Why is tracking part-time employees critical for ACA compliance?

Tracking part-time and variable-hour employees is essential to ACA compliance because it helps determine whether these employees are eligible for health coverage. Without accurate tracking, businesses risk non-compliance and penalties, especially if part-timers qualify for coverage but are not offered it.

What risks do businesses face if they ignore ACA tracking for part-time employees?

Ignoring ACA tracking for part-time employees can lead to significant penalties. If part-time workers are not tracked accurately, and they receive health insurance coverage from the marketplace, the employer could face fines of up to $2,000 per full-time employee. Accurate tracking of hours worked is the only way to prove compliance.

How does ACA-Track help businesses track part-time and variable-hour employees?

ACA-Track automates the collection of part-time and variable-hour employee hours, ensuring that businesses stay compliant with ACA requirements. It integrates seamlessly with payroll systems and timekeeping platforms to provide real-time updates on eligibility for health coverage.

What are the consequences for employers who fail to track part-time employee hours under the ACA?

Employers who fail to track part-time employee hours may be subject to hefty fines from the IRS. Penalties include $50 to $270 per form filed late or incorrectly. If an employee receives marketplace subsidies because the employer failed to offer them insurance, fines of $2,000 per employee may apply.

How does ACA-Track support ACA error correction and audits for businesses?

ACA-Track helps businesses identify and correct errors before forms are submitted to the IRS. In case of an audit, ACA-Track stores all data securely, making it easy to retrieve information and resolve issues promptly. The platform also provides expert support to ensure that businesses stay compliant and avoid penalties.

Risky Business: Ignoring ACA Tracking for Part-Timers

Navigating the intricacies of ACA (Affordable Care Act) compliance can be a daunting task for employers, especially when it comes to tracking part-time and variable hour employees. These employees are often seen as low-risk when it comes to benefits coverage, but ignoring them can lead to costly penalties, administrative headaches, and serious non-compliance issues.

For companies that are subject to the ACA, understanding the requirements for tracking part-timers and variable hour workers is not optional – it’s critical to maintaining compliance and avoiding hefty penalties. Thankfully, tools like ACA-Track offer businesses the ability to collect, monitor, and report ACA-related data with confidence. But how can businesses ensure they’re on the right track? Let’s dive into the key reasons why part-time employee tracking is crucial under the ACA, and why using a reliable solution like ACA-Track is the best way to manage this complex process.

The Basics of ACA Compliance

Before we dive deeper into part-time and variable hour tracking, let’s refresh our understanding of the Affordable Care Act and the responsibilities it places on employers.

What is the ACA’s Employer Mandate?

Under Section 4980H of the Internal Revenue Code, applicable large employers (ALEs) – generally those with 50 or more full-time employees (including full-time equivalent employees, or FTEs) – are required to offer affordable health insurance that provides minimum value to their full-time employees. If an employer fails to do so, they risk facing the employer shared responsibility payment.

For companies to determine whether they are subject to this mandate, they need to track not only the hours of their full-time employees but also part-time and variable hour employees, as these workers may push the company into ALE status when combined with full-time employees.

Part-Time and Variable Hour Employees: The Hidden Risk

For employers that rely on part-time or variable hour employees, tracking becomes a bit more complex. Why? Under the ACA, employees working an average of 30 hours a week or more are considered full-time and must be offered healthcare coverage. Failure to track and calculate the hours worked by these employees could result in an employer failing to offer coverage when required.

Why Should You Track Part-Time Employees?

Part-time employees are often overlooked when it comes to ACA compliance. However, the ACA requires that employers track the actual hours worked by all employees, including part-timers and variable-hour workers. This is crucial for determining whether these employees qualify for full-time status and whether they need to be offered health insurance.

If your company fails to track part-time workers’ hours, you may not be aware when they reach the threshold for full-time status. If one of these employees seeks coverage through the marketplace and qualifies for a premium subsidy (because your company didn’t offer them insurance), your business could face penalties. In short, ignoring part-time worker hours could cost you, especially if these workers average more than 30 hours per week over a measurement period.

What Happens If You Don’t Track Hours?

