1094/1095 and PCORI Compliance: What Employers Must Do After Filing
For many employers, submitting Forms 1094 and 1095 feels like the finish line. In reality, filing is only one part of your Affordable Care Act (ACA) compliance responsibility.
Once reporting is complete, Applicable Large Employers (ALEs) must shift focus to post-filing risk, potential IRS exposure, and upcoming Patient-Centered Outcomes Research Institute (PCORI) fees.
Here’s what you need to know.
Filing Forms 1094 and 1095 Is Only Step One
Applicable Large Employers are defined as organizations with 50 or more full-time employees, including full-time equivalent employees, during the prior calendar year.
ALEs must:
- Offer ACA-compliant coverage to at least 95 percent of full-time employees and their dependents
- Ensure coverage meets affordability and minimum value standards
- Accurately complete and submit Forms 1094-C and 1095-C
Form 1094-C is the transmittal form submitted to the IRS summarizing employer-level data. Form 1095-C provides detailed information about the coverage offered to each full-time employee.
Electronic filing is required for employers who meet the IRS electronic filing threshold. Deadlines typically fall in late March for electronic submission, but employers should confirm current IRS guidance each year.
Filing late or submitting inaccurate data can trigger penalties.
Understanding Employer Shared Responsibility Penalties
The IRS enforces two primary employer mandate penalties:
Penalty A
Triggered if an ALE fails to offer coverage to at least 95 percent of full-time employees and at least one employee receives a premium tax credit through the Marketplace.
This penalty applies across the employer’s full-time population, not just to uncovered employees.
Penalty B
Triggered when coverage is offered but is either unaffordable or fails to provide minimum value, and at least one employee receives a premium tax credit.
Penalty B is assessed per affected employee.
Accurate reporting and defensible affordability calculations are critical to reducing risk exposure.
Common Post-Filing Risks Employers Overlook
Many compliance issues surface after reporting season ends. These include:
Data inconsistencies
Payroll, HRIS, and benefits platform misalignment often leads to incorrect coding on Form 1095-C.
Affordability miscalculations
Using the wrong safe harbor or misapplying affordability percentages can create exposure months later.
Measurement period errors
Variable hour and seasonal employee tracking mistakes are common audit triggers.
Controlled group complications
Employers with shared ownership structures frequently miscalculate ALE status and reporting responsibility.
Filing forms does not eliminate liability if the underlying data is flawed.
PCORI Fees: What Employers Must Pay After Filing
After ACA reporting is complete, certain employers must pay PCORI trust fund fees.
What Is PCORI?
The Patient-Centered Outcomes Research Institute was created to fund research that helps patients and providers make informed healthcare decisions.
To fund this research, employers sponsoring applicable self-insured health plans must pay an annual fee.
Who Is Responsible for Paying PCORI?
PCORI fees generally apply to:
- Employers with self-insured health plans
- Employers offering certain level-funded arrangements
- Employers sponsoring Health Reimbursement Arrangements (HRAs)
Fully insured employers typically do not pay PCORI directly, as the carrier handles the fee.
How Is the Fee Calculated?
The fee is calculated based on the average number of covered lives under the plan. This includes:
- Employees
- Spouses
- Dependents
- COBRA participants
- Retirees, if covered
The per-covered-life rate adjusts annually and depends on the plan year end date. Employers must confirm the current IRS rate applicable to their specific plan year.
When Is PCORI Due?
PCORI fees are generally due July 31 following the end of the plan year and are reported using IRS Form 720.
If July 31 falls on a weekend or federal holiday, the deadline moves to the next business day.
PCORI fees are currently authorized through 2029.
Why 1094/1095 and PCORI Compliance Often Reveal Bigger Issues
Reporting season frequently exposes operational gaps that go beyond form submission.
Employers may discover:
- Misclassified employees
- Inaccurate full-time eligibility tracking
- Incorrect controlled group analysis
- Inconsistent documentation of safe harbor calculations
- Gaps between payroll and enrollment systems
These risks do not disappear once forms are filed. In fact, IRS enforcement activity often begins months after submission.
How SBMA Reduces Compliance Risk Beyond Filing
At SBMA, 1094 and 1095 processing is only part of the solution.
Our approach includes:
- Pre-filing data validation and eligibility review
- Affordability modeling and safe harbor analysis
- Controlled group assessment support
- Electronic filing and correction handling
- PCORI calculation assistance
- Ongoing support if IRS notices are received
Compliance is not just about meeting a deadline. It is about creating defensible systems that withstand scrutiny.
Final Takeaway
Submitting Forms 1094 and 1095 is not the end of your ACA responsibility. It is a checkpoint in a year-round compliance strategy.
With PCORI fees approaching and IRS enforcement continuing to evolve, employers must ensure their reporting, calculations, and documentation are accurate and defensible.
If you are unsure whether your post-filing processes are fully aligned, now is the time to review them.
