For employers subject to the Affordable Care Act (ACA) reporting requirements, filing Forms 1094-C and 1095-C is only part of the process. Just as important is understanding how that information is transmitted to the IRS, what happens after submission, and how to interpret the results. A clear understanding of these steps can help reduce errors, avoid delays, and minimize compliance risk.
Applicable Large Employers (ALEs) are required to report information about the health coverage they offer to employees. Form 1095-C is provided to employees and includes details about the coverage offered, months of eligibility, and affordability. Form 1094-C serves as the transmittal form submitted to the IRS and summarizes the employer’s reporting at a higher level.
While these forms are familiar to most HR and payroll teams, the accuracy of the data behind them is what drives successful filing. Information such as employee hours, eligibility status, enrollment elections, and coverage offers must align across systems before submission. Even small inconsistencies can result in IRS rejections or follow-up notices.
ACA reporting is submitted electronically through the IRS’s AIR (Affordable Care Act Information Returns) system. This is a secure system designed specifically for transmitting ACA data in a standardized XML format.
Unlike uploading a simple document, the AIR system requires structured data that meets specific formatting and validation rules. Most employers work with a vendor like BAS to generate and transmit these files, as the technical requirements are detailed and must align precisely with IRS specifications.¬
Before a file is accepted, it passes through multiple validation checks within the AIR system. These checks review formatting, required fields, and data consistency. If the file does not meet IRS standards, it will be rejected and must be corrected and resubmitted.
Once a file is transmitted, the IRS provides acknowledgment responses that indicate the status of the submission. These responses are a critical part of the process and should be reviewed carefully.
An “Accepted” status means the file was successfully received and passed validation checks. An “Accepted with Errors” status indicates that the file was processed, but certain records may contain issues that should be reviewed and potentially corrected. A “Rejected” status means the file did not pass validation and must be corrected before resubmission.
It is important to understand that submission alone does not complete the process. Employers remain responsible for reviewing IRS acknowledgments, addressing any errors, and ensuring that final data is accurate and complete.
ACA transmission is more than a filing requirement. It is a data-driven compliance process that depends on coordination between HR, payroll, and benefits administration. Errors in reporting can lead to IRS notices, penalties, or employee confusion.
By understanding how Forms 1094-C and 1095-C are transmitted, how the AIR system processes data, and what happens after submission, employers can take a more proactive approach. Strong data validation, clear internal processes, and timely review of IRS responses all contribute to a smoother filing experience and better compliance outcomes.
As ACA reporting continues to evolve, maintaining accurate data and a disciplined transmission process remains one of the most effective ways to reduce risk and ensure compliance.
BAS is authorized to transmit ACA reporting data to the IRS through the AIR system on behalf of its clients, helping ensure that filings meet required formatting and validation standards. Our team supports the full process, from data preparation through submission and response review. If you have questions about ACA filings or want to learn more about BAS’ ACA data collection and reporting services, please contact BAS at solutions@basusa.com or 1-888-945-5513.
Benefit Allocation Systems (BAS) provides best-in-class, online solutions for: Employee Benefits Enrollment; COBRA; Flexible Spending Accounts (FSAs); Health Reimbursement Accounts (HRAs); Leave of Absence Premium Billing (LOA); Affordable Care Act Record Keeping, Compliance & IRS Reporting (ACA); Group Insurance Premium Billing; Property & Casualty Premium Billing; and Payroll Integration.
MyEnroll360 can Integrate with any insurance carrier for enrollment eligibility management (e.g., Blue Cross, Blue Shield, Aetna, United Health Care, Kaiser, CIGNA and many others), and integrate with any payroll system for enrollment deduction management (e.g., Workday, ADP, Paylocity, PayCor, UKG, and many others).
This article is for informational purposes only and is not intended as legal, tax, or benefits advice. Readers should not rely on this information for taking (or not taking) any action relating to employment, compliance, or benefits. Always consult with a qualified professional before making decisions based on this content.