The IRS has released its draft instructions for Forms 1094-C and 1095-C for the 2025 tax year, outlining how Applicable Large Employers (ALEs) must report offers of health coverage to full-time employees.
While the document is still in draft form, several updates signal important changes for ACA compliance and employer reporting strategies heading into 2026.
Key Updates in the 2025 Draft Instructions
1. Extended Furnishing Deadline and Website Posting Option
Employers will have until March 2, 2026 to furnish Form 1095-C statements to employees for the 2025 calendar year — a continuation of the permanent 30-day extension granted by the IRS in recent years.
However, the draft instructions reinforce the “alternative furnishing method” that allows employers to notify employees electronically instead of mailing forms. Under this option:
- Employers may post a clear, conspicuous notice on their website stating that employees may request a copy of Form 1095-C.
- The notice must remain available through Oct. 15, 2026.
- Employers must furnish the form within 30 days of receiving a request.
This change simplifies the administrative burden of mass mailings but increases the importance of clear communication and website visibility. It’s important to note, however, this furnishing update does not apply to state ACA requirements.
If an employee lives in or moves to a state with its own ACA requirements and never received a 1095-C form during a specific tax year, you could be out of compliance with that state’s furnishing requirements.
Of the four jurisdictions — California, New Jersey, Rhode Island, and Washington D.C. — that have implemented their own individual mandate and separate Employer ACA filing and furnishing requirements, only one, Washington D.C., has specific guidance that says compliance with federal distribution standards satisfies that jurisdiction’s furnishing requirement.
2. Filing Deadlines Remain the Same
- Paper Filing Deadline: Feb. 28, 2026
- Electronic Filing Deadline: March 31, 2026
Employers filing 10 or more returns must file electronically via the IRS Affordable Care Act Information Returns (AIR) system. Those unable to e-file may submit Form 8508 to request a waiver.
3. Penalty Amounts for 2025 Tax Year
The draft instructions reaffirm updated penalty amounts:
- $340 per return or statement for failing to file or furnish correct information.
- Annual penalty caps of $4,098,500 for large employers.
- Penalties double for intentional disregard of filing requirements.
Employers should also be aware that the six-year statute of limitations on ACA enforcement now applies. This means the IRS has six years to assess penalties for missing or inaccurate filings.
4. Filing Corrections and Replacement Returns
If an employer’s ACA filing is rejected, the IRS allows 60 days to submit a corrected file to preserve the original filing date. The draft instructions emphasize the importance of prompt corrections and proper use of the “CORRECTED” checkbox when re-submitting 1094-C or 1095-C forms.
Employers using the alternative furnishing method must still provide corrected copies to employees upon request.
5. Clarifications on Substitute and Corrected Statements
Employers may issue substitute versions of Form 1095-C to employees, provided they meet all IRS layout and content requirements.
- Substitute forms must be substantially similar to the official IRS form.
- All data fields must be included on the form.
- Employers should verify alignment between employee statements and electronic filings to avoid mismatch rejections.
Preparing for the 2025 Filing Season
With these updates, ACA compliance remains as complex as ever. Employers should take proactive steps now to ensure smooth filing next year:
- Review your furnishing process. Determine whether you’ll continue mailing forms or switch to the website-notice method.
- Validate employee data early. Ensure EINs, addresses, and name fields comply with IRS formatting rules.
- Monitor for future IRS updates. These are draft instructions; final guidance may include refinements.
- Conduct a Penalty Risk Assessment. Identify and correct errors in time-tracking or coverage data before submission.
How Trusaic Can Help
Trusaic’s ACA Compliance Solutions simplify filing and eliminate risk by combining automation, accuracy, and audit-readiness:
- Seamless Integrations with HCM platforms like Workday and UKG Ready
- Automated Validation to flag data errors before filing
- Penalty Risk Assessment to uncover liabilities early
- Audit Defense and full-service support in responding to IRS notices
- End-to-End Filing Support for both federal and state mandates
Trusaic’s ACA compliance service enables you to offload 1095-C furnishing and filing responsibilities as well. Our designated support team prepares and distributes your 1095-C forms on-time to applicable employees by U.S. mail or electronically on demand.
We offer our clients two options to choose from:
- e-Distribution + Print and Mail (CA, RI, NJ only)
- Print and Mail only
Option 1 is our recommended approach and organizations can e-distribute with ease utilizing Trusaic’s platform. Our e-distribution platform makes it easy for an employer to notify their employees of the option to receive their forms while providing them with a link where they can access the form electronically.
This also simplifies any employee follow-up requests for a form as the employer can simply resend the link to their employee giving them digital access to their forms. This ensures all your forms are distributed on-time and can be easily tracked for compliance purposes.
Book a meeting to learn how other companies are adopting this approach to Form 1095-C furnishing.