How to Support Clients Who Are Applicable Large Employers (ALEs)

Navigating ACA compliance can be a complex task, especially for companies classified as Applicable Large Employers (ALEs). ALEs are subject to specific requirements under the Affordable Care Act (ACA) to provide affordable health coverage to full-time employees and report this coverage to the IRS. This article will explore how businesses can support their clients who are ALEs, focusing on the tools, strategies, and services that can help them stay compliant and avoid penalties.

One of the best ways for organizations to ensure compliance with ACA regulations is by using a reliable solution like ACA-Track, which provides a user-friendly system for tracking employee hours, eligibility, and ACA-related reporting.

Understanding the Responsibilities of an Applicable Large Employer (ALE)

What Is an ALE?

An Applicable Large Employer (ALE) is defined by the ACA as any employer that employs 50 or more full-time employees, including full-time equivalent employees (FTEs). ALEs must adhere to specific ACA provisions, which include offering affordable health coverage to full-time employees and reporting this information to the IRS.

How Does ACA Compliance Affect ALEs?

ALEs are required to:

1. Offer Health Coverage: ALEs must offer health insurance that is deemed affordable and provides minimum value to their full-time employees (those working 30 or more hours per week). The coverage must also extend to employees’ dependents.

2. Track Employee Hours: Tracking both full-time and variable-hour employees is crucial. Employers must monitor the actual hours worked to ensure they correctly determine who qualifies for coverage under the ACA.

3. Report to the IRS: ALEs must file Form 1094-C and Form 1095-C with the IRS. These forms provide information about the health insurance coverage offered and the employees who received it.

Failing to meet these requirements can lead to significant penalties. For example, if an ALE does not provide the required coverage, it may face a penalty of $2,000 per full-time employee (excluding the first 30 employees).

How to Support ALE Clients with ACA Compliance

1. Ensure Accurate Tracking of Employee Hours

One of the most important aspects of ACA compliance is tracking employee hours, especially for variable-hour and part-time employees. Without proper tracking, it’s difficult to determine whether an employee is full-time (working 30 hours per week) or part-time, which in turn affects their eligibility for health insurance coverage.

ACA-Track offers robust tools to support this effort. The platform collects actual hours worked by employees, whether they are full-time, part-time, variable-hour, or temporary workers. It integrates seamlessly with payroll systems, HRIS, and time-keeping systems to ensure that all employee hours are tracked accurately.

2. Monitor Employee Eligibility

Keeping track of which employees are eligible for coverage is a major part of ACA compliance. ACA-Track provides a monitoring system that alerts employers when an employee exceeds the ACA’s full-time thresholds or becomes eligible for health coverage. This helps companies stay proactive and avoid errors in reporting.

For example, ACA-Track can monitor employees during a measurement period (which can range from 3 to 12 months) and alert HR teams when an employee’s average hours exceed 30 hours per week, qualifying them for full-time status and employer health coverage.

3. Simplify ACA Reporting

ALEs must report health coverage information to the IRS using Forms 1094-C and 1095-C. These forms require detailed data on full-time employee status, health coverage offers, and whether employees accepted or waived coverage.

ACA-Track simplifies this process by generating the required forms automatically. The software tracks all the necessary data and compiles it into the correct format for electronic submission to the IRS. By using ACA-Track, companies can ensure that their reporting is accurate and submitted on time.

4. Provide Comprehensive IRS Filing

In addition to providing forms to employees, ALEs are required to transmit their ACA forms to the IRS electronically. ACA-Track simplifies this by handling electronic filings and even correcting any errors that might occur during the filing process. If an error is detected, ACA-Track offers solutions to help employers fix these errors before the deadline, ensuring they avoid penalties.

5. Assist with Correcting Reporting Errors

It’s not uncommon for errors to occur when filing ACA forms, especially when dealing with a large number of employees. ACA-Track offers services to correct reporting errors, ensuring that employers can fix mistakes before they become costly penalties.

This service is particularly important for ALEs, as incorrect filings or late submissions can result in significant penalties. For instance, filing forms after the deadline can result in a penalty of up to $270 per form.

6. Offer Expert Guidance and Support

The complexities of ACA compliance mean that many businesses need help navigating the regulations. ACA-Track offers a dedicated Client Success Advisor to help employers understand the nuances of ACA compliance. This support ensures that employers receive timely advice on managing their ACA responsibilities and avoid costly mistakes.

Having a trusted advisor who understands the intricacies of the ACA can provide peace of mind for ALEs, knowing they have expert support when they need it most.

7. Ensure Data Security and Privacy

Given the sensitive nature of the data involved in ACA reporting, data security is a top priority. ACA-Track uses state-of-the-art encryption to protect employee data and ensure compliance with all relevant data privacy laws. With SOC 2 Type 2 compliance and SAS 70 certification, ACA-Track offers secure, cloud-based storage for all ACA-related data.

This is essential for ensuring that your client’s data is kept safe from breaches, and it can also be vital in the event of an IRS audit, as all data is readily available for review.

8. Handle Penalties and Notices from the IRS

If an ALE does not comply with ACA requirements, it may receive a penalty notice from the IRS, such as the 226-J penalty letter. These letters explain the penalty owed by the employer and request a response within a specific time frame.

In these cases, ACA-Track can offer guidance on how to respond. If necessary, the platform can help ALEs dispute or correct errors that may have led to the penalty. This ensures that the company is not unfairly penalized for issues outside of its control.

9. Stay Updated with ACA Changes

ACA regulations are frequently updated, which can make compliance a moving target for ALEs. A third-party provider like ACA-Track ensures that clients stay up-to-date with the latest changes in ACA law, avoiding noncompliance due to outdated practices or reporting systems.

Conclusion

Supporting clients who are Applicable Large Employers (ALEs) requires a comprehensive approach that includes accurate tracking of employee hours, proactive eligibility monitoring, timely ACA reporting, and assistance with any penalties or errors.

Solutions like ACA-Track offer the tools, expertise, and support needed to streamline ACA compliance, helping ALEs meet their obligations while avoiding costly mistakes. By leveraging the power of ACA-Track, businesses can rest easy knowing that they are well-prepared for any ACA-related challenges they may face.