employee who was a full-time employee for any month of the calendar year. The forms report offers of coverage and enrollment, and they are used to determine whether an ALE member may owe a section 4980H payment.

Filing with the IRS

In general, Forms 1094-C and 1095-C are due by February 28 if you file on paper, or by March 31 if you file electronically, of the year after the calendar year the returns relate to. If that date falls on a weekend or legal holiday, the due date is the next business day.

For calendar year 2025 returns, the final IRS instructions set a paper due date of March 2, 2026, and an electronic due date of March 31, 2026. For calendar year 2026 returns, the IRS draft 2026 instructions list March 1, 2027, for paper filing and March 31, 2027, for electronic filing. February 28, 2027, falls on a Sunday, which is why the draft paper date is March 1. Confirm both dates in the final 2026 instructions when the IRS posts them. You can request an automatic 30-day extension to file by submitting Form 8809 on or before the due date.

Electronic filing at 10 or more returns

If you are required to file 10 or more information returns during the year, you must file electronically, unless the IRS approves a hardship waiver on Form 8508. The 10-or-more threshold is an aggregate of almost all information return types, not a count of Forms 1095-C alone. You may have fewer than 10 ACA forms and still have to e-file because of Forms W-2, 1099 or other returns filed in the same year. ACA information returns are filed electronically through the IRS AIR system.

Furnishing Form 1095-C to employees

The Paperwork Burden Reduction Act added an alternative manner of furnishing these statements, effective for calendar years after 2023. Under Notice 2025-15, an ALE can meet the furnishing requirement by posting a clear, conspicuous and accessible notice on its website stating that an individual may request a copy of the statement, and then furnishing a requested copy on time. A requested statement is timely if it is furnished by the later of January 31 of the following year or 30 days after the request.

The IRS draft 2026 instructions also state that the ordinary furnishing due date is automatically extended from January 31, 2027, to March 2, 2027, that a website notice should be posted by March 2, 2027, and that the notice should remain in the same location through October 15, 2027. The notice should include an email address, a mailing address and a telephone number for requests. Confirm the final wording and dates in the posted 2026 instructions. You may still furnish a Form 1095-C directly (including electronically with the employee’s consent).

Sources: Instructions for Forms 1094-C and 1095-C (2025); IRS draft 2026 Instructions for Forms 1094-C and 1095-C; Notice 2025-15; IRS Topic No. 801.

FAQ

Questions employers ask

What is an applicable large employer?

An applicable large employer, or ALE, is an employer that employed 50 or more full-time employees, including full-time equivalent employees, on average during the prior calendar year. ALE status is determined each year. Source: IRS, Determining if an employer is an applicable large employer.

How do I calculate full-time equivalent employees?

For each month, add the hours of service of employees who are not full-time, counting no more than 120 hours per person, then divide by 120. Average the monthly full-time plus FTE counts over the year. FTEs count only toward the 50-employee test. Source: IRS, Determining if an employer is an applicable large employer.

What if I own more than one business?

Companies with a common owner or that are otherwise related under section 414 are generally combined to decide ALE status. If the group is an ALE, each company is an ALE member even if it would be under 50 on its own. Payments and Forms 1094-C and 1095-C are still determined company by company. Talk with your tax advisor about your ownership structure. Source: IRS, Determining if an employer is an applicable large employer.

What are the 2026 shared responsibility amounts?

For calendar year 2026, the section 4980H(a) applicable dollar amount is $3,340 and the section 4980H(b) amount is $5,010, under Rev. Proc. 2025-26. These are used to compute a monthly payment only if the conditions for that payment are met, including that a full-time employee received a premium tax credit.

When are Forms 1094-C and 1095-C due for 2026 coverage?

The general rule is February 28 for paper filing and March 31 for electronic filing of the following year, moved to the next business day if that date is a weekend or legal holiday. The IRS draft 2026 instructions list March 1, 2027, for paper and March 31, 2027, for electronic filing. Confirm those dates in the final instructions when posted.

Do I still have to send a Form 1095-C to every full-time employee?

Not automatically. Under Notice 2025-15, you may instead post a clear, conspicuous and accessible website notice that an individual may request a copy, and then furnish a requested statement on time (by the later of January 31 of the following year or 30 days after the request). The IRS draft 2026 instructions describe posting that notice by March 2, 2027, and leaving it up through October 15, 2027. Confirm the final instructions when they are posted.

Does PayNortheast provide health insurance?

No. PayNortheast does not sell or offer health insurance. For payroll clients, we handle ACA information reporting — calculating, processing and filing Forms 1094-C and 1095-C, and corresponding with the IRS about a filing when needed. Health coverage comes from your insurance carrier.

Sources

Official sources for this page

Every figure and rule on this page comes from the sources below, opened November 13, 2026. Re-check them when the IRS publishes new revenue procedures or the final 2026 form instructions.

1. IRS, Determining if an employer is an applicable large employer — 50-employee test, 30 hours / 130 hours, FTE calculation (120-hour divisor), aggregation under section 414, seasonal exception, TRICARE and veterans’ coverage exclusion.
2. IRS, Employer shared responsibility provisions — 95% offer rule, the two types of payment, and the 30-employee exclusion for section 4980H(a).
3. Rev. Proc. 2025-26 (also I.R.B. 2025-33) — 2026 section 4980H(a) amount of $3,340 and section 4980H(b) amount of $5,010.
4. Rev. Proc. 2025-25 — 9.96% required contribution percentage for plan years beginning in 2026.
5. Instructions for Forms 1094-C and 1095-C (2025) — general filing rule (February 28 / March 31), 2025 due dates, and the 10-or-more electronic filing threshold.
6. IRS draft 2026 Instructions for Forms 1094-C and 1095-C — draft paper due date of March 1, 2027, electronic due date of March 31, 2027, and draft furnishing / website-notice dates of March 2, 2027, through October 15, 2027. These are draft instructions; confirm them when the final instructions are posted.
7. Notice 2025-15 — alternative manner of furnishing statements under sections 6055(c)(3) and 6056(c)(3), effective for calendar years after 2023.
8. IRS Topic No. 801, Who must file information returns electronically — 10-return aggregate electronic filing threshold; ACA returns are filed through AIR.

Last updated November 13, 2026. This page does not replace advice from your tax advisor or employment attorney.