1094-C vs 1095-C: ACA Employer Reporting Guide 2026

TL;DR

Form 1094-C is the transmittal or “cover sheet” that summarizes your organization’s ACA reporting and gets sent only to the IRS. Form 1095-C is the employee-level form that documents whether you offered health coverage to each full-time worker, and copies go to both the IRS and the employee. Every Applicable Large Employer (50 or more full-time employees) must file both forms, and getting them wrong can trigger penalties of $340 per form or more.

Understanding the difference between 1094-C and 1095-C trips up even experienced HR professionals. The form numbers are nearly identical, they’re filed together, and the IRS documentation isn’t exactly light reading. But confusing these two forms, or mishandling either one, can cost your company tens of thousands of dollars in penalties.

This guide breaks down what each form does, who files which, how deadlines work, and what changes if you offer an Individual Coverage HRA (ICHRA) instead of a traditional group plan.

Schedule a consultation if you have specific questions about your ICHRA reporting obligations.

What Is Form 1094-C?

Form 1094-C is the transmittal form for ACA employer reporting. Think of it as the cover letter you attach to a stack of individual employee forms before mailing them to the IRS. You file one 1094-C per organization, and it summarizes your company’s information: EIN, address, contact person, total number of 1095-C forms being transmitted, and certifications about the health insurance you offered during the tax year.

The IRS will not accept your 1095-C filings without a correctly completed 1094-C accompanying them. This makes the transmittal form a gating document. If it’s wrong or missing, everything behind it gets rejected.

One important concept: the “Authoritative Transmittal.” If your company files 1095-C forms in multiple batches (common for large organizations), one 1094-C submission must be designated as the authoritative transmittal. This is the version the IRS uses to determine your employer shared responsibility status and whether you owe any penalties under the ACA’s employer mandate.

Key facts about Form 1094-C:

• Filed exclusively with the IRS (employees never receive it)
• One per organization per tax year
• Contains summary-level data, not individual employee details
• Must accompany every batch of 1095-C forms
• Includes certifications about coverage offers and ALE status

What Is Form 1095-C?

Form 1095-C is the employee-level form. You prepare one for every full-time employee, regardless of whether that person enrolled in your health coverage or declined it. Copies go to both the IRS and the employee.

The form has three parts:

• Part I: Employee and employer identifying information (names, SSNs, EINs, addresses)
• Part II: Information about the offer of coverage, including what was offered (Line 14), the employee’s share of the lowest-cost monthly premium (Line 15), and applicable safe harbor or other codes (Line 16)
• Part III: Covered individuals enrolled in self-insured coverage (only completed if the employer offers a self-insured plan)

Form 1095-C serves a dual purpose. The IRS uses it to determine whether an employer met ACA obligations and whether employees qualify for the premium tax credit on marketplace plans. Employees use it when filing their personal tax returns.

A critical point that practitioners on Reddit frequently highlight: you must furnish a 1095-C to every full-time employee, not just those who enrolled. All Applicable Large Employers must file 1095-C forms regardless of whether they offer coverage. The forms document the absence of coverage offers too.

1094-C vs 1095-C: Side-by-Side Comparison

The simplest way to remember the 1094-C vs 1095-C distinction: 1094-C is the envelope, 1095-C is what’s inside it. Neither works without the other.

Who Must File Forms 1094-C and 1095-C?

The ALE Threshold

Only Applicable Large Employers (ALEs) file the C variants. An ALE is generally an employer that averaged at least 50 full-time employees, including full-time equivalent employees, during the previous calendar year.

These forms must be filed whether or not the ALE offers coverage. If you have 200 full-time employees and offer no health plan at all, you still owe 200 individual 1095-C forms plus one 1094-C transmittal.

Controlled Group Rules

This is where many employers get caught off guard. Companies that are part of a controlled group (commonly owned entities under IRC Section 414) are treated as a single employer for purposes of determining ALE status. Two businesses with 30 employees each, owned by the same person, collectively hit the 50-employee threshold.

Each entity in the controlled group files its own 1094-C, but the group’s combined headcount determines whether ALE obligations apply. For a deeper explanation, see this guide on controlled group rules.

Small Employers (Under 50 FTEs)

If your business has fewer than 50 full-time equivalent employees and you’re not part of a controlled group that pushes you over the threshold, you don’t file Forms 1094-C and 1095-C. Instead, if you offer a self-insured health plan (including a self-insured ICHRA), you file Forms 1094-B and 1095-B to report minimum essential coverage.

This distinction matters. Practitioners on Reddit regularly describe confusion when small employers with ICHRAs assume they need the C forms. They don’t, unless the controlled group rules drag them into ALE territory.

