ACA information reporting is a separate compliance requirement from offering health coverage — and mistakes in Forms 1094-C and 1095-C can lead to IRS penalties even when your benefits program is running smoothly. For HR administrators, payroll managers, and controllers, understanding what’s actually required (and what common assumptions are wrong) can prevent costly errors during filing season.
Affordable Care Act (ACA) compliance isn’t just about offering health coverage—it also includes information reporting. Each year, many employers and other coverage providers must file forms such as 1094-C/1095-C (generally for Applicable Large Employers, or ALEs) or 1094-B/1095-B (generally for certain insurers and coverage providers).
Because the rules can be technical, misinformation is common. Here are five of the biggest question-based myths about ACA information reporting—and the facts that clear them up.
#1 – Do Only Large Employers Have to File ACA Information Returns?
Myth
“Only big companies have to file ACA information returns.“
Reality
Not only “big companies” file—some smaller employers and other entities may have reporting obligations too.
It’s true that Applicable Large Employers (ALEs)—generally those averaging 50+ full-time employees (including full-time equivalents)—have major ACA reporting duties (typically using 1094-C/1095-C).
But ACA reporting can also apply to:
Insurance carriers (who report on individuals they insured)
Employers with self-funded (self-insured) plans (who may report individuals enrolled even if they’re not an ALE, depending on structure and rules)
Other coverage providers in specific situations
Takeaway: “Not an ALE” doesn’t automatically mean “no ACA reporting.” The right answer depends on who provided the coverage and how the plan is funded.
#2 – Does Offering Coverage Mean You Don’t Need to File ACA Forms?
Myth
“If we offered coverage, we don’t need to worry about the forms.“
Reality
Offering coverage and reporting coverage are two different requirements.
Even when an employer does everything right operationally—making an offer of coverage, managing enrollments, tracking eligibility—ACA reporting is still a separate compliance obligation. The IRS uses these filings to confirm (among other things):
whether an ALE offered coverage to full-time employees,
whether coverage met key requirements for the employer mandate,
and, historically, how individuals satisfied coverage rules.
In practice, many penalties and compliance issues come not from the coverage itself, but from missing, late, or inaccurate forms.
#3 – Is Form 1095-C Only for Employees Who Enrolled in Coverage?
Myth
“Form 1095-C is only for employees who enrolled in our plan.“
Reality
For ALEs, 1095-C often goes to full-time employees—even if they declined coverage.
A common mistake is assuming the 1095-C is like a “proof of enrollment” form. For ALEs, Form 1095-C is primarily about the offer of coverage and related details.
Depending on the situation, ALEs may need to furnish 1095-C to:
employees who were full-time for at least one month (even if they waived coverage),
employees who enrolled in a self-funded plan (because enrollment reporting is also required in those cases).
Takeaway: Enrollment is not the only trigger. Offer and full-time status matter.
#4 – Is Your Payroll Vendor Responsible for ACA Filing Compliance?
Myth
“If we use a payroll vendor or benefits administrator, they’re responsible for filing—so we’re covered.“
Reality
Vendors can help, but the employer is typically still accountable.
Many organizations rely on a third party (payroll provider, benefits admin, broker, or ACA reporting vendor) to prepare and submit ACA forms. That can be efficient and smart—but it doesn’t automatically transfer legal responsibility.
Common pitfalls include:
relying on vendor defaults that don’t match your plan design,
incomplete employee measurement/eligibility data,
errors from missed dependent SSNs/DOBs (where required),
assuming filings are complete without reviewing drafts.
Takeaway: Even with a vendor, employers should validate data, review filings, and keep documentation.
#5 – Can You Fix ACA Filing Mistakes Later Without Consequences?
Myth
“If we make a mistake, we can just fix it later with no consequences.“
Reality
Corrections are allowed, but timing and accuracy still matter—and penalties can apply.
The IRS does allow corrected returns, and many organizations do need them. But errors can still trigger:
IRS notices,
employee confusion (and extra HR workload),
potential penalties for late, incomplete, or incorrect returns, depending on the facts.
Also, some “small” errors aren’t so small—like using the wrong coverage codes, offering coverage dates incorrectly, or misclassifying full-time status. Those issues can ripple into compliance risk.
Takeaway: Build a process that prevents errors early, and correct quickly when needed.
Practical Wrap-Up: What to Remember About ACA Information Reporting
ACA information reporting is less about “paperwork for paperwork’s sake” and more about proving compliance through consistent data. The most common failures aren’t malicious—they’re procedural:
misunderstanding who must file,
confusing enrollment with offer reporting,
assuming a vendor eliminates responsibility,
and underestimating the impact of “small” coding or data mistakes.
PRO TIP: Speak with a professional HR Consultant. Many payroll/HRIS software platforms are limited to a single option for filing ACA Information reports which may not be the best option for your organization. Adverse reviews by the IRS can be costly.
Don’t assume your vendor has it covered.
REDW’s HR Consulting team helps employers — including Tribal governments and their enterprises — navigate ACA information reporting, vendor validation, and compliance reviews.
Connect with our team to make sure your filings are accurate and on time.
