Selling ACA Solutions: What Employers Want to Know

Navigating the complexities of the Affordable Care Act (ACA) can be daunting for employers, especially when it comes to tracking employee hours, meeting reporting deadlines, and ensuring compliance with the IRS. Fortunately, solutions like ACA-Track make the ACA compliance process much simpler. This blog post will walk through the essential aspects of ACA compliance that employers need to know, explore what ACA-Track offers, and explain why ACA solutions are crucial for modern businesses.

Part I – Basic ACA Information

What Does the ACA Mean for Employers?

The Affordable Care Act (ACA), specifically Section 4980H of the Internal Revenue Code, mandates that certain employers, known as Applicable Large Employers (ALEs), offer affordable, minimum-value health coverage to their full-time employees (and their dependents) or face potential penalties. If at least one full-time employee receives a premium tax credit to purchase health insurance through the Health Insurance Marketplace, the employer may be subject to an Employer Shared Responsibility Payment.

How to Determine If Your Company is an ALE?

An ALE is defined as an employer who employs 50 or more full-time employees, including full-time equivalent employees (FTEs). These FTEs are calculated by combining the hours worked by part-time employees, with a cap of 120 hours per part-time employee. If your company’s workforce meets this threshold, it is considered an ALE, and ACA regulations apply.

Full-Time Employee Definition under the ACA

A full-time employee, for ACA purposes, works an average of at least 30 hours per week (or 130 hours per month). For employers, tracking part-time and variable hour employees is essential to determine eligibility for health coverage under ACA regulations.

Why Track Part-Time and Variable Hour Employees?

Tracking part-time and variable hour employees is critical for determining whether they are eligible for health coverage under ACA guidelines. Without accurate tracking, employers may risk non-compliance penalties, especially if a part-time employee is later found to have worked enough hours to qualify for coverage.

Part II – ACA Reporting: Compliance, 1095s, and IRS Submission

ACA Reporting Responsibilities for ALEs

ALEs are required to report details about their health coverage offerings to the IRS using Forms 1094-C and 1095-C. Form 1095-C must also be provided to each employee, detailing whether the employer offered health coverage, the type of coverage, and the months it was available.

Employers must collect data from various departments such as payroll, human resources, and benefits administration to complete ACA reporting requirements. Inaccurate or incomplete reporting can result in penalties, so ensuring all relevant data is compiled and submitted accurately is paramount.

Reporting Deadlines

• 1095 Forms to Employees: Generally due by January 31 each year, but the IRS has allowed extensions in the past.

• 1094 Transmittal to the IRS: Typically due by March 31, unless filing by paper, in which case it is due by February 28.

What Happens If Your Company is Non-Compliant?

Failing to comply with ACA regulations can result in hefty penalties. For instance, employers who fail to file or furnish the required 1095 forms on time may face penalties starting at $50 per return, escalating to $270 per return if filed after August 1. These penalties are per return, meaning they can quickly add up.

Employers may also receive IRS 226-J penalty letters, which outline the specifics of any penalties assessed due to non-compliance. Immediate attention is necessary to address these penalties, especially since they often come with a 30-day response window.

Part III – Non-Compliance: Penalties and Penalty Letters

Non-compliance with ACA regulations can lead to serious financial consequences. There are two main types of penalties:

1. Failure to File Penalties: Employers who fail to file the required forms 1094-C and 1095-C by the deadline face fines. If filed more than 30 days late but before August 1, the penalty is $110 per return.

2. Shared Responsibility Payment (Assessment Fees): If an employer does not offer adequate coverage or fails to meet ACA requirements, they may be subject to a shared responsibility payment. This penalty is $2,000 per full-time employee (excluding the first 30 employees) for not offering coverage, or $3,000 per employee who qualifies for a premium tax credit.

In both cases, these penalties add up quickly, making timely and accurate reporting critical to avoiding significant financial burdens.

Part IV – ACA-Track: Your Solution for ACA Compliance

Why Choose ACA-Track?

ACA-Track is a comprehensive, user-friendly software solution designed to simplify ACA compliance. From tracking employee hours to filing IRS reports electronically, ACA-Track offers the following key features:

• Monthly Line Code Audits for 1095-C: Ensuring your 1095-C forms are accurate and in compliance with ACA reporting guidelines.

• Variable Hour Tracking: ACA-Track monitors part-time and variable hour employees, ensuring you meet ACA reporting standards.

• Federal and State Reporting: The software generates and files the necessary 1094-C and 1095-C forms electronically, reducing the risk of errors.

• Client Success Advisors: ACA-Track provides dedicated client support to ensure that ACA compliance remains easy to manage for businesses of any size.

Key Features of ACA-Track:

• Customizable Dashboard: ACA-Track allows users to arrange and filter data as needed for greater efficiency.

• Snapshot Summary: This feature preserves employee ACA data over time, giving employers easy access to historical records.

• Flexible Configuration: Employers can adjust the measurement, administrative, and stability periods as needed to meet their business’s unique requirements.

• Data-Driven Insights: ACA-Track offers a data-rich platform, with features like grouping, sorting, and color coding to quickly identify discrepancies.

Security and Compliance

Security is paramount when dealing with sensitive employee data. ACA-Track ensures that all personal information is encrypted, and all data transfers are conducted via HTTPS, keeping your business in compliance with data protection regulations. The platform is SAS 70 certified and SOC 2 Type 2 compliant, making it a secure choice for ACA compliance.

Part V – Choosing the Right Third-Party ACA Provider

When evaluating ACA compliance solutions, employers must consider several factors:

• Upfront Costs: Some providers charge flat rates, while others have separate costs for setup, data exchange, and printing services.

• Customer Support: Look for a provider that offers dedicated support, like the Client Success Advisors at ACA-Track, to guide you through the compliance process.

• Data Format Compatibility: Ensure that your payroll and HR systems are compatible with the ACA reporting requirements to avoid potential issues.

Conclusion

For employers, ACA compliance is not just a regulatory requirement—it’s an ongoing task that requires diligent tracking, reporting, and attention to detail. ACA-Track offers a streamlined, secure, and effective solution to help businesses stay compliant with ACA regulations, avoiding penalties and reducing the administrative burden.

Whether you’re a small employer or an ALE, ACA-Track’s flexible and user-friendly platform can help ensure that your ACA reporting and compliance is seamless, so you can focus on running your business without worry. Don’t risk penalties—explore ACA-Track today to stay on top of ACA compliance!

Visit ACA-Track for more information and to get started on your ACA compliance journey.