How ICHRA Changes 1095-C Reporting

An ICHRA is classified as a self-insured group health plan under ACA rules, which means it qualifies as an eligible employer-sponsored plan. This has direct implications for how you fill out Form 1095-C.

ICHRA-Specific Line 14 Codes

Traditional group plans use offer codes 1A through 1E on Line 14 of the 1095-C. ICHRA employers use a different set: codes 1L through 1S. These codes indicate the type of ICHRA offer made to the employee and whether the employee’s spouse or dependents were also eligible.

For a detailed walkthrough of how these codes work, see Line 14 codes explained.

Line 15: The Affordability Amount

For traditional plans, Line 15 reports the employee’s share of the lowest-cost self-only premium. For ICHRA employers, Line 15 reports the monthly ICHRA allowance amount or the lowest-cost silver plan premium minus the ICHRA allowance, depending on the specific offer code used.

The affordability threshold for tax year 2025 is 9.02% of household income. Employers typically demonstrate affordability using one of three safe harbors: the Federal Poverty Line safe harbor, the W-2 wages safe harbor, or the rate-of-pay safe harbor. Read the full ICHRA affordability guide for specifics.

Line 16: Safe Harbor Codes

ICHRA employers indicate affordability on Line 16 using code 2F (W-2 safe harbor) or 2H (rate-of-pay safe harbor), among others. Getting this wrong can make it look like your ICHRA wasn’t affordable, which could expose employees to premium tax credit eligibility issues and your company to employer mandate penalties.

Why ICHRA Reporting Requires More Detail

ICHRA reporting requires more granular data than traditional group health plan reporting. You’re tracking individual allowance amounts, employee-specific affordability calculations by class, and coverage verification for each participant. One useful note: ICHRA reimbursements are not reported on Form W-2, unlike employer-sponsored group health plan costs.

For employers managing this complexity, SimplyHRA’s employer platform automates much of the tracking and generates audit-ready reporting.

Filing Deadlines for Tax Year 2025

For calendar year 2025, the deadlines break down as follows:

The employee furnishing deadline was permanently extended from January 31 to March 2 (30 days after the original date).

Mandatory Electronic Filing

Starting in 2024, any organization filing 10 or more ACA information returns in a calendar year must e-file them. This threshold is dramatically lower than the previous 250-form requirement. Practically every ALE will need to file electronically.

If you need extra time, you can request an extension using Form 8809, which grants an automatic 30-day extension for filing with the IRS. This does not extend the employee furnishing deadline.

The Paperwork Burden Reduction Act: A 2025 Change Most Employers Miss

The Paperwork Burden Reduction Act (PBRA) changed the rules for furnishing Forms 1095-C to employees. Under the new rules, employers are no longer required to automatically mail or distribute Form 1095-C to every full-time employee, as long as they meet certain conditions.

To take advantage of this alternative furnishing method, an ALE must post a clear, conspicuous, and accessible notice on its benefits website by March 2, 2026, informing employees that they may request a copy of their Form 1095-C.

Two important caveats:

1. You still must prepare and file all 1095-C forms with the IRS. The PBRA only eliminates the automatic distribution requirement to individuals. It does not reduce your filing obligations one bit.

2. State mandates still apply. If you operate in California, New Jersey, Rhode Island, or the District of Columbia, those jurisdictions have their own ACA reporting requirements, and you must still furnish forms to employees under those state rules regardless of the PBRA.

This is a detail most competing resources on 1094-C vs 1095-C skip entirely. But it matters, because employers who assume the PBRA eliminates all their obligations are setting themselves up for state-level penalties.

Penalties for Errors or Late Filing

The financial consequences of getting ACA reporting wrong are significant and growing.

Tiered Penalty Structure (2025 Tax Year)

These penalties apply separately for failing to file with the IRS and for failing to furnish to employees. So a single employee’s missing or incorrect 1095-C could generate up to $680 in combined penalties ($340 for the IRS copy and $340 for the employee copy).

Real-Dollar Example

Say you have 75 full-time employees and you miss the filing deadline entirely. That’s 75 missing 1095-C forms plus one missing 1094-C, totaling 76 failures at $340 each: $25,840 minimum. If the IRS determines intentional disregard, those same 76 failures cost $51,680 with no ceiling.

For deeper context on how these penalties interact with the employer mandate, see the ACA employer penalty guide.

IRS Enforcement Letters

The IRS uses two main letters to enforce ACA reporting:

• Letter 226J: Proposes an Employer Shared Responsibility Payment (ESRP) based on information from the 1094-C and 1095-C filings (or the lack thereof). For 2025, the ESRP is $241.67 per employee per month ($2,970 annualized) for failing to offer minimum essential coverage, or $362.50 per month ($4,350 annualized) for offering coverage that isn’t affordable or doesn’t provide minimum value.

