Forms 1094/1095-C

What Happens When You Don’t File Forms 1094/1095-C

If you don’t file Forms 1094/1095-C as required, the IRS will assess penalties and send you notices. These forms are required for large employers, and they request details about the health insurance coverage provided to your employees. 

To help, this guide explains what to expect if you receive Letter 5699 about these unfiled forms. It also outlines your filing requirements and what to do if you’re exempt from filing these forms. 

Key takeaways

• Form 1095-C – Must be provided to employees by large employers to show that the employer offered health insurance.
• Form 1094C – Should be sent to the IRS with copies of the 1095-C forms provided to your employees.
• Why – Required for large employers under the Affordable Care Act.
• Risk of ACA non-compliance – May be subject to significant penalties – thousands per employee.

The tax attorneys at The W Tax Group have extensive experience dealing with unfiled information returns and penalties — contact us today.

Table of Contents

• Who needs to file Forms 1094/1095-C?
• How to determine if you are a large employer
• What is IRS Form 1095-C?
• What is IRS Form 1094-C?
• Deadlines for filing these forms
• How the IRS uses these employee health insurance forms
• Penalties for not filing Forms 1094/1095-C
• Penalties for not complying with the ACA
• What is affordable coverage under the ACA?
• What to do if you receive Letter 5699
• How to stay ACA-compliant

Who Needs to File Form 1094/1095-C?

Applicable Large Employers (ALEs) are required to file these forms. ALEs are defined as employers with at least 50 full-time equivalent (FTE) employees in the previous year. 

For example, if you employed 50 or more full-time employees in 2020, you are required to prepare and distribute Form 1095-C to the full-time employees working for you during 2021.

How to determine if you are an ALE

The IRS uses a very specific formula to calculate how many employees you have. First, you must add up all of your full-time employees. Then, you must look at the hours worked by part-time employees to calculate your “full-time equivalents” (FTEs).

To determine if you are an ALE, work through these steps:

1. Count the number of full-time employees during every month of the year – this includes any employee who worked more than 30 hours per week on average during the month.
2. Add up all of the hours worked by non-full-time employees for every month and divide by 120.
3. Add together the results from lines one and two, which should include employee counts from all 12 months of the year.
4. Divide the total by 12.
5. If the result is 50 or more, you are an ALE and must file these forms the next year. 

Note that if any part-time employee had more than 120 hours for the month, they should be counted as a full-time employee. 

What if I hire new employees during the year?

Add the new employees to your count for the month they are hired. If that brings your annual number to over 50, you are an ALE for the following year.

How do new employers figure out if they are ALEs?

New employers are considered ALEs during their first year of business if they reasonably expect to have 50 or more FTEs for the year. 

What Is Form 1095-C?

Mandatory for ALEs since 2015, Form 1095-C is a form that you provide to your employees to prove that you provided or offered health insurance to them. It requires the following information:

• Employee name, Social Security Number, and address.
• Employer name, Employer Identification Number, and address.
• The health insurance coverage offered to the employee.
• The lowest-cost premium available to the employee.
• The months of the year when the coverage was available.

You must provide this form to all of your employees who are eligible for coverage, even if they didn’t participate in your health plan. You must distribute or postmark these forms by the last day of January along with W2s, 1099-NECs, and other employee tax documents.

Do I need 1095-C to file my taxes?

No, individuals no longer need this form to file their taxes. However, businesses with over 50 employees are still legally required to provide health insurance to their employees and may face penalties if they don’t provide this form.

What Is Form 1094-C?

The 1094-C is basically a “cover sheet” for the 1095-C forms. When you send your employees’ 1095-C forms to the IRS, you also send a completed Form 1094-C. These forms are due on February 28 if you file on paper and by March 31 if you e-file.

Employers with fewer than 250 employees can choose whether they want to mail a paper return or e-file. If you have 250 or more employees who receive 1095-C forms, you must e-file.

This form requires the following details:

• The name, address, phone number, and EIN of your business.
• The number of full-time employees you have.
• The name of a contact person.
• How many 1095-C forms were generated for your employees.

If you’re filing as part of an Aggregated ALE Group, you must list the other members of your aggregated group.

Deadlines for Form 1094-C and 1095-C

As indicated above, here are the deadlines for these forms:

• Providing 1095-C to employees – Jan 31st
• Paper filing 1094-C and sending copies of 1095-C to the IRS – February 28th
• E-filing 1094-C and sending copies of 1095-C to the IRS – March 31st

How the IRS Uses Forms 1095-C and 1094-C

The IRS needs information from the 1095/1094-C forms to track compliance with the Affordable Care Act (ACA). If employers are supposed to offer coverage but don’t, they must pay a penalty. The IRS uses these forms to identify which employers should face a penalty.

