Why is it important to track part-time employees under the ACA?

Tracking part-time and variable-hour employees is essential under the ACA because their hours determine whether they meet the threshold for full-time status (30 hours per week). Proper tracking helps employers know when coverage must be offered to avoid penalties and ensures accurate ACA reporting.

What risks do employers face if they don’t track part-time employees accurately?

Employers who fail to track part-time employees risk costly IRS penalties for not offering coverage to eligible employees. Without documented hours, the IRS may assume coverage was owed, leading to shared responsibility payments and fines for inaccurate or late ACA filings.

How does ACA-Track help with tracking part-time and variable-hour employees?

ACA-Track automatically collects and monitors hours worked for all employees, including part-time and variable-hour staff. It integrates with payroll and timekeeping systems to provide accurate hour tracking, eligibility alerts, and helps maintain compliance with ACA requirements.

What forms are required for ACA reporting related to part-time employees?

Applicable Large Employers must file Forms 1094-C and 1095-C with the IRS to report health coverage offers and employee eligibility. ACA-Track generates and electronically files these forms accurately, ensuring complete and timely ACA reporting.

How can employers avoid IRS audits and penalties related to part-time employee tracking?

Employers should maintain detailed documentation of all employee hours worked and use reliable ACA compliance solutions like ACA-Track. This reduces errors, facilitates accurate reporting, and provides easy access to data in case of IRS audits or penalty notices such as Letter 226-J.

The Risk of Not Tracking Part Time Employees Under the ACA

The Risk of Not Tracking Part-Time Employees Under the ACA

As the Affordable Care Act (ACA) continues to shape employer health insurance obligations, many companies face a critical compliance challenge: tracking part-time and variable-hour employees accurately. While full-time employees clearly fall under ACA rules, part-time workers are often overlooked, creating significant risk for employers. This blog post will explain why diligent tracking of part-time employee hours is essential under the ACA, the consequences of non-compliance, and how a comprehensive solution like ACA-Track can help you mitigate these risks.

Understanding the ACA’s Employer Mandate and the Role of Part-Time Employees

The ACA’s employer mandate requires Applicable Large Employers (ALEs)—generally those with 50 or more full-time equivalent employees—to offer affordable health coverage providing minimum value to full-time employees and their dependents or face penalties. But what counts as a full-time employee?

Full-time employees are those who average at least 30 hours per week (or 130 hours per month).
Full-time equivalents (FTEs) are calculated by combining part-time employee hours (capped at 120 hours per employee per month) and dividing by 120 to see how many FTEs they represent.

This means part-time and variable-hour employees are critical to the ACA calculation. If an employer fails to track these workers properly, they risk underestimating their FTE count, potentially misclassifying their ALE status, and more importantly, failing to offer coverage when required.

Why Tracking Part-Time Employees is Crucial

Determining Full-Time Status Over Measurement Periods

Part-time employees with variable hours can cross the ACA full-time threshold during measurement periods (ranging from 3 to 12 months). Without accurate hourly tracking, employers cannot determine when a part-time or variable-hour employee becomes a full-time employee eligible for coverage.

Avoiding Costly Penalties

If a part-time employee works 30 or more hours per week on average during the measurement period but the employer fails to offer health coverage, the employee can purchase Marketplace coverage and receive premium tax credits. This triggers an employer shared responsibility payment (penalty) to the IRS.

Employers must have documentation proving that part-time employees worked fewer than 30 hours weekly to avoid penalties. No documentation means the IRS may assume coverage was owed.

Ensuring Accurate ACA Reporting

ALEs are required to submit IRS Forms 1094-C and 1095-C, reporting health coverage offers and employee eligibility status. Without detailed, accurate hours worked for part-time staff, these forms can contain errors leading to IRS penalties or correction letters such as the dreaded IRS Letter 226-J.

The Risks of Not Tracking Part-Time Employees

Penalties and Financial Exposure

Non-tracking or inaccurate tracking leads to several risks:

Employer Shared Responsibility Payment (ESRP): Up to $2,000 per full-time employee (excluding the first 30) if coverage is not offered.
Reporting Penalties: Fines from $50 to $270 per incorrect or late 1095/1094 form, with potential maximum penalties exceeding a million dollars.
IRS Audits and Correction Letters: The IRS can issue 226-J penalty letters demanding documentation and imposing penalties if compliance is not demonstrated.

Operational and Compliance Challenges

Misclassification Risks: Misjudging employee hours can misclassify workers and trigger penalties or employee dissatisfaction.
Administrative Burden: Without an automated system, manual tracking of part-time hours across departments is prone to error and costly.
Data Silos: ACA data often resides in payroll, HR, benefits, and finance systems, complicating accurate and timely reporting.

How ACA-Track Solves These Challenges

ACA-Track is a proven ACA compliance solution designed to simplify and secure the tracking and reporting process—especially for part-time and variable hour employees.

Comprehensive Employee Hour Tracking

ACA-Track collects actual hours worked from multiple sources — timekeeping systems, payroll, manual timesheets, mobile entries — ensuring 100% of your workforce is monitored, including part-time, paraprofessional, and substitute employees.

Intelligent Monitoring and Alerts

The platform monitors employee eligibility against ACA thresholds and alerts you in advance when employees approach full-time status, so you never miss a coverage obligation.

Seamless ACA Reporting

ACA-Track generates error-free 1094-C and 1095-C federal and state reports and can file electronically with the IRS, streamlining compliance and reducing costly mistakes.

User-Friendly and Customizable

With customizable dashboards, snapshot views preserving historical data, and flexible configurations for measurement and stability periods, ACA-Track puts all ACA data and controls at your fingertips — making it easy for benefits, HR, payroll, and finance teams to collaborate.

Data Security and Reliability

Built on a secure, SAS 70-certified cloud platform, ACA-Track encrypts personal data, complies with HIPAA restrictions, and transfers data via HTTPS, protecting sensitive employee information.

Dedicated Client Support

With ACA-Track, you get a dedicated Client Success Advisor to guide you through compliance, audits, and reporting — turning a complicated process into a manageable one.

Final Thoughts: Don’t Risk ACA Non-Compliance—Track All Employees’ Hours

The risk of not tracking part-time employees’ hours under the ACA is significant—both in terms of financial penalties and operational headaches. Accurate tracking is your best defense against penalties and IRS scrutiny.

If your organization struggles with managing ACA compliance across multiple employee types and systems, consider a trusted solution like ACA-Track. Their comprehensive approach to collecting, monitoring, and reporting employee hours ensures you stay compliant, avoid costly penalties, and simplify ACA responsibilities.

For employers committed to ACA compliance, tracking part-time employees isn’t just good practice—it’s a regulatory necessity. Make sure your ACA compliance strategy includes every hour worked.

Explore ACA-Track’s features and how it can help your business at ACA-Track today.