Do I Have to File ACA Reports?

Every year around tax time, a certain question starts coming up in our conversations with clients: “Do we have to file those ACA forms?” Sometimes the answer is a clear yes. Sometimes it’s a clear no. And sometimes it requires a little math that nobody warned you about when you were building your business. Here’s what you need to know — in plain English, not IRS-speak.

“The ACA doesn’t ask what you intended. It asks what your numbers say.”

ACA reporting applies to Applicable Large Employers — and only them

The Affordable Care Act requires something called ACA reporting from employers who meet a specific size threshold. Each year, these employers must report whether they offered health coverage to their full-time employees — and whether that coverage met the ACA’s standards for affordability and minimum value.

Miss the filing, file late, or file incorrectly, and the penalties add up fast. But before you worry about any of that, the first question is simply: does this apply to you?

The answer comes down to whether you qualify as an Applicable Large Employer, or ALE.  An ALE is an employer who averaged 50 or more full-time employees — including full-time equivalents — during the preceding calendar year.

That last part matters: you’re not counting your current headcount. You’re looking back at last year’s average. So if you crossed 50 employees in 2025, you’re an ALE for 2026 reporting purposes — even if you’ve since scaled back.

Two types of employees count — and they count differently

This is where most employers get tripped up. The ACA doesn’t just count heads. It has specific definitions for who counts as full-time and how part-time hours get factored in.

Full-time employee

Under the ACA, a full-time employee is someone who averages at least 130 hours per month. Note that this is a monthly average — not weekly. 130 hours a month works out to roughly 30 hours per week, which is lower than the standard 40-hour definition most employers think of.  This is important: an employee who works 30 hours a week is a full-time employee under the ACA, even if your company considers them part-time by its own internal policy.

Full-time equivalent (FTE)

An FTE is what you get when you combine part-time employees’ hours to calculate how many full-time employees they collectively represent. You don’t count part-timers as whole employees — but you can’t ignore them either. The method: add up all the hours worked by part-time employees in a given month (up to 120 hours per employee), then divide by 120. That gives you your FTE count for that month.  Add your FTEs to your actual full-time count, and you have your monthly total. Average those monthly totals across the year, and you have your ALE determination number.

How the count actually works

FT employees (avg 130+ hrs/month) + FTEs (part-time hrs ÷ 120) = Monthly total (average this across 12 months)

If that 12-month average lands at 50 or above, you’re an ALE. If it lands below 50, you’re not — and ACA reporting doesn’t apply to you. A quick example: say you have 42 full-time employees and a handful of part-timers who collectively log 960 hours a month. That’s 960 ÷ 120 = 8 FTEs. Add them together: 42 + 8 = 50. You’ve just crossed the threshold.

What ALEs are required to do

If you’re an ALE, the ACA requires you to file two forms each year:

Form 1095-C — provided to each full-time employee, showing whether coverage was offered, what it covered, and what it cost them.

Form 1094-C — the transmittal form filed with the IRS summarizing your organization’s overall coverage offering.

These aren’t optional for ALEs. They’re annual obligations, with deadlines in the first quarter following the reporting year.  One more thing worth saying out loud: being an ALE doesn’t mean you’re required to provide health coverage. It means you’re required to report on whether you did. Of course, if you’re an ALE and you didn’t offer coverage, there may be separate penalties to consider — but the reporting obligation exists regardless.

The businesses that get into trouble with ACA compliance are usually the ones who assumed the rule didn’t apply to them, without actually running the numbers. A 38-person company with a robust part-time workforce might be an ALE and not know it. A 55-person company that shrank mid-year might not be. The only way to know is to count — the right way, using last year’s data.

Not sure if you’re an ALE?

If you’ve had any workforce changes in the past year, it’s worth a conversation around filing season.

This blog does not constitute formal Payroll, HR or legal advice. Our HR Resource Center by Mineral offers further guidelines for this and many other topics. For a small additional fee you can also speak to a live HR Specialist. Contact your friendly APlus Payroll CSS for further information (including login details) or login here.