This annual review guide is designed to help brokers support employer ACA compliance. Not every item will apply to every group. Some ACA provisions apply to all employers sponsoring group health coverage, while others apply only to Applicable Large Employers (ALEs) subject to the employer mandate. Reviewing these areas each year helps proactively identify gaps and keep clients compliant.
2026 Employer Shared Responsibility (“employer mandate”) obligations are based on the employer’s average group size for each of the 12 months of 2025. Employers that qualify as ALEs must offer coverage to full-time eligible employees during 2026 and then report on that coverage (or lack thereof) to the IRS in Q1 2027, when penalty assessments may occur.
Determine Employer Size for 2026 ALE Status
(Applies to all employers)
Determining ALE status is the first step each calendar year.
- Perform the ALE calculation on or around January 1, 2026.
Review the average number of full-time employees + full-time equivalents (FTEs) for all 12 months of 2025.- If the employer averaged 50 or more FT/FTE employees, it is an ALE for the entire 2026 calendar year.
- Consider “Controlled Group” Members.
Aggregate commonly owned or related companies to determine accurate size. Controlled group rules often bring smaller entities into ALE status.
Note: Controlled group determinations are tax matters that must be made by the employer’s tax or legal counsel. Most health insurance brokers do not have E&O coverage for tax advice and should avoid making these determinations themselves. Brokers can, however, flag the issue and advise clients to consult appropriate professionals. - Check for Transition Relief.
If the employer crosses the 50 threshold for the first time, determine whether they qualify for one-time transition relief, which allows coverage to begin by April 1, 2026, to avoid penalties for January–March.
Affordability & Minimum Value for 2026
(Applies to ALEs)
Affordability failures remain a primary trigger for IRS penalties.
- Confirm 2026 coverage options meet one of the ACA affordability safe harbors (W-2, Rate of Pay, or Federal Poverty Line).
- Affordability Threshold: For plan years beginning in 2026, the affordability percentage is 9.96%.
- Verify that the offered plan meets Minimum Value standards.
- Review contribution strategies and minimum wage changes that may affect affordability calculations for 2026.
- Employers that are not ALEs are not subject to ACA affordability rules but must still comply with applicable carrier, market, and plan contribution requirements, which vary by funding type and segment
Eligibility Rules & Waiting Periods
(Some items apply to all employers; others to ALEs)
- Definition of Full-Time Employees:
Confirm use of the 30 hours/week or 130 hours/month standard to determine full-time status.
Applies to all employers sponsoring group health insurance. - Waiting Period:
Verify that waiting periods remain ≤ 90 days, including any orientation period (max 1 month).
Applies to all employers sponsoring group health insurance. - Look-Back Measurement Method (employers using variable-hour tracking to determine eligibility):
For hourly employees with fluctuating schedules, confirm the structure is ACA-compliant and consistently applied to ongoing employees:- Measurement, administrative, and stability periods should already be established (fixed or date-of-hire based).
- Apply the results of the most recent measurement period (ending in late 2025) to determine 2026 full-time status.
- Review the administrative period (up to 90 days) to ensure it does not reduce or overlap the required stability period.
- Stability periods must match or exceed the length of the measurement period.
- Document the measurement method in the employer’s ERISA SPD and, ideally, the employee handbook.
Required Notices & Disclosures
(Some apply to all employers; some to ALEs)
- Exchange Notice: Provide to all new hires within 14 days of hire. Applies to all employers sponsoring a health plan.
- Summary of Benefits & Coverage (SBC) + Uniform Glossary:
- Required for small group employers.
- Large group employers are generally not required to provide SBCs but may choose to do so.
- Distribute at renewal for the 2026 plan year, to new hires, and at the initial offer of coverage.
- This is in addition to ERISA SPD distribution.
- 60-Day Notice of Material Modification:
Issue if mid-year plan changes occur that affect SBC content. This is uncommon, as most plans don’t change midyear. - ERISA SPD Distribution:
Confirm timely delivery. While not ACA-specific, this step is often overlooked. - 1095-C Forms (ALEs):
For 2025 coverage, provide employee copies by March 2, 2026, and file electronically with the IRS by the end of March 2026.
IRS Reporting & 226-J Letter Readiness
(Applies to ALEs)
ACA reporting is due annually for the prior year.
- 1094-C and 1095-C Filing (for 2025)
Due electronically on the last day of March 2026. Confirm coding logic (Lines 14/16) accurately reflects offers made in 2025. - IRS Correspondence
Monitor for Letter 226-J or 227 series, typically issued in 2027 for 2025 reporting, which indicate potential noncompliance penalties. Ensure the employer’s team understands response procedures and timelines.
Plan Administration Reminders for 2026
(Applies to all employers)
- Confirm employers are not reimbursing individual plans, unless using QSEHRA or ICHRA.
- For small groups, verify participation/contribution requirements and flag the 11/15–12/15 special open enrollment window if participation is an issue.
- Ensure eligibility rules and plan documents for 2026 remain aligned with ACA requirements.
Premium Tax Credit Awareness
(Applies to ALEs)
Employees receiving a Premium Tax Credit (PTC) for Marketplace coverage in 2026 can trigger Employer Shared Responsibility penalties if a qualifying offer was not made.
- Educate employers on the connection between Marketplace subsidies and IRS penalties.
- Remind them that IRS Letters 226-J for ACA employer mandate non-compliance are based on this information.
Documentation & Strategic Review
(Applies to all employers; certain elements ALE-specific)
- Review and document key ACA compliance decisions for 2026, including:
- Affordability safe harbor (ALEs)
- Measurement method (all employers with variable-hour employees)
- Controlled group composition (all employers)
- Reporting responsibilities:
- ALEs in 2025 must report in 2026.
- ALEs determined in early 2026 will report in Q1 2027.
- Ensure ERISA plan documents and SPDs reflect 2026 eligibility and measurement rules.
Key Takeaway for 2026
Brokers play a critical role in helping employers start each calendar year with accurate ALE determinations, affordability calculations, and eligibility structures in place. 2026 compliance hinges on understanding 2025 data, executing timely reporting, and preparing for downstream IRS enforcement.