‘Complexity’ of the ACA Mandate Biggest Challenge for Employers

In a survey conducted recently by ACA-Track™, the complexity of the Affordable Care Act law is by far the most concerning challenge for employers in 2018. Here are the top 10 ACA mandate challenges in 2018 ranked in order of respondents indicating either “Very Concerned” or “Extremely Concerned” and recommended best practices for addressing each:

1. Complexity of the ACA Law – 79.16%

BEST PRACTICE: Employers should treat ACA requirements with the seriousness it deserves. Dedicate funds, resources and staff to educate top management and to ensure the company complies with ACA regulations.

2. Time and/or resources required to implement and stay compliant – 64.77%

BEST PRACTICE: Provide quality staff members the resources and time to implement ACA requirements and to understand specific details of the organization’s needs to remain compliant. Consider qualified third-party providers for ACA tracking and reporting.  Oftentimes, the cost of a quality third-party provider is less expensive than the resources, time and staff that are required to comply internally.

3. Understanding the details of the ACA law and its impact on my organization – 62.49%

BEST PRACTICE: Provide quality staff members the resources and time to learn as much as necessary about ACA employer shared responsibility provisions and how those provisions affect the organization.  Informed staff members can also offer advice in selecting a quality third-party provider if the members are aware of ACA regulations and its organization’s specific needs relating to compliance.

4. Tracking employee hours – 62%

BEST PRACTICE: Because of the complexity of ACA rules regarding part-time worker eligibility, ALEs should consider an automated system for tracking actual hours worked of all part-time and variable-hour workers. The tracking system should include employee hire dates, term dates, leave dates, actual hours worked on a daily basis, measurement periods and limited non-assessment periods, if any.  For most organizations, the data required to comply with tracking comes from several departments (payroll, HR, benefits etc.), which further complicates the process of integrating the data.

5. Ability to respond to an IRS audit – 54.26%

BEST PRACTICE: Employers should implement procedures that include documentation of all functions related to ACA activities, (i.e., open enrollment notifications, waiver documentation, data retention on individual measurement periods and offers of insurance to new employees, etc.).  In case of an audit, the burden of responsibility falls on the employer to prove the employer offered insurance, the employer tracks part-time worker hours, the employee waived coverage, and those employees who do not qualify for insurance offers by tracking actual hours worked.

6. Reporting requirements (forms 1095 B/C) – 50%

BEST PRACTICE: Clean ACA data is essential for ACA reporting.  Submitting accurate 1094s and 1095s the first time around is critical.  Errors and incorrect data can cause IRS penalties and costly assessments at worst, but also, at best, incorrect data and errors cause extra work to correct the errors and possible IRS inquiries/audits.  Employers may wish to consider a quality third-party provider that collects all ACA data, applies the rules and regulations of ACA reporting, produces the 1094 and 1095 forms, and submits the forms to the IRS and employees.

7. Ability to respond to an IRS Penalty Letter 226-J – 46.33%

BEST PRACTICE: The stakes are high. ACA penalties can be in the millions of dollars due to missing information, incorrect or dirty data, incorrect full-time employee counts, or errors in coding.  Employers that have received a 226-J must respond in a timely manner and dedicate resources to either reduce or eliminate the penalty.  Documentation is of the utmost importance in proving ACA compliance to reduce or eliminate penalties.

8. Understanding how ACA applies to seasonal employees – 43.46%

BEST PRACTICE: Employers must accurately classify “seasonal employees” and “seasonal workers” and apply the appropriate ACA rules regarding tracking and measurement periods for those employees who require tracking of actual hours worked.  Without a clear understanding of classifying and monitoring employees, the employer may be at risk for penalties if an eligible employee should receive a premium tax credit.

9. Understanding how ACA applies to self-insured employers – 41.76%

BEST PRACTICE: There are special provisions for employers providing self-insured coverage that are not ALEs.  Those employers must report differently and on different forms.  Employers in this category need to be aware of their responsibility to furnish 1094-B and 1095-B forms.

10. Reporting requirements (forms 1094-B/C) – 41.66%

BEST PRACTICE: ALEs are required to report information about health insurance coverage offered to their full-time employees (and their dependents).  ALEs are required to report to the IRS, as well as to their full-time employees, regardless of whether the ALE actually offers health insurance coverage. The ALE must collect all the data necessary to complete and submit the 1094 and 1095 forms to the IRS and employees. Employers may wish to consider a quality third-party provider that collects all ACA data, applies the rules and regulations of ACA reporting, produces the 1094 and 1095 forms, and submits the forms to the IRS and employees.