After the IRS identifies an ALE that could be responsible for an Employer Shared Responsibility Payment (ESRP), the IRS usually sends the ALE Letter 226J. After getting this letter, the ALE can either acknowledge its responsibility for the ESRP or explain why it believes it doesn’t have to make this payment.

How does the IRS know if you are an ALE?

The IRS uses information from payroll tax forms to spot employers who should have filed the ACA health insurance forms. The agency also uses details on individual employees’ tax returns – in particular, the IRS can see which of your employees claims the premium tax credit (PTC) for buying insurance on the marketplace.

Penalties for Not Filing or Incorrectly Filing Forms 1094/1095-C

As of 2025, the IRS can assess the following civil penalties if you fail to file these forms:

• $60 per form if you file within 30 days of the due date, up to $683,000.
• $130 per form if you file more than 30 days late but before August 1, up to $1.049 million.
• $340 per form if you file after August 1, up to $4.098 million.

For example, say that you have 99 employees and you don’t file any of these forms. Then, you may receive 99 penalties for not filing 99 1095-C forms and an additional penalty for not filing the 1094-C form. Your penalty will be $340 * 100 or $34,000.

Penalties for ACA Noncompliance

Additionally, the IRS can impose much stricter penalties for a general lack of ACA compliance. 

4980H(a) penalty (aka hammer penalty)

You incur this penalty if you don’t offer adequate health insurance to 95% of your employees. As of 2025, the penalty is $241.67 per employee per month or annualized at $2970. Take your total FTEs, subtract 30, and then multiply the total by the penalty.

4980H(b) penalty 

As of 2025, if you offer coverage that doesn’t provide minimum value or is not considered affordable, your penalty will be $362.50 per month or annualized at $4350 for each employee who received a premium tax credit.

For instance, if you had 10 employees claim PTC for 12 months of the year, your penalty is the annualized penalty times 10 or $43,500.

What if you’re liable for both penalties?

If a business is liable for both penalties, the IRS charges the higher amount. You will not be assessed both the 4980H(a) and (b) penalties at the same time. 

What is considered to be affordable coverage?

ALEs must offer affordable coverage to their employees. As of 2025, the ACA defines affordable coverage as a plan where the lowest cost, self-only minimum coverage costs the employee 9.02% or less of their household income. However, employers don’t always know their employees’ household income, so the law offers employers three safe-harbor calculations. 

Under the following three methods, the employee’s required contribution for the lowest cost, self-only, minimum coverage is affordable if:

• W-2 safe harbor: Less than 9.05% of their W-2 wages. 
• Rate of pay safe harbor: Less than 9.05% of a salaried worker’s monthly wage or less than 9.05% of 130 hours times the employee’s hourly wage (use their lowest wage if their wage changed during the period). 
• Federal poverty line: Less than 9.05% of the federal poverty line for a single individual.

What to Do If You Receive Letter 5699

Generally, the IRS makes initial contact with employers by sending Letter 5699 (Missing Information Return Form 1094/1095-C). This letter outlines the following reasons for not filing, along with these resolution options:

• If you filed under a different EIN – provide the name, EIN, and date that you used when filing.
• If you are not an ALE – respond with information to prove that you don’t have that many employees.
• If you should have filed but didn’t – submit the delinquent forms now or send in an explanation of when you will be able to e-file them.
• If you had another reason not to file these forms – contact the IRS or reach out to a tax pro for help.

Ideally, you should get help dealing with this letter, and you should respond as soon as possible. 

How to Stay Compliant With ACA Regulations

To stay compliant with ACA regulations and to avoid these penalties in the future, keep these tips in mind:

• Stay up to date on ACA requirements – consult with a CPA or business tax specialist for help. 
• Calculate your full-time and full-time equivalent employees monthly if you think you may be close to the filing threshold.
• Work with a payroll company or use software that can help you generate these forms. 
• Make sure your employees understand that they should be utilizing your coverage and not applying for insurance on the marketplace.

Get Help with Late, Unfiled, or Incorrect 1095-C Forms.

If you have received an IRS notice, don’t ignore it. Instead, get help from a tax professional who understands how the IRS works. At The W Tax Group, our tax attorneys have the experience and knowledge you need — contact us for help with ACA filing requirements or other business tax problems today.

Lead Tax Attorney at The W Tax Group

Stephen A Weisberg