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May 28, 2025 By Mark

Navigating the Differences Between Federal and State ACA Laws

Navigating the Differences Between Federal and State ACA Laws

Navigating the Differences Between Federal and State ACA Laws

The Affordable Care Act (ACA) has become an essential piece of legislation that governs healthcare coverage for employers and employees in the United States. While the law establishes federal guidelines, it’s important to note that states have the authority to implement their own laws and regulations regarding healthcare. This creates a complex web of federal and state-specific compliance requirements for employers to navigate, especially those in industries with a significant number of employees.

In this blog post, we’ll explore how the ACA works on both the federal and state levels, the key differences between the two, and how companies can stay compliant with the help of solutions like ACA-Track.

Understanding the ACA and Its Federal Mandates

The ACA, signed into law in 2010, aims to make healthcare coverage more affordable and accessible to Americans. Among its provisions, the ACA requires applicable large employers (ALEs) to provide health insurance to their full-time employees or face penalties.

For companies with 50 or more full-time employees (or full-time equivalent employees), the ACA mandates:

  • Employer Shared Responsibility Payment (ESRP): If an ALE does not offer affordable and minimum value health insurance to its employees and their dependents, it may face penalties.

  • Reporting to the IRS: ALEs must report to the IRS about the health insurance coverage offered to employees through forms 1094-C and 1095-C.

  • Employee Notification: ALEs must send Form 1095-C to each employee by January 31 of the following year. This form provides information on the health coverage offered and helps determine if employees are eligible for premium subsidies through the Health Insurance Marketplace.

The ACA sets these requirements at the federal level, but each state may have additional laws, rules, or reporting obligations that can affect employers, particularly those with employees in multiple states.

State-Specific ACA Regulations and Their Impact

While the ACA sets a federal framework, many states have taken steps to create their own healthcare laws that may either align with or go beyond the federal guidelines. These state laws can influence how employers comply with ACA reporting and health coverage requirements.

For example, California, Massachusetts, and New Jersey have implemented individual mandates that require residents to have health insurance coverage or pay a penalty. These state-specific mandates can sometimes overlap with the ACA’s federal requirements, adding additional layers of complexity for employers.

Let’s take a closer look at the differences between federal and state laws:

1. State-Specific Health Insurance Mandates

Some states, like California, Massachusetts, and New Jersey, have passed laws requiring individuals to obtain health insurance or face a penalty. While the federal individual mandate penalty was effectively repealed in 2019, states can still impose their own mandates. For employers, this may require providing state-specific reports to comply with both federal ACA and state requirements.

2. State-Based Marketplaces

Under the ACA, each state has the option to establish its own health insurance marketplace, or “exchange,” for individuals to purchase health insurance. States like California (Covered California) and Washington (Washington Healthplanfinder) have their own state-based exchanges, while other states use the federal marketplace, HealthCare.gov. Employers in states with state-based exchanges may need to adjust their reporting requirements to meet both federal and state regulations.

3. State-Specific Reporting

In addition to federal ACA reporting requirements, employers in certain states may also have to file separate reports to state authorities. This might include reporting on employee health insurance offerings or demonstrating that employees have access to minimum essential coverage.

4. Penalties and Fines

States may impose their own penalties for non-compliance with state-specific healthcare laws. For instance, an employer in California may be subject to state penalties if they fail to comply with California’s individual mandate, even if they meet federal ACA standards. Similarly, an employer in Massachusetts may face fines if they do not meet the state’s healthcare coverage standards for their employees.

The Importance of Tracking Employees and Compliance

One of the most significant challenges for employers is tracking employees to ensure that they meet ACA compliance requirements. ACA rules focus heavily on employee classifications, such as full-time, part-time, variable hour, and seasonal employees. Employers must track the hours worked by all employee types and assess whether they qualify for healthcare coverage under the ACA.

For companies with a complex workforce structure, solutions like ACA-Track can streamline compliance. With ACA-Track, businesses can automate the tracking of hours worked by all employee types, including full-time, part-time, and variable-hour employees, ensuring that eligibility thresholds are met.

How ACA-Track Simplifies ACA Compliance for Employers

Navigating ACA regulations can be daunting, especially with the added complexity of state-specific laws. Fortunately, tools like ACA-Track make this process easier by offering a comprehensive compliance solution. Here are some of the key features:

1. Employee Hour Tracking

ACA-Track tracks the actual hours worked by all employee types, ensuring accurate reporting for full-time, part-time, and variable-hour employees. This is especially important for ensuring that employees who work an average of 30 hours or more per week are offered health coverage in compliance with the ACA.

2. Automated Reporting

ACA-Track simplifies reporting by automatically generating the required forms 1094-C and 1095-C for IRS submission. The system integrates with your payroll system to ensure that the necessary employee data is captured and reported correctly.

3. State-Specific Compliance

ACA-Track helps employers keep track of both federal and state-specific reporting requirements. This is particularly useful for employers in states with their own mandates, as the platform can ensure compliance with both federal and state regulations.

4. Error Correction

If errors are detected in ACA filings, ACA-Track helps identify and fix them, reducing the risk of penalties. This is crucial for employers in states with additional fines for non-compliance.

5. Cloud-Based Security

ACA-Track offers a secure, cloud-based platform that ensures your company’s sensitive data is protected. With SOC 2 compliance and robust encryption, ACA-Track provides a safe environment for storing and transmitting employee health coverage data.

The Benefits of Using ACA-Track for ACA Compliance

  • Ease of Use: ACA-Track’s user-friendly interface allows businesses to easily navigate complex ACA reporting and tracking requirements.

  • Time Savings: By automating the tracking and reporting process, ACA-Track saves businesses time and effort, freeing up resources for other critical areas.

  • Minimized Risk: ACA-Track helps reduce the risk of costly penalties by ensuring that employers comply with both federal and state-specific ACA regulations.

  • Dedicated Support: ACA-Track offers dedicated Client Success Advisors to assist with compliance questions and ensure that businesses stay on track throughout the year.

Conclusion

Navigating the complexities of the ACA can be challenging, particularly when considering the differences between federal and state regulations. As states implement their own laws and regulations around healthcare, employers must remain vigilant in tracking and reporting employee data to ensure compliance. Solutions like ACA-Track offer a streamlined, efficient way to manage ACA compliance, keeping both federal and state-specific requirements in check.

By leveraging ACA-Track’s robust tracking, reporting, and compliance solutions, employers can reduce the administrative burden of ACA compliance, minimize the risk of penalties, and ensure that their workforce has access to affordable healthcare coverage. With dedicated support and a user-friendly platform, ACA-Track makes ACA compliance simpler and more manageable for employers of all sizes.

For more information on ACA compliance, visit ACA-Track today!

Filed Under: ACA Compliance

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Information provided by PSST, LLC concerning the Affordable Care Act is not legal advice and should not be treated as such. If you have questions about how the Affordable Care Act will affect you as an employer, please consult legal counsel.

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