How to Design an ACA Compliance Workflow: A Comprehensive Guide

Navigating the complexities of Affordable Care Act (ACA) compliance can be overwhelming for many employers, especially Applicable Large Employers (ALEs) who must ensure their workforce meets ACA requirements and that reporting to the IRS is accurate and timely. Designing an effective ACA compliance workflow is essential to avoid costly penalties and to maintain peace of mind.

In this blog post, we’ll walk you through the essential components of building a reliable ACA compliance workflow — from data collection to IRS reporting — while highlighting how ACA-Track can simplify and streamline the entire process.

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Understanding ACA Compliance Basics

Before diving into workflow design, it’s crucial to understand who needs to comply and why.

• Who is subject to ACA employer mandates?
  Employers with 50 or more full-time and full-time equivalent (FTE) employees are considered Applicable Large Employers (ALEs). ALEs must offer affordable, minimum value health coverage to full-time employees or risk employer shared responsibility payments.

• Who is a full-time employee?
  A full-time employee is generally one who averages 30 or more hours per week or 130 hours per month.

• Why track variable-hour and part-time employees?
  Because part-time and variable-hour workers may cross the full-time threshold during measurement periods, tracking their actual hours worked is vital for determining eligibility and avoiding penalties.

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Step 1: Data Collection — The Foundation of ACA Compliance

Accurate and comprehensive data collection is the first step in building your workflow. You must capture actual hours worked by all employee types, including:

• Full-time employees

• Part-time employees

• Variable hour employees

• Seasonal and substitute workers

This data often comes from multiple sources — payroll systems, time clocks, manual time sheets, or even employee mobile entries. Manual consolidation can be error-prone and time-consuming.

This is where ACA-Track excels. ACA-Track collects actual hours worked across your entire employee base, integrating seamlessly with any payroll system, HRIS, or financial management software to ensure data accuracy and centralization.

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Step 2: Monitoring Employee Eligibility & Compliance Status

Once the data is collected, the next phase involves monitoring employee eligibility for health coverage.

Key workflow elements include:

• Defining measurement periods to evaluate whether variable-hour employees meet the full-time criteria.

• Tracking administrative and stability periods for coverage offerings.

• Monitoring employee events such as waivers, leaves, and terminations that affect coverage eligibility.

• Setting up alerts to notify when employees surpass eligibility thresholds or when coverage needs to be offered.

ACA-Track’s customizable dashboard allows you to configure these periods, track eligibility thresholds, and receive proactive alerts, making compliance monitoring straightforward and actionable.

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Step 3: Data Analysis & Audits for Accuracy

After monitoring eligibility, performing internal audits is critical to identify any data discrepancies or errors that could lead to inaccurate reporting or penalties.

• Conduct monthly line code audits on ACA 1095-C forms to validate reporting accuracy.

• Identify errors early with color-coded warnings and easy-to-filter views.

• Review variable hour employee classifications and coverage offers for accuracy.

ACA-Track supports these processes by providing data-rich, user-friendly views with powerful filtering and export capabilities, enabling your team to efficiently analyze and correct issues.

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Step 4: Generating IRS-Compliant ACA Reporting

Your workflow must culminate in the generation of ACA forms:

• Form 1095-C: Provided to employees, detailing offers of coverage and enrollment information.

• Form 1094-C: The transmittal sent to the IRS summarizing your coverage data.

Employers with more than 250 employees are required to file electronically with the IRS. ACA-Track electronically creates the IRS XML files and ensures the data conforms to IRS schema requirements.

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Step 5: IRS Submission & Follow-Up

Once forms are generated:

• Obtain your Transmitter Control Code (TCC) if filing electronically (required for employers with 250+ employees).

• Submit ACA files through the IRS AIR (Affordable Care Act Information Returns) system before the deadlines (Form 1095-C due to employees by January 31; Form 1094-C due to IRS by March 31).

• Track submissions and ensure receipt confirmations.

ACA-Track manages electronic filing seamlessly and offers dedicated client support to guide you through the submission process.

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Step 6: Correcting Errors & Handling IRS Notices

Despite your best efforts, errors can occur or the IRS may send penalty letters such as the IRS 226-J.

A robust workflow includes:

• Regularly reviewing IRS notices and verifying any discrepancies.

• Quickly researching and correcting errors, including offers made, waivers, and coverage status.

• Engaging legal or ACA compliance experts if needed.

ACA-Track supports correction filings and helps maintain comprehensive documentation to prepare your organization in case of an IRS audit or penalty challenge.

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Why Choose ACA-Track for Your ACA Compliance Workflow?

Designing and maintaining a compliant ACA workflow is complex and requires data precision, continuous monitoring, and reliable reporting capabilities.

ACA-Track provides a proven ACA compliance solution that:

• Collects and integrates hours worked for 100% of employees across systems.

• Monitors employee eligibility thresholds with customizable alerts.

• Reports with confidence by generating IRS-ready 1094-C and 1095-C forms.

• Performs monthly audits to prevent costly errors.

• Offers dedicated Client Success Advisors to support your specific business needs.

• Maintains secure, cloud-based data storage compliant with industry standards.

With ACA-Track, employers can simplify compliance management, minimize risk, and focus on their core business.

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Final Thoughts

Designing an effective ACA compliance workflow is no small task. It requires comprehensive data collection, diligent monitoring, precise reporting, and proactive error resolution.

By following the steps above and leveraging a specialized solution like ACA-Track, your organization can confidently navigate ACA requirements with accuracy and efficiency.

For more information and to explore ACA-Track’s features, visit their website and discover how to make ACA compliance simple and stress-free.