The deadline to file ACA reporting forms with the IRS is not until March 2027. That date is also, for most employers, too late to fix the problems that will show up in those forms because the problems are building now, inside 2026 payroll, eligibility, and enrollment data, and December 31 is when the year closes.
Applicable large employers (ALEs), or those with 50 or more full-time employees or full-time equivalents, are required to file Forms 1094-C and 1095-C covering the 2026 plan year. Based on the IRS’s established 30-day automatic extension pattern, forms are expected to go to employees by March 2, 2027, and to the IRS electronically by March 31, though final deadlines are confirmed in the IRS instructions for each reporting year.
But ACA reporting is not a form-filling exercise. The forms are a summary of data that has been accumulating all year across full-time employee status determinations, offer dates, affordability codes, dependent information, and Social Security numbers. That data has to be reconciled before it hardens into filings the IRS will read.
Letter 226-J, the IRS notice that opens an Employer Shared Responsibility Payment (ESRP) review, is generated by cross-referencing 1094-C and 1095-C filings against marketplace premium tax credit claims. It is an automated process, not an audit. As John Sansoucie, Chairman and CEO of CogNet, a business process management firm, noted in Corporate Compliance Insights in September 2026, the letter “is built entirely from the data reported on Forms 1094-C and 1095-C, matched against marketplace records.”
A coding error does not need to reflect genuine non-compliance to trigger a proposed penalty. Missing a 2C code for enrolled employees, miscoding a full-time status determination, or using an affordability figure based on a stale wage rate can each produce a proposed assessment.
Holland & Knight reported in October 2026 that the IRS is expected to issue Letter 226-J notices for the 2024 tax year by year-end, a timeline Holland & Knight and other benefits law firms have documented as running approximately two years after the relevant filing period. That means employers are simultaneously managing exposure from a prior filing year while building the data that will determine their 2026 exposure.
The financial stakes for non-compliance are rising. The 2026 ACA ESRP penalties, set by the IRS in Rev. Proc. 2025-26, are $3,340 per year per uncovered full-time employee under Section 4980H(a) and $5,010 per year for specific employees receiving marketplace subsidies under Section 4980H(b). Those figures increase for 2027. The Section 4980H(a) penalty rises to $3,780 and the Section 4980H(b) penalty to $5,670, both relevant to employers finalizing contribution rates for the new plan year.
The 2027 affordability threshold also rises to 10.22%, up from 9.96% in 2026, meaning employers using the federal poverty line, rate-of-pay, or Form W-2 safe harbors need to rerun those calculations before 2027 rates are finalized, not after.
The most common year-end oversight in ACA compliance is the assumption that another party handled the requirement. World Insurance Associates’ 2026 year-end compliance roundup, authored by Jay Kirschbaum, senior vice president and director of benefits compliance, flags this explicitly as the leading source of missed obligations.
Payroll vendors often prepare and file the forms. Benefits advisors often coordinate enrollment and eligibility. Neither automatically owns the full data reconciliation. Full-time status may be tracked in HR systems that do not talk cleanly to the payroll system generating the codes. Dependent SSNs collected at enrollment may not have made it into the reporting file. Midyear rehires, variable-hour workers, and employees who crossed the ALE measurement threshold at different points in the year all create coding complexity that payroll defaults do not always catch.
The practical question for advisors reviewing their ACA-related employer obligations before the end of 2026 is who owns data reconciliation, and whether that ownership has actually been confirmed. Confirming now, before December 31 closes the year, is what distinguishes a Q4 review from a January fire drill. By the time the ACA’s subsidy and eligibility landscape has shifted and 1095-C production begins, correcting mismatches in payroll, eligibility, and enrollment records becomes significantly more difficult and costly.
The employer who receives a 226-J letter in late 2027 for the 2026 plan year has 90 days to respond. That window expanded from 30 days by the Employer Reporting Improvement Act, which also established a six-year statute of limitations on ESRP assessments beginning with returns filed after December 31, 2024. Those are useful procedural protections. They are not a substitute for clean data going into the forms in the first place.
