Section 6056 of the Internal Revenue Code requires every Applicable Large Employer to tell the IRS whether it offered health coverage to its full-time employees and, if so, what that coverage looked like. In practical terms, the IRC 6056 reporting requirements mean filing Form 1094-C and a Form 1095-C for each full-time employee, furnishing a copy of the 1095-C to that employee, and doing all of it on the IRS’s schedule using the correct month-by-month codes. The filings are how the IRS decides whether you owe a shared responsibility penalty and whether your employees qualify for premium tax credits on the Marketplace.
Whether Section 6056 Applies to You
Only Applicable Large Employers file under Section 6056. You are an ALE if your average workforce during the prior calendar year included 50 or more full-time employees, counting full-time equivalents. A full-time employee is anyone averaging at least 30 hours per week or 130 hours per month.1Internal Revenue Service. Identifying Full-Time Employees Part-time hours are combined each month and divided by 120 to produce an FTE count, added to the full-time headcount, then averaged across the twelve months of the prior year.2Internal Revenue Service. Determining if an Employer Is an Applicable Large Employer
Employers under 50 have no Section 6056 obligation at all.
Controlled Groups
Companies under common ownership or otherwise related under the aggregation rules of IRC Section 414 are treated as a single employer for the 50-employee count. If three commonly owned companies together reach 50 full-time employees including FTEs, every company in the group is an ALE member, even one with only 10 employees. Each ALE member files its own Forms 1094-C and 1095-C, and any shared responsibility penalty is assessed separately against each member.2Internal Revenue Service. Determining if an Employer Is an Applicable Large Employer A small professional practice that assumes it is exempt because it has 15 employees can be caught by this if the owner controls another business with 40.
The Seasonal Worker Exception
There is a narrow carve-out. If your workforce exceeded 50 full-time employees including FTEs for 120 days or fewer during the calendar year, and the workers pushing you over the line were seasonal, you are not an ALE for the following year.2Internal Revenue Service. Determining if an Employer Is an Applicable Large Employer Both conditions must hold. Non-seasonal hires above 50, or seasonal workers keeping you above 50 for more than 120 days, and the exception is gone.
What You File: Forms 1094-C and 1095-C
Form 1094-C is the transmittal. It summarizes your filing and certifies whether you offered coverage to at least 95% of your full-time employees. Each ALE member files one Form 1094-C, regardless of headcount.3Internal Revenue Service. Questions and Answers About Information Reporting by Employers on Form 1094-C and Form 1095-C
Form 1095-C is where the substance lives. You complete one for every employee who was full-time during any month of the calendar year, and you furnish a copy to each of them. Part II of the form requires month-by-month detail on three lines.4Internal Revenue Service. Instructions for Forms 1094-C and 1095-C
Line 14: The Offer of Coverage
Line 14 takes a Series 1 code (1A through 1U) describing what type of coverage, if any, you offered that month. Code 1A signals a Qualifying Offer: coverage that met minimum essential coverage and minimum value standards, with the employee’s share of the self-only premium at or below a specified threshold. The code you enter is how the IRS decides whether you met your obligation to offer coverage.4Internal Revenue Service. Instructions for Forms 1094-C and 1095-C
Line 15: The Employee’s Required Contribution
Line 15 reports the employee’s required monthly contribution for the lowest-cost self-only plan that provided minimum value. You enter this amount even if the employee declined coverage or picked a different plan, because the IRS uses it to test affordability. Leave Line 15 blank only when Code 1A is on Line 14 (a Qualifying Offer already meets affordability) or when no offer was made. Common mistake: entering the family plan rate, the plan the employee actually chose, or the amount net of a wellness incentive. Any of those can make affordable coverage look unaffordable on paper and invite a penalty letter you then have to fight.
Line 16: Status and Safe Harbors
Line 16 takes a Series 2 code (2A through 2I) that does one of two things: it reports the employee’s status (2A means not employed that month, 2B means not full-time) or it claims an affordability safe harbor. Code 2C, for example, identifies the Rate of Pay safe harbor. Lines 14 and 16 have to line up logically to describe what actually happened each month; mismatched codes are the most common cause of IRS follow-up.4Internal Revenue Service. Instructions for Forms 1094-C and 1095-C
Part III for Self-Insured Plans
If you self-insure, you also complete Part III of Form 1095-C, reporting the individuals actually enrolled each month, including dependents. Fully insured ALEs skip Part III; the carrier reports enrollment on Form 1095-B.
2026 Deadlines
For the 2025 tax year, reported in 2026, the deadlines are:5Internal Revenue Service. First Quarter Tax Calendar
- March 2, 2026: paper filing of Forms 1094-C and 1095-C with the IRS. The statutory February 28 date falls on a Saturday, pushing it to Monday.
- March 2, 2026: furnish Form 1095-C copies to full-time employees. Final IRS regulations made this March date permanent, replacing the original January 31 deadline.
- March 31, 2026: electronic filing of Forms 1094-C and 1095-C with the IRS.
