Form 1094-B

What is ACA Form 1094-B: Transmittal of Health Coverage Information Returns?

Form 1094-B is a transmittal form used by insurance providers and certain other entities in the United States to report information to the IRS about health coverage offered under the Affordable Care Act (ACA). It serves as a cover sheet for Form 1095-B, summarizing the individual 1095-B returns being transmitted. The form is utilized to provide the IRS with details about the responsible entity and the number of associated 1095-B forms. It plays a vital role in the IRS's ability to enforce ACA provisions and verify compliance with health coverage requirements.

When Should You File Form 1094‑B Instead of Form 1094‑C?

The Affordable Care Act (ACA) created two parallel reporting tracks, and the form you file depends on two factors—your entity type and the kind of health plan you sponsor:

• File Form 1094‑B (with accompanying Form 1095‑B)
  only if you are not an Applicable Large Employer (i.e., you averaged fewer than 50 full‑time and full‑time‑equivalent employees in the prior calendar year) and you:
  • Provide self‑insured health coverage to employees, retirees, or COBRA participants, or
  • Act as a health insurance issuer (carrier), government program (Medicaid/CHIP), or other entity that actually provides the coverage.
• File Form 1094‑C (with accompanying Form 1095‑C) if you are an Applicable Large Employer (ALE), regardless of whether your plan is fully insured or self‑insured.
  • For fully insured plans, you complete Parts I–II of Form 1095‑C for each full‑time employee; the carrier separately files Forms 1094‑B/1095‑B. • For self‑insured plans, you complete Parts I–III of Form 1095‑C for all covered individuals (full‑time and non‑full‑time).

Quick decision guide:

1. Are you an ALE (≥ 50 FTEs)? • Yes  →  File 1094‑C / 1095‑C. • No  →  Go to 2.
2. Do you provide self‑insured coverage? • Yes  →  File 1094‑B / 1095‑B. • No (you’re fully insured)  →  No ACA transmittal required—your insurer will file 1094‑B / 1095‑B.

What is the penalty for not filing form 1094-B?

The penalty for not filing Form 1094-B (along with the associated Forms 1095-B) can be substantial. The penalty is generally $330 per return, with a maximum annual penalty of $3,783,000. If the failure to file is due to intentional disregard, the penalty per return increases, and there is no maximum annual penalty. These amounts can be adjusted for inflation, and various factors may influence the exact penalty, such as the timing of the filing and whether the failure was due to reasonable cause.

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How to Determine Applicable Large Employer (ALE) Status Under the ACA

Under the Affordable Care Act (ACA), an employer (together with any entities in its controlled or affiliated service group) is considered an Applicable Large Employer (ALE) for a calendar year if it averaged at least 50 full‑time employees, including full‑time‑equivalent employees (FTEs), during the preceding calendar year. ALE status determines whether you must offer health coverage and file Forms 1094‑C/1095‑C, so it is critical to calculate it correctly and document your work.

ACA regulations (26 CFR § 54.4980H‑2) lay out an eight‑step process:

1. Select a 12‑month measurement period. New employers use the months they were in business.
2. Identify full‑time employees. For each month, count employees who averaged ≥ 30 hours of service per week (or ≥ 130 hours in that month).
3. Calculate full‑time‑equivalent employees (FTEs). Add all hours of service for non‑full‑time employees for the month (cap each employee at 120 hours), then divide the total by 120.
4. Total the monthly ACA headcount. Add the results from steps 2 and 3 to get a headcount for each month.
5. Compute the annual average. Add the 12 monthly totals and divide by 12. Round down to the nearest whole number.
6. Apply the seasonal‑worker exception (if relevant). If the average exceeds 50 solely because seasonal workers (working < 120 days in the year) push you over the threshold, you are not an ALE.
7. Aggregate controlled‑group members. Organizations that share common ownership or are part of an affiliated‑service group must combine their counts; every member is treated as an ALE member if the group’s average is ≥ 50.
8. Document and retain your analysis. Keep worksheets and payroll reports—these are vital if the IRS questions your calculations or issues a § 4980H penalty notice.

If your annual average is 50 or more, you are an ALE for the current calendar year. That means you must:

• Offer affordable, minimum‑value coverage to at least 95 % of full‑time employees (and their dependents) or potentially owe an employer‑shared‑responsibility payment (ESRP).
• File Form 1094‑C with the IRS and furnish Form 1095‑C to each full‑time employee by the applicable deadlines.

Which Workers “Count” When You Calculate Your ACA Head‑Count?

When you determine Applicable Large Employer (ALE) status under the Affordable Care Act (ACA), you must apply the IRS hours‑of‑service rules—not your own HR policies—to decide who is in the numerator. In broad terms, you add together (1) full‑time employees and (2) full‑time‑equivalent employees (FTEs) for each calendar month of the prior year and then average the totals over 12 months. The categories below explain who is—and is not—part of that monthly head‑count.

