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ACA Reporting and the Employer Mandate for 50+ Employees
Applicable Large Employer status triggers at an average of 50 full-time-equivalent employees in the prior year, counting part-time hours toward the total, not just headcount. The 2026 no-offer penalty is $3,340 per employee, and the wrong-offer penalty is $5,010. BEG can produce the monthly hours-of-service count that decides ALE status, at $45 per employee monthly.
The FTE math that catches growing employers off guard
A business owner who counts 45 people on the payroll and assumes ACA reporting does not apply yet is often wrong. Applicable Large Employer status is not a headcount test, it is a full-time-equivalent test. Part-time hours get converted into the FTE calculation and added to the full-time count, so a company with 45 W-2 employees and a rotating group of part-timers can easily average 50 full-time-equivalent employees over the prior calendar year without anyone on the leadership team realizing it happened.
The trigger, precisely
ALE status is set by an average of at least 50 full-time employees, including full-time equivalents, during the prior calendar year. Full-time means 30 or more hours of service a week, or 130 a month, and that FTE conversion is what makes the calculation different from simply counting badges.
Filing mechanics and the 2024 furnishing change
ALEs must file Form 1094-C as the transmittal, plus a Form 1095-C for every full-time employee. For calendar year 2025, the deadline was March 2, 2026 on paper or March 31, 2026 electronically, and any filer with 10 or more information returns in aggregate must file electronically. Furnishing got easier in 2024: since January 31 of that year, employers may post a clear and conspicuous website notice instead of mailing every 1095-C, though a copy still has to reach an employee within 30 days of a direct request.
What a miss actually costs in 2026
| Penalty | 2026 amount |
|---|---|
| 4980H(a), no offer of coverage | $3,340 per full-time employee, minus the first 30 |
| 4980H(b), unaffordable or insufficient offer | $5,010 per employee who receives a premium tax credit |
These employer shared responsibility payments sit on top of separate reporting penalties: $340 per return for failing to file or furnish a correct 1095-C, capped at $4,098,500 a year, and another $340 per return for filing on paper when electronic filing was required.
Affordability in 2026
For plan years beginning in 2026, the employee's required contribution for self-only coverage cannot exceed 9.96 percent of household income, applied in practice through one of three safe harbors: W-2 wages, rate of pay, or the federal poverty line.
Where BEG fits, and where the add-on line sits
The hours data that decides ALE status and full-time status in the first place lives in the payroll system BEG runs, so BEG can produce the monthly hours-of-service count with or without the benefits add-on. Form 1094-C and 1095-C preparation and filing sit in the Managed Benefits add-on at $10 PEPM, not the base payroll fee; without the add-on, the client's benefits broker or TPA files those forms. Plan design, affordability safe-harbor selection, and any Letter 226J response stay with the client's broker and counsel either way.
Full BEG managed payroll keeps the underlying hours-of-service data accurate every pay period.
Managed Payroll, Handled.
BEG manages payroll at $45 per employee per month, all-inclusive. Get an instant cost comparison for your business.
Frequently Asked Questions
How does a business get caught off guard by ALE status?
By counting only full-time headcount and ignoring part-time hours. A company with 45 employees on a W-2 and a rotating group of part-timers can still average 50 full-time-equivalent employees once those part-time hours are converted into the FTE formula, which is exactly what the calculation is designed to catch.
What is the exact Applicable Large Employer trigger?
An average of at least 50 full-time employees, including full-time equivalents, during the prior calendar year. Full-time means 30 or more hours of service a week, or 130 a month, and FTEs are computed by converting part-time hours into full-time equivalents.
What forms does an Applicable Large Employer have to file?
Form 1094-C as the transmittal, plus a Form 1095-C for every full-time employee. For calendar year 2025, the deadline was March 2, 2026 on paper or March 31, 2026 electronically, and any filer with 10 or more information returns in aggregate must file electronically.
Does every 1095-C still have to be mailed to employees?
No, not since January 31, 2024. Employers may post a clear and conspicuous website notice instead of mailing every 1095-C, but must still furnish a paper or electronic copy within 30 days of an employee request.
What is the 2026 penalty for not offering coverage at all?
The 4980H(a) penalty is $3,340 per full-time employee, minus the first 30, if coverage is not offered to at least 95 percent of full-time employees and at least one employee receives a premium tax credit.
What is the 2026 penalty for an unaffordable or insufficient offer?
The 4980H(b) penalty is $5,010 per employee who receives a premium tax credit because the coverage offered was unaffordable or did not provide minimum value.
What counts as affordable coverage for 2026?
The employee’s required contribution for self-only coverage cannot exceed 9.96 percent of household income for plan years beginning in 2026, applied in practice through the W-2, rate-of-pay, or federal poverty line safe harbors.
What are the penalties for filing an incorrect 1095-C?
For 2025 returns, $340 per return for failing to file or furnish a correct form, up to $4,098,500 a year, and a separate $340 per return for filing on paper when electronic filing was required.
Does BEG file Forms 1094-C and 1095-C?
Only through the optional Managed Benefits add-on at $10 PEPM. The hours data that decides ALE and full-time status lives in the payroll system BEG runs, so BEG can produce the monthly hours-of-service count either way, inside standard managed payroll at $45 per employee monthly. Without the add-on, the client's benefits broker or TPA handles the actual filing.
Related Resources
Anthony leads payroll solutions at Business Executive Group, a national managed payroll firm serving businesses across industries. BEG manages payroll at $45 PEPM, all-inclusive, with deep expertise in compliance, multi-state filing, and industry-specific payroll requirements. Get instant pricing at beghr.com.
Sources: IRS, Employer Shared Responsibility Q&A; IRS, Instructions for Forms 1094-C and 1095-C; Rev. Proc. 2025-26; Rev. Proc. 2025-25. This is general compliance information, not tax or legal advice.
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