How can non-compliance with ACA affect my bottom line?

Non-compliance with ACA regulations can lead to significant financial penalties, including fines for late or incorrect filings of Forms 1094-C and 1095-C. Businesses may also face the Employer Shared Responsibility Payment (ESRP) penalty, which can cost up to $2,000 per full-time employee. Additionally, non-compliance can lead to legal costs and damage to your company's reputation.

What are the penalties for failing to comply with ACA regulations?

Penalties for ACA non-compliance vary depending on the nature of the violation. For instance, failing to file 1095-C forms on time can result in fines ranging from $50 to $270 per form. Employers who do not offer affordable health coverage or meet minimum value requirements could face a $2,000 per employee fine, excluding the first 30 employees.

How does ACA-Track help mitigate ACA compliance risks?

ACA-Track helps businesses manage their ACA compliance by automating the collection of employee data, including hours worked, eligibility tracking, and benefit status. It simplifies ACA reporting by automatically generating and filing Forms 1094-C and 1095-C with the IRS, reducing the risk of penalties and audit complications.

Can ACA-Track help with ACA reporting errors and audits?

Yes, ACA-Track identifies reporting errors before forms are submitted to the IRS, ensuring accurate and timely filings. In the case of an IRS audit, ACA-Track stores all relevant data in one secure location for easy retrieval, simplifying the audit process and helping businesses avoid unnecessary penalties.

How does tracking part-time and variable-hour employees impact ACA compliance?

Tracking the hours of part-time and variable-hour employees is essential for ACA compliance. These employees must be monitored to determine if they meet the ACA’s full-time equivalent (FTE) threshold. ACA-Track automates this process, ensuring that all hours are accurately tracked and eligibility for health benefits is determined in accordance with ACA rules.

How Non-Compliance with ACA Can Impact Your Bottom Line

How Non-Compliance Can Affect Your Bottom Line

As an employer, ensuring your business complies with the Affordable Care Act (ACA) is not only important for the well-being of your employees, but it’s also crucial for the health of your bottom line. Failing to comply with ACA regulations can result in hefty fines, penalties, and other unforeseen financial consequences. These costs can compound quickly and can significantly impact your business operations and profitability. In this blog post, we’ll explore the risks associated with non-compliance, why ACA compliance is essential, and how ACA-Track can help safeguard your organization from these potentially devastating consequences.

Understanding ACA Compliance

The Affordable Care Act (ACA) requires applicable large employers (ALEs) to offer health coverage to full-time employees or face a penalty. An ALE is defined as an employer with 50 or more full-time employees, including full-time equivalent (FTE) employees. For employers who qualify as ALEs, failure to comply with ACA regulations related to health coverage, reporting, and recordkeeping can result in severe penalties.

Key aspects of ACA compliance include:

Offering Affordable Health Coverage: ALEs must offer health insurance that meets minimum value and is affordable to their full-time employees (working an average of 30 or more hours per week).
Tracking and Reporting Employee Hours: Employers must accurately track the hours worked by their employees, especially part-time and variable-hour workers, to determine eligibility for health benefits.
Filing Forms 1094-C and 1095-C: Employers must file these forms with the IRS to report their health coverage offers and coverage status for each employee.

With such complex regulations, ensuring compliance can be a daunting task for businesses of any size. That’s where ACA-Track comes into play.

The High Cost of Non-Compliance

Non-compliance with ACA regulations can be financially devastating, both in terms of penalties and the potential loss of employee trust. Here are some of the most significant ways non-compliance can affect your bottom line:

1. Penalties for Non-Compliance

One of the most immediate and severe consequences of non-compliance is the imposition of penalties by the IRS. For example, if your company fails to file the required forms (1095-C and 1094-C) on time, or if your health insurance offering doesn’t meet ACA standards, your company can be subject to substantial penalties.

Filing Penalties: If your forms are filed late, the penalties can range from $50 per return if filed within 30 days of the due date, up to $270 per return if filed after August 1. These penalties are capped at $1,113,000 for large employers.
Shared Responsibility Payment: If you don’t offer affordable health coverage or your coverage does not meet minimum value, you may be required to make a per-employee, per-month shared responsibility payment. This can be as much as $2,000 per employee (excluding the first 30 employees).

