Elizabeth Raggio, JD
The IRS recently published final instructions for Forms 1094-B and 1095-B and Forms 1094-C and 1095-C reporting health
coverage information for the 2023 tax year. These instructions reflect that any business who files ten (10) or more returns
of any sort (including W2s, 1099s, and 1095 Forms) MUST file electronically through the correct IRS system. For ACA,
employers must file through the AIR system via XML software once the employer has applied for and been granted its
TCC.1. Employers who incorrectly file via paper could face penalties of $310 per form filed.
Note, Employers can file Form 8508 Waiver (allowing them to file by paper) and this waiver will be automatically granted for the first year only2
This change in the electronic filing requirements will be especially felt by smaller employers, who relied on the ability to
file forms on paper in previous tax years when they were submitting fewer than 250 returns. Consider a small employer
reporting 35 employees and their dependents enrolled in their level funded group health plan using Form 1095-B. In
previous tax years, this employer may have relied on the third-party administrator (TPA) to provide specific data elements
that the employer used to populate these forms, which were then submitted on paper. Filing these same forms on paper
in 2024 would equate to a $10,850 penalty!
Now, let’s take this a step further and assume this same employer with a level funded product is actually an Applicable
Large Employer (ALE).3 While only 35 employees enrolled, this employer had a few employees waive and another handful
of part-time, not eligible employees making them an ALE, even though their benefits might have been written on a small
group benefit plan. Instead of filing Forms 1094-B and 1095-B, this employer should have been reporting its health
coverage offering using Forms 1094-C and 1095-C. If the employer does not realize its mistake, it may receive IRS Letter
5699 from the IRS and risks exposure to $310 penalties per form required to filed and furnished. In other words, those civil
penalties will be doubled.
With the expiration of good faith transition relief and increased IRS enforcement of these health coverage reporting
requirements, it is more important now than ever for employers to understand which filing requirements apply to them.
Employers who have previously filed these forms on paper should be working with their TPAs now to understand what
information they will receive and the level of assistance they can expect.
If you need assistance with filing your 1094 and 1095 forms electronically or understanding which filing requirements apply
to you, we have the resources to help. Reach out to our sister services company, ETC Companies, for more information.
You can reach them at firstname.lastname@example.org or call 210-323-7846.
1 htps://www.irs.gov/e-file-providers/air/apply-for-the-affordable-care-act-application-for-transmiter-control-code-tcc 2 htps://www.irs.gov/pub/irs-pdf/f8508.pdf 3 If you are unsure if you are an ALE, use this link: htps://www.eligibilitytrackingcalculators.com/wp-content/uploads/2023/09/ALEDetermination-using-FTE-Calculations-FINAL-Aug-2023-ETC-1.pdf