ACA Reporting Responsibilities: HR vs. Payroll vs. Benefits

ACA Reporting Responsibilities: HR vs. Payroll vs. Benefits – Understanding Your Organization’s Obligations and How ACA-Track Helps You Comply

The Affordable Care Act (ACA) introduced a complex set of reporting and compliance requirements that can feel like a maze for employers, especially for Applicable Large Employers (ALEs). For many organizations, understanding who is responsible for what in terms of ACA compliance can be confusing. The question often arises: should HR, Payroll, or Benefits handle the ACA reporting responsibilities? Let’s break down the key roles each department plays in ACA compliance and how ACA-Track can streamline the process for your business.

Part I: What is ACA Reporting and Why is It Crucial?

Before diving into the responsibilities of each department, it’s important to understand what ACA reporting involves. Under the ACA, ALEs (businesses with 50 or more full-time employees, including full-time equivalent employees) are required to report health coverage offered to employees, including details on eligibility and enrollment. The two primary forms used for ACA compliance are:

• Form 1094-C: Transmittal of Employer-Provided Health Insurance Offer and Coverage Information Returns.

• Form 1095-C: Employer-Provided Health Insurance Offer and Coverage.

These forms are filed with the IRS, and copies are also provided to employees. The information is crucial because it helps the IRS determine whether an employer owes the shared responsibility payment (i.e., a penalty) for failing to offer affordable, minimum-value health insurance coverage.

Part II: HR, Payroll, and Benefits – Who Does What?

While ACA compliance is a shared responsibility, each department within your organization plays a unique role in ensuring accurate and timely reporting. Let’s explore the responsibilities of HR, Payroll, and Benefits teams and how they intersect.

Human Resources (HR) – Tracking Employee Eligibility and Status

HR plays a central role in ACA compliance, primarily due to its responsibility for tracking employee eligibility and status. Some of the tasks HR handles include:

• Tracking Full-Time vs. Part-Time Employees: HR needs to keep accurate records of whether employees are considered full-time or part-time. According to the ACA, a full-time employee is someone who works an average of at least 30 hours per week, or 130 hours per month. HR will monitor employees’ work schedules and ensure they are classified correctly.

• Managing New Hires and Terminations: HR must keep track of employee hire dates, terminations, and any changes to employee status. This information is critical in determining whether an employee is eligible for health insurance and helps in the preparation of Forms 1095-C.

• Tracking Employee Events: HR is also responsible for monitoring events such as employee leave, waivers, and changes to coverage. These events could affect an employee’s eligibility for health coverage under the ACA, and timely tracking ensures compliance.

ACA-Track’s Role: ACA-Track simplifies these tasks with its intuitive dashboard that allows HR teams to easily track employee eligibility thresholds, new hire measurement periods, and event-based changes. The platform automatically monitors employee hours, ensuring no one falls through the cracks.

Payroll – Calculating Hours and Reporting

Payroll is responsible for collecting and processing employee hours worked, which is essential for determining full-time status. Payroll also plays a key role in reporting health coverage eligibility. Some payroll responsibilities include:

• Tracking Hours Worked: Payroll must ensure that the hours worked by employees, particularly part-time and variable-hour employees, are accurately recorded. This includes data from timekeeping systems, manual timesheets, or automated systems.

• Determining Full-Time Equivalent (FTE) Status: Payroll uses the hours worked by part-time employees to calculate whether they qualify as full-time equivalents. If part-time employees work an average of 30 hours per week or 130 hours per month over a designated measurement period, they must be offered health coverage.

• Reporting Hours on Forms 1095-C: Payroll plays a critical role in ensuring that the hours worked by each employee are reported accurately on Form 1095-C.

ACA-Track’s Role: ACA-Track provides full integration with payroll systems, helping payroll departments automate the collection of employee hours and accurately calculate full-time status. The software also offers real-time tracking of variable hour employees, reducing the risk of compliance errors and penalties.

Benefits – Ensuring Coverage and Managing Insurance Information

The Benefits team is responsible for managing employee health insurance plans and ensuring that employees are offered appropriate coverage. Their tasks include:

• Providing Health Coverage: The Benefits department ensures that the right employees are enrolled in the right health plans and that the coverage meets ACA requirements (affordable and minimum value).

• Monitoring Waivers and Coverage Elections: Benefits is responsible for tracking waivers and any instances where employees elect not to take health insurance, ensuring that the correct data is reported on Forms 1095-C.

• Handling Enrollment Changes: The Benefits team must ensure that any changes in coverage, such as dependents added or removed, are captured for ACA reporting.

ACA-Track’s Role: ACA-Track integrates seamlessly with benefits systems, providing a comprehensive view of health coverage offered to each employee. The platform tracks coverage elections, waiver codes, and any changes to an employee’s insurance status, making it easier for the Benefits team to report to the IRS.

Part III: The Role of ACA-Track in Streamlining ACA Compliance

Given the complexity of ACA reporting and the shared responsibilities across departments, having a centralized solution like ACA-Track is invaluable. ACA-Track is designed to integrate data from payroll, HR, and benefits systems, providing a unified platform for ACA compliance tracking and reporting. Here’s how ACA-Track simplifies the process:

• Data Integration: ACA-Track integrates seamlessly with your payroll, HR, and benefits systems, pulling data from each department to ensure all the necessary information is available for ACA reporting.

• Real-Time Monitoring: The platform continuously monitors employee hours, eligibility, and coverage to ensure compliance with ACA regulations. If an employee exceeds the eligibility threshold, HR is alerted in advance, allowing them to take necessary actions.

• Error Correction and Reporting: ACA-Track helps you quickly identify and fix errors in your ACA reporting. It also streamlines the creation of Forms 1094-C and 1095-C, ensuring accurate submission to the IRS and timely distribution to employees.

• Secure Data Management: ACA-Track is cloud-based and SOC 2 Type 2 compliant, ensuring your employee data is securely stored and protected from breaches.

• Dedicated Support: With ACA-Track, you’ll have access to a dedicated Client Success Advisor to guide you through the process, answer your questions, and ensure compliance is achieved effortlessly.

Part IV: Consequences of Non-Compliance

Failing to comply with ACA reporting requirements can result in significant penalties. The IRS imposes fines for late filings, incorrect information, and non-reporting of employee coverage. For example, the penalty for late filing of ACA returns can range from $50 to $270 per form, depending on how late the submission is. If your company is audited, having accurate data in one location, like with ACA-Track, can help you avoid costly penalties.

Conclusion

The responsibility for ACA compliance is a shared one, involving HR, Payroll, and Benefits departments. Each department plays a critical role in ensuring that the data needed for ACA reporting is accurate and up-to-date. With ACA-Track, your organization can streamline the ACA reporting process, reduce errors, and ensure timely compliance. By integrating HR, payroll, and benefits data into one centralized platform, ACA-Track simplifies the complex and often time-consuming process of ACA compliance, allowing you to focus on what really matters – running your business.

For more information on how ACA-Track can help with your ACA compliance needs, visit their website today!