• Letter 5699: Sent when the IRS has no record of your 1094-C/1095-C filings at all, asking you to confirm whether you were required to file.

Under the Employer Reporting Improvement Act, the IRS now has a six-year statute of limitations for assessing ESRPs, up from the previous three years. This means filings from 2020 onward remain subject to audit for a much longer period.

Common Mistakes to Avoid

1. Filing Only for Enrolled Employees

Every full-time employee gets a 1095-C, whether they enrolled in your plan, declined coverage, or weren’t offered anything at all. The form’s purpose is to document what was offered, not just what was accepted.

2. Assuming Your Vendor Bears Legal Responsibility

Payroll providers and benefits platforms prepare the forms, but the employer is legally responsible for accuracy. If your vendor makes a mistake, the IRS penalizes you, not them. Always review filings before submission.

3. Ignoring Controlled Group Aggregation

Two sister companies with 28 and 25 employees, respectively, might assume neither is an ALE. If they share common ownership, their combined 53 employees trigger ALE status for both entities.

4. Using Wrong Line 14/15/16 Code Combinations

Certain code combinations on Form 1095-C are logically impossible, and the IRS flags them. For example, reporting that you offered coverage (Line 14) but not including a safe harbor code (Line 16) when an employee declined creates an inconsistency. ICHRA employers face additional complexity because the 1L through 1S codes require matching affordability entries.

5. Miscounting Full-Time Equivalent Employees

Employee misclassification (treating full-time workers as part-time, or ignoring variable-hour employees) can push you over or under the 50-FTE threshold incorrectly. The financial stakes of miscounting are enormous: hundreds of thousands in penalties for a company that should have been filing but wasn’t.

6. Missing State-Specific Requirements

Even after the PBRA, California, New Jersey, Rhode Island, and DC require employers to furnish 1095-C forms to employees on their own timelines. Employers operating in multiple states need to track these requirements separately.

1095-A vs 1095-B vs 1095-C: How They All Fit Together

People searching for the difference between 1094-C and 1095-C often have a broader question: what are all these 1095 forms?

An employer that offers a self-insured health plan but is not an ALE should file Forms 1094-B and 1095-B, not the C variants. This applies to small employers offering self-insured ICHRAs. For a complete breakdown of how these forms relate, see the 1095-A vs 1095-C differences guide.

FAQ

Do I need to file both Form 1094-C and Form 1095-C?

Yes. If you’re an ALE, you must file both. Form 1094-C is the transmittal that accompanies your batch of 1095-C forms. The IRS rejects 1095-C submissions that arrive without a properly completed 1094-C.

What if my business has fewer than 50 employees?

You’re generally not required to file the C forms. If you offer a self-insured health plan or ICHRA, you would file Forms 1094-B and 1095-B instead. The exception is if you’re part of a controlled group that collectively exceeds 50 full-time employees.

Does offering an ICHRA change which forms I file?

It depends on your size. ALEs offering an ICHRA still file 1094-C and 1095-C, using ICHRA-specific codes (1L through 1S) on Line 14. Non-ALE employers offering an ICHRA file 1094-B and 1095-B to report minimum essential coverage.

Can I skip mailing 1095-C forms to employees under the Paperwork Burden Reduction Act?

Only if you post a compliant notice on your benefits website by the furnishing deadline and are prepared to provide copies upon request. You must still file all 1095-C forms with the IRS. And if you operate in California, New Jersey, Rhode Island, or DC, state rules still require furnishing.

What happens if I file late but correct the error quickly?

The IRS uses a tiered penalty system. If you correct your filing within 30 days of the due date, the penalty drops to $60 per form. Corrections made before August 1 are penalized at $130 per form. After that, the full $340 per form applies.

Is ICHRA reported on Form W-2?

No. The ACA requires employers to report the cost of employer-sponsored group health plans on W-2s, but ICHRA reimbursements are excluded from W-2 reporting. This catches some employers off guard during year-end, so it’s worth flagging with your payroll team early. For more on how reimbursement tax rules work, see our detailed guide.

How long can the IRS audit my ACA filings?

Under the Employer Reporting Improvement Act, the statute of limitations for Employer Shared Responsibility Payments is now six years. This means your 2025 filings could face scrutiny through 2031.

Getting 1094-C and 1095-C right is not optional, and the penalties for errors keep climbing. If you’re offering or considering an ICHRA, the reporting requirements add another layer of complexity that makes accuracy even more important.

Schedule a demo to see how SimplyHRA helps employers manage ICHRA compliance, including audit-ready reporting that takes the guesswork out of ACA filing season.