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ACA Compliance Guide 2025

Everything employers need to know for maintaining ACA compliance in 2025

Healthcare compliance and ACA documentation

The Affordable Care Act (ACA) continues to be a central piece of legislation governing how businesses offer and report health coverage to their employees. For growing businesses, especially those approaching or surpassing the 50 full-time employee threshold, navigating ACA compliance can feel overwhelming.

This comprehensive guide provides everything employers need to know for maintaining compliance in 2025. It includes key legal updates, deadlines, coverage requirements, eligibility tracking best practices, and technology tips to keep your business audit-ready and penalty-free.

Chapter 1: Understanding the ACA and ALE Status

Business team analyzing employee data and compliance metrics

What Is the ACA?

The ACA, enacted in 2010, is a federal law that mandates health coverage standards for individuals and employers. Under the Employer Shared Responsibility Provisions (also known as the "employer mandate"), Applicable Large Employers (ALEs) are required to:

  • Offer minimum essential coverage to at least 95% of full-time employees to avoid penalties under Section 4980H(a)
  • Offer affordable coverage that provides minimum value to avoid penalties under Section 4980H(b)
  • Report this information to the IRS annually via Forms 1094-C and 1095-C

Determining Applicable Large Employer (ALE) Status

You are considered an ALE if you employed an average of 50 or more full-time employees (including full-time equivalents) during the previous calendar year.

Best Practices:

  • Track employee headcount monthly
  • Include all full-time employees (30+ hours/week) and calculate full-time equivalents for part-time staff
  • Maintain clear documentation in case of audit

Chapter 2: Coverage Requirements in 2025

Healthcare benefits and insurance coverage documentation

Minimum Essential Coverage (MEC)

Employers must offer a health plan that qualifies as MEC — this includes most broad-based medical plans.

Minimum Value

The plan must cover at least 60% of total allowed costs for standard populations and include substantial inpatient and physician services.

Affordability Standard for 2025

For plan years beginning in 2025, coverage is considered affordable if the employee's share of the premium for the lowest-cost self-only plan does not exceed 8.39% of their household income (anticipated value; final IRS confirmation pending).

Employers may use one of the following safe harbors:

  • W-2 Safe Harbor
  • Rate of Pay Safe Harbor
  • Federal Poverty Line (FPL) Safe Harbor

Tip:

Affordability must be tested annually for each plan year and each eligible employee.

Chapter 3: Tracking Employee Eligibility

HR team tracking employee hours and eligibility data

Full-Time Employee Definition

Under ACA, a full-time employee works at least 30 hours per week or 130 hours per month.

Look-Back Measurement Method

For variable-hour, seasonal, or part-time workers, use the look-back measurement method:

Measurement Period:

3 to 12 months to determine full-time status

Stability Period:

Period of time employee is treated as full-time, regardless of current hours

Administrative Period:

Optional gap between measurement and stability to notify employees and enroll in coverage

Best Practice:

Use HR or HCM software that automates this tracking and retains an audit trail.

Chapter 4: Reporting to the IRS

Tax forms and IRS reporting documentation

IRS Forms

Form 1095-C:

Distributed to each eligible employee

Form 1094-C:

Transmittal summary sent to the IRS

Key Deadlines for 2025

  • January 31, 2026: Deadline to furnish 1095-Cs to employees
  • March 31, 2026: Electronic filing deadline for Forms 1094-C and 1095-C

Electronic Filing Requirement

Businesses filing 10 or more returns (W-2, 1099, 1095, etc.) must file electronically. Paper filing is no longer permitted for most employers.

Tip:

Choose ACA software that handles electronic filing and corrects errors before submission.

Chapter 5: Avoiding Common Compliance Pitfalls

Warning signs and compliance risk management

1. Misclassifying Employees

Ensure all employees are properly classified as full-time, part-time, or variable-hour.

2. Failing to Track Measurement Periods

Not tracking hours accurately can lead to misidentified eligibility and penalties.

3. Offering Coverage Too Late

New full-time employees must be offered coverage within 90 days or by the first day of the fourth month of employment.

4. Miscalculating Affordability

Wage increases or plan cost changes can render previously affordable plans non-compliant.

5. Incomplete or Late IRS Filings

Missing deadlines or submitting inaccurate forms is a major source of IRS penalties.

Chapter 6: Using Technology for ACA Compliance

Modern HR technology and compliance software interface

Why Automation Matters

Manual tracking is error-prone, time-consuming, and difficult to scale. Automation improves accuracy, ensures timeliness, and helps manage complexity.

Key Software Features to Look For:

  • Real-time eligibility tracking
  • Safe harbor affordability testing
  • IRS e-filing integration
  • Documented audit trail
  • Reporting dashboards for compliance risk alerts

Bonus:

Choose solutions that integrate with your payroll and benefits systems to reduce data silos.

Chapter 7: Preparing for an ACA Audit

Audit preparation and document organization

What Triggers an Audit?

  • Employee complaints
  • Late or inaccurate 1095-C filings
  • Random selection by the IRS

What to Have Ready:

  • Payroll and time-tracking records
  • Offer of coverage documentation
  • Measurement/stability period documentation
  • Copies of filed 1094-C and 1095-C

Pro Tip:

Keep all records for at least 3 years.

Conclusion

ACA compliance in 2025 is about more than just filing forms — it's about building processes, using technology, and staying informed about changing regulations. Growing businesses that adopt proactive strategies and leverage smart systems will be positioned not only to avoid penalties but to build trust, retain talent, and scale with confidence.

Need Help Navigating ACA Compliance?

At Cimplx, we specialize in helping businesses simplify ACA tracking, eligibility management, affordability calculations, and IRS reporting.

Contact us today to streamline your compliance for 2025 and beyond.

Ready to Master ACA Compliance in 2025?

Let Cimplx help you navigate the complexities of ACA compliance with automated tracking, reporting, and expert guidance.