How will our plan design affect reporting obligations and potential penalties?

Your plan design determines what you must report under the Affordable Care Act (ACA) and your potential exposure to penalties. Large employers (those with 50 or more full-time employees) are required to file annual ACA reports proving that affordable, compliant coverage was offered to eligible employees. The type of plan you offer affects how these reporting rules apply.

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Every large employer must file ACA reports:
If your organization qualifies as an Applicable Large Employer (ALE), you must file the following forms each year:

• Form 1094-C: A summary of your organization’s coverage offer.
• Form 1095-C: Employee-level details on coverage offered, cost, and eligibility.

These forms are required whether your plan is fully insured, self-funded, level-funded, MEC, or ICHRA. The information reported will vary based on your plan structure.

Your plan design affects potential ACA penalties:
Under the Employer Shared Responsibility Provision (ESRP), two types of penalties may apply:

• 4980H(a) “Offer of Coverage” Penalty: Applies if Minimum Essential Coverage (MEC) is not offered to at least 95 percent of full-time employees (those working 30 or more hours per week).
• 4980H(b) “Affordability and Minimum Value” Penalty: Applies if the coverage offered is unaffordable (costs more than 8.39 percent of household income in 2024) or does not provide Minimum Value (covers less than 60 percent of expected costs).

Your plan type determines which penalties you could face.

How common plan types impact compliance:

• Traditional major medical (PPO, HMO, HDHP): Meets both MEC and Minimum Value requirements and carries the lowest penalty risk.
• MEC-only plans: Meet the “offer of coverage” rule but not Minimum Value. These plans avoid the 4980H(a) penalty but may still trigger 4980H(b).
• ICHRA: Meets both standards if reimbursements are sufficient for employees to buy affordable, compliant individual coverage. Requires additional affordability reporting.
• Vitable-based bundles: When combined with MEC or ICHRA, Vitable improves accessibility and satisfaction while maintaining compliance.

Plan funding structure affects reporting responsibilities:

• Fully insured: Your carrier reports coverage details, and you report coverage offers.
• Self-funded or level-funded: You must report both the coverage offer and the coverage details.
• ICHRA: You must report contribution amounts and the affordability method used each month.
  
  • Best practice: Work closely with your benefits administrator or payroll provider to ensure accurate coding for coverage and affordability.

Prevention is the best protection:
Most ACA penalties occur due to incomplete reporting or unaffordable plan design. Reduce risk by:

• Offering MEC to all eligible employees.
• Ensuring full-time employees receive affordable, Minimum Value coverage.
• Keeping clear records of offers, waivers, and affordability calculations.
• Partnering with a provider such as Vitable to simplify compliance and communication.

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Vitable works alongside MEC, HDHP, and ICHRA plans to help employers remain ACA-compliant while improving employee access and satisfaction. Every member receives $0 primary care, mental health, and prescription access through virtual or in-home visits, making compliance coverage affordable and meaningful.

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Your plan design determines both your ACA reporting requirements and potential penalty risk. Fully insured and major medical plans make compliance easier, while MEC and ICHRA models require more detailed documentation. Pairing any plan type with Vitable’s primary-care-first model helps you stay compliant, avoid penalties, and deliver benefits that employees actually value and use.

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