If you do not track part-time or variable hour employees’ hours and one of them receives a subsidy through the marketplace, your business can face significant penalties. The IRS can impose fines for non-compliance, with penalties as high as $2,000 per full-time employee (excluding the first 30 employees). And the only way to prove that part-time employees worked less than 30 hours per week is by having accurate records of their hours worked.

Simply put, if you’re not tracking hours, you’re leaving yourself open to penalties and audits.

How Can ACA-Track Help?

Fortunately, there’s a solution to make ACA compliance easier: ACA-Track. ACA-Track simplifies ACA compliance tracking by collecting, monitoring, and reporting the necessary data for all employee types, including part-time and variable-hour workers. Here’s how ACA-Track makes ACA compliance easy:

1. Tracking Employee Hours Across Systems

ACA-Track seamlessly integrates with payroll systems, HRIS platforms, and timekeeping systems to collect actual hours worked by all employees. This includes part-time, full-time, variable-hour, and even substitute employees, ensuring that no worker’s hours are overlooked.

This system collects data from multiple sources, whether it’s manual timesheets, automated time clocks, or mobile devices, giving employers a comprehensive view of the hours worked by every employee.

2. Employee Eligibility Monitoring

One of the most critical aspects of ACA compliance is determining whether an employee is eligible for health insurance based on the hours they work. ACA-Track monitors employee eligibility thresholds and sends advance alerts when these thresholds are exceeded. This is especially useful for part-time employees who may fluctuate in their weekly hours, ensuring you stay on top of compliance requirements.

3. Comprehensive Reporting

ACA-Track offers comprehensive 1094 and 1095 reporting, generating the necessary forms to submit to the IRS. These reports help document the hours worked by each employee, their eligibility for benefits, and whether they were offered coverage. ACA-Track ensures all ACA data is maintained in one secure, easily accessible location.

4. Fixing ACA Reporting Errors

In the event of errors in your ACA filings, ACA-Track helps identify and correct them before they result in penalties. By ensuring all reporting is accurate and timely, ACA-Track minimizes the chances of receiving penalty letters from the IRS.

5. Security and Compliance

As a cloud-based solution, ACA-Track is built to ensure the security of your employee data. The system is SOC 2 Type 2 compliant and uses SSL encryption to protect sensitive information. This means your company’s ACA data is secure, compliant, and readily available when you need it most, especially in the event of an IRS audit.

Avoiding ACA Penalties

If your company fails to comply with ACA requirements, especially when it comes to tracking part-time and variable-hour workers, you may face severe penalties. The penalties for ACA non-compliance can range from $50 to $270 per incorrect return. This increases exponentially if the forms are filed late or not filed at all. These penalties are not something you want to risk, especially when tools like ACA-Track exist to ensure you stay compliant.

Furthermore, if your company is found in violation of the ACA’s shared responsibility provisions (failing to offer insurance coverage to eligible employees), you could be on the hook for $2,000 per full-time employee (excluding the first 30 employees). For businesses with a large workforce, these penalties can quickly add up into the millions.

What to Do if You’ve Received an IRS Penalty Letter

If you’ve already received a Letter 226-J from the IRS, it’s crucial to respond promptly. The IRS uses this letter to inform you of any penalties your company may face for failing to comply with ACA regulations. You’ll need to carefully review the letter, correct any errors, and submit the necessary documentation in a timely manner. Working with an ACA compliance service provider like ACA-Track can ensure your company responds appropriately and avoids unnecessary fines.

Final Thoughts: Don’t Risk ACA Compliance

In conclusion, ignoring ACA tracking for part-time and variable hour employees is a risky business move. The ACA requires that employers track the hours worked by all employees, and failure to do so can result in penalties that could significantly affect your bottom line.

By leveraging ACA-Track, businesses can simplify ACA compliance, ensure accurate reporting, and avoid costly penalties. With ACA-Track’s comprehensive data collection, real-time alerts, and secure reporting features, your company can stay ahead of the compliance curve and avoid the pitfalls of ACA non-compliance.

Remember, when it comes to ACA tracking, it’s better to be proactive than reactive. Start tracking your employees’ hours with ACA-Track today, and ensure your company stays on the right side of the ACA.