ACA Reporting Starts Long Before Filing Forms 1094 and 1095

For many employers, ACA reporting feels like a once-a-year obligation. Forms are generated, deadlines approach, and the focus turns to getting Forms 1094 and 1095 filed correctly and on time.

But those forms are not where ACA compliance begins. They are simply the final output of decisions, data, and processes that occur all year long.

When ACA reporting issues arise, the problem is rarely the forms themselves. The issue almost always traces back to how employee data, eligibility, and enrollment were handled months earlier.

ACA Reporting Is a Reflection of Your Year, Not a Snapshot

Forms 1094 and 1095 do not ask employers to make judgment calls at filing time. They report what has already happened.

The IRS uses these forms to confirm whether an employer:

• Offered coverage to eligible employees
• Offered coverage on time
• Offered coverage that met Minimum Essential Coverage requirements
• Offered coverage that met affordability standards
• Tracked eligibility consistently across the year

If the data behind those answers is incomplete or inconsistent, reporting errors follow.

This is why ACA compliance should be viewed as a year-round operational process, not a year-end administrative task.

Eligibility Tracking Drives Reporting Accuracy

One of the most common ACA reporting issues stems from eligibility misalignment.

Applicable Large Employers must track:

• Hours worked
• Measurement periods
• Stability periods
• Changes in employee status

When this tracking is done manually or inconsistently, it becomes difficult to determine when coverage should have been offered and to whom.

Errors in eligibility tracking often lead to:

• Missed offers of coverage
• Incorrect Line 14 and Line 16 codes
• Increased exposure to Penalty B assessments

Accurate reporting depends on knowing exactly when an employee became eligible and whether an offer was made at the correct time.

Enrollment Decisions Affect Reporting Outcomes

Another frequent breakdown occurs when enrollment data is disconnected from eligibility and payroll data.

Enrollment changes throughout the year matter. New hires, terminations, leaves of absence, and status changes all impact how offers of coverage are reported.

If enrollment records are incomplete or not updated in real time, reporting becomes a cleanup exercise instead of a confirmation process.

Common challenges include:

• Offers made but not documented correctly
• Employees waiving coverage without proper records
• Delays between eligibility and enrollment processing
• Conflicting data between payroll and benefits systems

When enrollment accuracy suffers, reporting accuracy suffers with it.

Payroll and Benefits Data Must Stay Aligned

ACA reporting relies heavily on payroll data, especially for affordability testing and eligibility determination.

When payroll and benefits systems are not aligned, discrepancies appear in:

• Hours worked
• Employee classifications
• Offer dates
• Coverage tiers

Trying to reconcile these differences at filing time is risky and time-consuming. It also increases the likelihood of errors that can trigger IRS notices later.

Ongoing data alignment throughout the year reduces the need for corrections and minimizes compliance exposure.

Reporting Errors Are Usually Process Failures

Most ACA reporting issues are not caused by a misunderstanding of the forms. They are caused by gaps in the process.

These gaps often include:

• Manual tracking of hours and eligibility
• Delayed updates to employee status
• Disconnected payroll and benefits systems
• Limited visibility into ACA measurement periods
• Reactive rather than proactive compliance management

By the time Forms 1094 and 1095 are generated, it is often too late to correct these issues without amendments or increased risk.

Why a Year-Round Administrative Approach Matters

A strong ACA compliance strategy focuses on prevention rather than correction.

Year-round administration supports:

• Continuous eligibility monitoring
• Timely and documented offers of coverage
• Accurate enrollment records
• Reliable reporting data at year-end

This approach reduces administrative burden, lowers compliance risk, and gives employers confidence that their reporting reflects reality.

Turning Reporting Season Into a Review Opportunity

February is an ideal time for employers to assess what worked and what did not during the most recent reporting cycle.

Questions worth asking include:

• Were eligibility determinations clear and consistent?
• Did enrollment records align with payroll data?
• Were reporting issues identified late or early?
• Did the process rely too heavily on manual work?

Using reporting season as a diagnostic tool helps employers strengthen systems before the next compliance year begins.

ACA Compliance Is Built Throughout the Year

Forms 1094 and 1095 are important, but they are not the foundation of ACA compliance. They are the result of months of data tracking, monitoring, and administration.

Employers who treat ACA compliance as an ongoing process rather than an annual filing obligation are better positioned to reduce risk, avoid penalties, and simplify reporting year after year.

The work starts long before the forms are filed.