2. Increased Operational Costs

Tracking employee hours, maintaining accurate records, and managing health insurance coverage can be time-consuming and costly without the right systems in place. Failure to track hours worked by part-time or variable-hour employees can lead to significant gaps in your reporting and health coverage offerings, which might then result in penalties and legal costs.

In addition, the costs of manually correcting ACA-related reporting errors or dealing with audits can quickly add up. Businesses without a streamlined ACA compliance system often find themselves scrambling to rectify errors, which is both expensive and time-intensive.

3. Damage to Employee Trust and Morale

Non-compliance doesn’t just affect your financial bottom line—it can damage employee trust and morale as well. If employees are not offered health insurance when they are eligible or if they are left in the dark about their benefits, it can lead to dissatisfaction, reduced productivity, and even higher turnover rates. Moreover, employees who are affected by ACA violations could seek compensation through legal action or complaints to the IRS, further impacting your business finances.

4. Risk of IRS Audits

One of the most serious risks of non-compliance is the possibility of an IRS audit. If the IRS identifies discrepancies in your ACA filings or finds that you have failed to meet the ACA’s employer mandate, your business could face a detailed audit. Audits can be time-consuming and costly, and the fines and penalties associated with audit outcomes can add significant pressure to your business operations. The risk of an audit increases if your ACA reporting is inconsistent or incomplete.

How ACA-Track Can Help Mitigate Risks

Fortunately, you don’t have to navigate the complexities of ACA compliance on your own. ACA-Track offers a comprehensive solution to ensure your business stays compliant and avoids costly penalties. With ACA-Track, you can automate the process of tracking, reporting, and maintaining ACA compliance. Here are some key ways ACA-Track helps businesses:

1. Accurate and Efficient Tracking of Employee Hours

ACA-Track allows you to track the hours worked by all employees, including variable-hour and part-time workers, in real time. By integrating with your payroll and HR systems, ACA-Track ensures that you are always aware of employee eligibility for health coverage based on actual hours worked. This eliminates the risk of offering health coverage to employees who don’t meet the eligibility criteria, reducing the chance of costly penalties.

2. Seamless 1095-C and 1094-C Reporting

With ACA-Track, generating and submitting your 1095-C and 1094-C forms to the IRS becomes a streamlined process. ACA-Track automatically compiles all necessary data, ensuring accurate reporting without the hassle of manually collecting and sorting information from multiple departments. You can be confident that your filings will be submitted on time, helping you avoid late penalties.

3. Automated Error Identification and Resolution

ACA-Track automatically detects and flags errors in your reporting, such as discrepancies in employee eligibility, missing data, or incorrect form submissions. The software provides proactive alerts, allowing you to resolve issues before they become costly penalties or audit triggers.

4. Easy Access to Compliance Data for Audits

In the event of an IRS audit, ACA-Track maintains all ACA compliance data in one secure location, making it easy to retrieve and present documentation when needed. The platform’s customizable dashboard and snapshot features allow you to access historical compliance data quickly, minimizing the disruption caused by an audit.

5. Security and Data Protection

With ACA-Track, your employee data is stored securely in a SAS 70-certified cloud environment. ACA-Track adheres to industry-standard security practices, ensuring that your sensitive employee information is protected from unauthorized access. This peace of mind helps you avoid potential data breaches, which could result in legal and reputational damage.

Conclusion

Non-compliance with ACA regulations is more than just an administrative headache—it can have a direct and serious impact on your business’s financial health. Penalties, increased operational costs, and the risk of employee dissatisfaction can severely hurt your bottom line. However, by using a comprehensive and reliable ACA compliance solution like ACA-Track, you can mitigate these risks, ensure smooth reporting, and safeguard your business from unnecessary costs. Don’t wait for the IRS or your employees to point out compliance failures—take proactive steps today to secure your business’s future.