An automatic 30-day extension is available by filing Form 8809 on or before the original due date, with no signature or explanation required. A second 30-day extension is available in hardship situations, but that request must be on a paper Form 8809 with an explanation.4Internal Revenue Service. Instructions for Forms 1094-C and 1095-C
Electronic Filing Is Effectively Mandatory
If you file 10 or more information returns of any type during the calendar year, counting W-2s, 1099s, 1095-Cs, and everything else together, electronic filing is required.6Internal Revenue Service. Affordable Care Act Information Returns (AIR) Any company with 50 or more full-time employees clears that threshold easily. Paper filing when you were required to file electronically is treated as failure to file, and the penalties are the same as not filing at all.
Electronic filing goes through the IRS’s Affordable Care Act Information Returns (AIR) system, which requires a Transmitter Control Code. Apply for the TCC well ahead of the deadline.6Internal Revenue Service. Affordable Care Act Information Returns (AIR)
The 2026 Affordability Threshold
For plan years beginning in 2026, coverage is affordable if the employee’s required contribution for self-only coverage does not exceed 9.96% of household income.7Internal Revenue Service. Revenue Procedure 2025-25 Because employers cannot see household income, the IRS provides three safe harbors, the W-2 wages safe harbor, the Rate of Pay safe harbor, and the Federal Poverty Line safe harbor, and the one you use is what you report on Line 16. The percentage adjusts annually, so recalculate before each plan year if your contributions run near the limit.
Penalties for Late or Incorrect Reporting
Errors on Forms 1094-C and 1095-C trigger penalties under IRC Sections 6721 (failure to file correct returns with the IRS) and 6722 (failure to furnish correct statements to employees). These are separate. One mistake can hit you twice if the same error appears on the IRS filing and the employee copy.
For returns due in 2026, the amounts scale by how quickly you fix the problem:8Internal Revenue Service. Information Return Penalties
- Corrected within 30 days of the due date: $60 per return or statement.
- Corrected after 30 days but by August 1: $130 per return or statement.
- Not corrected by August 1, or never filed: $340 per return or statement.
- Intentional disregard: $680 per return or statement, with no annual cap.
Annual caps limit exposure for non-intentional failures and vary by employer size. An employer with average gross receipts above $5 million is capped at $4,098,500 per year in the highest tier; smaller employers with gross receipts of $5 million or less are capped at $1,366,000.9Internal Revenue Service. Internal Revenue Manual 20.1.7 – Information Return Penalties Caps do not apply to intentional disregard.
Reasonable Cause Relief
The IRS can waive these penalties if you show the failure was due to reasonable cause and not willful neglect.10Office of the Law Revision Counsel. 26 U.S.C. 6724 – Waiver; Definitions and Special Rules You need to demonstrate ordinary business care, compliance systems that were actually in place, and something outside your control that prevented timely or accurate filing. The IRS looks at factors like natural disasters, destruction of records, serious illness of key personnel, and reliance on erroneous IRS advice. If a payroll vendor mishandled data and you had reasonable oversight, you have an argument. If you simply never got to it, you do not.
How 6056 Reporting Feeds the Bigger Penalty
The reporting penalties above punish paperwork. The employer shared responsibility penalties under IRC Section 4980H punish the underlying failure to offer adequate, affordable coverage, and they are the reason accurate 6056 reporting matters so much. The IRS uses your Forms 1094-C and 1095-C to identify who owes a 4980H assessment.
For 2026, both types of 4980H penalty have increased:11Internal Revenue Service. Questions and Answers on Reporting of Offers of Health Insurance Coverage by Employers (Section 6056)
- 4980H(a), failure to offer coverage: if you fail to offer minimum essential coverage to at least 95% of your full-time employees and their dependents, and at least one full-time employee gets a premium tax credit on the Marketplace, the penalty is roughly $3,340 per year for each full-time employee minus the first 30. At 200 full-time employees, that is about $568,000 annually.
- 4980H(b), unaffordable or inadequate coverage: if you offer coverage but it fails affordability or minimum value, the penalty is roughly $5,010 per year for each full-time employee who receives a premium tax credit. It is narrower than 4980H(a) but the per-employee amount is higher.
Sloppy Line 14, 15, and 16 codes can make it look like you failed to offer coverage when you actually did, generating an incorrect 4980H letter you then have to defend against. Getting the codes right is the primary defense.
Errors That Cause the Most Trouble
Misidentifying who counts as full-time is the most damaging mistake. Under the monthly measurement method, an employee who averages 130 hours in one month and 110 in the next flips between full-time and non-full-time. Miss even one full-time month and the missing 1095-C is treated as a failure to file.
Line 15 dollar amounts drawn from the wrong plan, as noted above, are a close second. Controlled group blind spots come next, particularly for owners with interests in multiple entities that individually look too small to be ALEs.2Internal Revenue Service. Determining if an Employer Is an Applicable Large Employer And treating the electronic filing threshold as optional stacks a filing penalty on top of whatever substantive issues the returns already contain.