ACA reporting preparation has a reputation as a January problem. The forms are due early in the year, the benefits team owns them, and payroll gets pulled in when the numbers look wrong. That sequence produces corrections, penalty notices, and a benefits analyst working weekends in February. The 1095-C prints what your HCM platform holds for every month of the year, so the work that decides whether the forms are right happens in October, November, and December. Here is the sequence we run with clients, and the configuration behind each step.
Start ACA reporting preparation with the ALE check
Everything downstream depends on whether you file at all. The IRS determines applicable large employer status each calendar year based on the prior year’s average workforce: an employer with at least 50 full-time employees, including full-time equivalent employees, on average during the prior year is an ALE for the current year. Companies near the line, companies that acquired a business mid-year, and companies under common control with sister entities get this wrong most.
Pull the monthly full-time and full-time equivalent counts for 2025 from your HCM platform and run the average. If you are an ALE, you file Form 1094-C as the transmittal and a Form 1095-C for each full-time employee, and the IRS reporting page for ALEs lays out the obligations. If you are part of an aggregated ALE group, each member files its own forms and the 1094-C carries the group information. Confirm which entity in your HCM structure is the filing entity before anyone touches a form.
Measurement and stability periods decide who gets a form
The IRS defines a full-time employee for these forms under section 4980H: an employee who averages at least 30 hours of service a week, or 130 hours a month, determined under either the monthly measurement method or the look-back measurement method. Your HCM platform applies whichever method you configured, to whichever employee groups you assigned it, and the answer drives the form count.
The October check has three parts. First, confirm every employee group carries a measurement method and that variable-hour groups sit under look-back with a defined measurement period, administrative period, and stability period. Second, confirm the hours feeding the calculation match the IRS definition of an hour of service, which includes paid vacation, holidays, illness, jury duty, and leave. A time system that counts worked hours only will under-measure someone who took two weeks of PTO in the measurement period. Third, pull anyone sitting in a Limited Non-Assessment Period, such as a new variable-hour hire still inside an initial measurement period, and confirm the platform tags them, because the 1094-C full-time count excludes them and line 16 carries a specific code for them.
Offer-of-coverage codes and the affordability safe harbor
Line 14 of the 1095-C carries an offer-of-coverage code for each month. The IRS instructions list the code series: 1A for a Qualifying Offer, 1E and its neighbors for minimum value coverage offered to the employee and family members in various combinations, 1H for no offer. Your HCM platform assigns these codes from the benefit plan configuration: which plans meet minimum value, who was eligible, who was offered, and when. An eligibility rule that fires a month late, or a plan flagged as non-minimum-value by mistake, produces twelve wrong codes per employee.
Line 15 carries the Employee Required Contribution, which the instructions define as the employee share of the monthly cost for the lowest-cost, self-only, minimum essential coverage providing minimum value offered to the employee. That figure comes from the plan rate table, and a rate change during open enrollment that never reached the ACA configuration prints the old number on every form.
Line 16 is where the affordability safe harbor lives. The instructions provide three: code 2F for the Form W-2 safe harbor, 2G for the federal poverty line safe harbor, and 2H for the rate of pay safe harbor. The W-2 safe harbor, once used for an employee, applies for every month of the year the employee is offered coverage. Assign the safe harbor per employee group in the configuration now, document the choice, and confirm the platform populates line 16 from it. A group with no safe harbor assigned leaves the line blank where it matters most.
The six data fields that break 1095-C forms
Configuration sets the rules. Data feeds them. In our experience the fields below account for most of the corrections we see, and the data quality problems that build up after go-live land here first.
- Legal name and SSN. A nickname in the legal-name field or a transposed digit puts the wrong identity on a federal form. Reconcile every record against the I-9 and W-4.
- Hire and termination dates. These decide which months get a code. A rehire without a fresh hire date, or a termination entered late, shows an offer for months the person was gone.
- Hours of service. Confirm the time data carries paid leave and that imported hours from a scheduling system land in the measurement calculation.
- Offer-of-coverage code by month. A blank month, or a no-offer code on someone the benefits module shows as offered, is the mismatch that surfaces most in test runs.
- Employee required contribution. Check the plan rate table against the ACA configuration after open enrollment closes.
- Affordability safe harbor. Every employee group carries one, and the configured choice matches what you documented.
Self-insured plans add a seventh: Part III covered individuals, which the instructions require for any employee who enrolls in self-insured coverage. Dependent records with missing SSNs or dates of birth surface here.
The December test run
Generate draft 1095-Cs in the first week of December. Pull a sample that covers every employee type you have: salaried full-time, hourly full-time, variable-hour under look-back, a mid-year hire, a mid-year termination, a rehire, a leave of absence, and a dependent-heavy enrollment on a self-insured plan. Check each month’s codes by hand against the benefits and payroll records. Every mismatch traces back to a configuration setting or a data field, and December is the month when you can fix the source and regenerate.
The IRS instructions state the general rule: forms file by February 28 on paper or March 31 electronically, in the year following the calendar year the return covers, and employers filing 10 or more information returns must file electronically. The instructions for the 2026 tax year were unpublished at the time of writing, so treat the forms as due early in 2027 and confirm the exact dates on the IRS instructions page when the new edition posts. The year-end payroll timeline we published in September runs alongside this one, and the two share the same December bottleneck: adjustments, W-2 previews, and ACA test forms all compete for the same analysts in the same two weeks. Sequence them now.
Where Providence Technology Solutions fits
ACA reporting preparation is a configuration audit with a deadline attached. Providence Technology Solutions has worked alongside HR and payroll teams on HCM configuration since 2016, including walking clients through 1095-C submission and IRS filing and tracing form errors to their root cause in the platform. Dayforce describes its compliance approach as built-in configurable rules that support changing regulations, and the ACA setup is where those rules earn their keep. If your team wants a second set of eyes on ALE status, measurement periods, safe harbor assignments, and the December test run before the forms generate, visit theptsteam.com. This post is general information; consult legal or tax counsel for your organization’s specific filing position.