1. Full‑Time Employees (≥ 30 hours/week or ≥ 130 hours/month)

• Include every common‑law employee (IRS defines this by who controls the work performed), even if the employee:
  • Is on probation,
  • Has waived or is ineligible for health coverage, or
  • Works under a collective‑bargaining agreement.
• Count paid but not worked hours—vacation, PTO, jury duty, military leave—because they are hours of service under 26 CFR § 54.4980H‑1(a)(24).

2. Full‑Time‑Equivalent Employees (FTEs)

For each month, add the hours of service of all employees who averaged < 30 hours/week, cap each person at 120 hours, divide the total by 120, and round down. The result is the number of FTEs for that month.

3. Special Categories & Exceptions

Category	Counted?	Key Rule / Reference
Seasonal workers	Yes, but the seasonal‑worker exception may remove them if they work < 120 days in the year.	26 CFR § 54.4980H‑2(b)(2)
Variable‑hour / On‑call	Yes—use look‑back measurement method if elected.	26 CFR § 54.4980H‑3(d)
Staffing‑agency temps	Generally yes if you are the common‑law employer; contractual labels are irrelevant.	Notice 2014‑49
Interns & student workers	Count hours actually worked and paid.	26 CFR § 54.4980H‑1(a)(24)
Independent contractors	No—verify status with Form SS‑8 factors.	IRS Pub 15‑A
Expatriates working abroad	No, if they earn none of their hours in the U.S.	26 CFR § 54.4980H‑1(a)(24)

4. Controlled‑Group Aggregation

If your organization shares at least 80 % ownership or meets affiliated‑service‑group tests with other entities, you must combine all employees across the group before applying the 50‑employee threshold. Each subsidiary or affiliate that offers any employees becomes an ALE member and files its own Forms 1094‑C/1095‑C, even if it employs fewer than 50 workers on its own.

5. Best Practices

• Create a monthly worksheet that captures every payroll cycle’s paid hours (including paid leave).
• Flag workers hired through staffing firms and review contracts for common‑law‑employer language.
• Document head‑count decisions (e.g., why an individual is treated as an independent contractor).
• Recalculate after mergers, acquisitions, or divestitures—ALE status can change mid‑year for the surviving group.

What is the deadline to submit Form 1094-B?

The deadline to submit Form 1094-B to the IRS, along with the associated Form 1095-B, depends on the method of filing:

• Electronic Filing: If filing electronically, the deadline is Monday, March 31^st, 2025.
• Paper Filing: If filing by paper, the deadline is Friday, February 28^th, 2025. Paper filing is usually only allowed if the reporting entity is submitting fewer than 10 returns.

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What is Minimum Essential Coverage (MEC)?

Minimum Essential Coverage (MEC) is a term used in the context of the Affordable Care Act (ACA) to describe the type of health insurance coverage an individual must have to meet the legal requirement for health coverage. MEC includes a broad array of coverage options, encompassing both public and private health insurance plans. Some examples of MEC include:

• Employer-Sponsored Plans: Health insurance provided through an employer, including both large and small employers, governmental employers, and self-insured plans.
• Government-Sponsored Plans: Coverage under programs such as Medicare Part A, Medicaid, the Children's Health Insurance Program (CHIP), and TRICARE.
• Individual Market Plans: Health insurance purchased through the Health Insurance Marketplace or directly from an insurance company.
• Certain Other Health Coverage: Specific types of coverage recognized by the Department of Health and Human Services (HHS) as MEC, including certain student health plans and foreign coverage.

Having MEC is essential to comply with the ACA's individual mandate, which requires most individuals to have health coverage or potentially pay a penalty. Certain exemptions may apply, and the mandate's enforcement varies by state.

Tips to Remember

Completing Form 1094-B accurately is crucial for ACA reporting compliance. Here are some tips to assist you in the process:

• Review Instructions: Carefully read the official IRS instructions for Forms 1094-B and 1095-B. Understanding these guidelines will help ensure that the forms are filled out correctly.
• Gather Necessary Information: Before you begin, assemble all necessary information, including details about the responsible entity, the type of coverage provided, and the number of associated Form 1095-B returns.
• Use Accurate Employee Counts: Ensure that you accurately count and report the number of individual 1095-B forms being transmitted.
• Consider Electronic Filing: If you are filing for multiple individuals, electronic filing may streamline the process. Depending on the number of returns, electronic filing may be mandatory.
• Double-Check All Entries: Verify all information entered on the form for accuracy, as errors can lead to penalties or the need to file corrected returns.
• Meet Filing Deadlines: Be aware of the filing deadlines, which differ depending on whether you are filing electronically or by paper, and ensure timely submission.

Following these tips and referring to the latest IRS guidelines will help you navigate the completion and submission of Form 1094-B.