ACA Reporting Requirements For A Small Business


The term “small business” refers to companies with fewer than 50 regular employees. To qualify as a small business under the Affordable Care Act, a company must have no more than 50 full-time employees (unless it is a subsidiary of a larger company).

ACA Reporting Requirements For A Small Business

ACA has the following requirements for small businesses:

  • Employers should withhold and report 0.9% more on income exceeding $200,000
  • Employers should indicate health insurance on employee’s W-2 Form
  • Employers should report self-insured coverage in an annual return, providing details of employees in such a plan

Filing Forms 1094 and 1095

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Here’s what you need to know about filing forms 1094 and 1095:

When Not To Report

Small businesses do not have to file forms 1094 and 1095 if they do not provide health coverage for their employees. The assumption is that the issuer of the policy will do so. However, special circumstances could require your small business to file forms 1094 and 1095.

When To Report

If you have a small business and provide self-insured coverage, you will use Forms 1094 and 1095 to report the Minimum Essential Coverage (MEC) you sponsor.

Form 1094 is a transmittal sheet with employee details. It also lists a contact person to talk to the IRS when they reach out.

Form 1095-B outlines employee, employer, and covered individuals’ details. The employer sends the form to the IRS and furnishes the employee with a copy.


Failure to disclose MEC details warrants a penalty. However, the IRS could waive or reduce penalties for reasonable causes or corrections rectified promptly.

Form 1099-MISC

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Form 1099-MISC provides Miscellaneous Information to IRS. It has the following sections:

  • Payer information
  • Recipient information
  • Amounts

Medical and healthcare payments constitute part of the amount the form reports. The document applies when the recipient is an employee of the small business. Learn more about this in the guide to form 1099.

So, where does the non-employee category fall?

Form 1099-NEC

The IRS introduced the form to report non-employee compensation. The form details whether the payer sold more than $5,000 worth of goods for resale to the non-employee.

Form 1099-NEC differs from 1099-MISC; you must file it before 31st January.

When Is a Small Business Exempt From Filing Form 1099?

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A small business does not have to file Form 1099- MISC or 1099-NEC if:

  • The small business is an S-corporation
  • The small business paid an incorporated company for non-medical and non-legal services.
  • The small business made payments below $600 in a tax year

Filing Form 1099-MISC

You could avoid paper and file the document through the IRS Filing Information Returns Electronically (FIRE) system. The option allows you to sign up for the Combined Federal/State Filing (CF/SF) program. Consequently, you do not have to file the form separately for federal and state departments.

However, some states may require additional action on CF/SF. We advise employers to fact-check for their respective states.

What You Need To Know

A small business may or may not be an S-corporation exempt from filing Form 1099. However, the small business must withhold and report 0.9% more for income exceeding $200,000. While you’re not required to file Forms 1094-B and 1095-B, self-insured coverage requires you to file these forms.


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