What Every Applicable Large Employer Needs to Know About ACA Compliance

Navigating Affordable Care Act (ACA) compliance can feel like a maze for many large employers. With detailed reporting requirements, employee hour tracking, and penalties looming for missteps, Applicable Large Employers (ALEs) must stay vigilant and informed. If your company employs 50 or more full-time equivalent employees, you fall under this category and face specific responsibilities mandated by the ACA.

In this comprehensive guide, we’ll break down everything you need to know about ACA compliance — from understanding your obligations to practical solutions for simplifying the process. We’ll also introduce ACA-Track, a proven ACA compliance solution designed to streamline tracking, reporting, and error correction.

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Understanding ACA Compliance for Applicable Large Employers (ALEs)

What Makes an Employer “Applicable Large”?

An employer is considered an ALE if it employs 50 or more full-time employees or full-time equivalents (FTEs). This includes:

• Full-time employees working 30+ hours per week

• Part-time employees whose combined hours convert into full-time equivalents

ALE status is determined based on the previous calendar year’s workforce size, meaning your compliance obligations are projected annually.

Why Does This Matter?

ALEs must offer health insurance that meets affordability and minimum value standards to their full-time employees (and their dependents). Failing to do so may result in employer shared responsibility payments, especially if any employee obtains premium tax credits through the Health Insurance Marketplace.

Defining Full-Time Employees and Full-Time Equivalents

• Full-time employees: Those working 30 or more hours per week (or 130+ hours per month).

• Full-time equivalents: Calculated by dividing total hours worked by part-time employees (capped at 120 hours per employee per month) by 120.

Accurately tracking these hours is critical for determining coverage eligibility.

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The Importance of Tracking Part-Time and Variable Hour Employees

Employers must track hours worked by all employee types, including part-time and variable hour workers, to determine eligibility for ACA coverage offers.

• Why track hours? Without documented hours, employees who work fewer than 30 hours per week could still claim eligibility for Marketplace subsidies, which may trigger penalties for the employer.

• Continuous tracking: Even after the individual mandate was repealed in 2017, ALEs remain responsible for offering coverage and reporting full-time employees’ coverage.

Failing to track accurately puts employers at risk of noncompliance penalties.

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ACA Reporting Requirements

ALEs must complete and submit specific IRS forms each year:

• Form 1095-C: Details the health insurance offers made to full-time employees.

• Form 1094-C: The transmittal form summarizing all 1095-Cs and submitted to the IRS.

These forms must be furnished to employees by January 31 each year, and the transmittal must be submitted to the IRS by March 31. Large employers (with 250+ employees) are required to file electronically.

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Challenges in ACA Compliance

Managing ACA compliance is complex because it requires coordination across multiple departments:

• Payroll: Provides hours worked and wages data.

• HR: Tracks employment status changes, hires, and terminations.

• Benefits: Manages insurance enrollment and waivers.

• Finance: Oversees reporting and potential penalties.

Combining data from different sources often leads to errors and missed deadlines.

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How ACA-Track Simplifies ACA Compliance

ACA-Track offers a comprehensive solution that helps ALEs stay compliant with minimal hassle. Here’s how ACA-Track supports your compliance efforts:

Data Collection

• Tracks actual hours worked for all employee types, including variable hour and part-time workers.

• Integrates seamlessly with any payroll, HRIS, or timekeeping system.

• Supports data collection from multiple sources like mobile devices, manual timesheets, and automated clocks.

Employee Eligibility Monitoring

• Provides real-time monitoring of employee eligibility thresholds.

• Issues advance alerts when employees exceed ACA hours limits.

• Tracks employee events such as waivers and leaves to ensure accurate eligibility determination.

Accurate Reporting

• Generates IRS-compliant Forms 1094-C and 1095-C for federal and state submissions.

• Offers electronic IRS XML file filing capabilities.

• Provides detailed monthly line code audits to detect and fix reporting errors before submission.

• Maintains comprehensive ACA data for easy retrieval during IRS audits or state healthcare exchange requests.

User-Friendly Interface

• Customizable dashboard allowing you to view, filter, and sort data by status, location, or employee.

• Snapshot summary feature captures employee ACA data over time.

• Color-coded warnings highlight errors or unusual data for quick correction.

Security and Compliance

• Operates on a secure, SAS 70 certified and SOC 2 Type 2 compliant cloud platform.

• Encrypts personal data and transfers information via HTTPS.

• Does not store HIPAA-protected medical information, ensuring data privacy.

Dedicated Support

• Every ACA-Track client receives a dedicated Client Success Advisor.

• Offers expert assistance throughout the year to make ACA compliance straightforward.

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What Happens If You Don’t Comply?

Noncompliance can result in substantial penalties:

• Late filing or furnishing of ACA forms can trigger fines up to $270 per return, doubling if not filed or furnished at all.

• Employer shared responsibility payments can reach $2,000 per full-time employee if coverage is not offered.

• IRS Letter 226-J penalty notices require prompt response and may lead to additional assessments.

Handling these penalties can be time-consuming and costly, making a reliable ACA compliance partner invaluable.

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Choosing the Right ACA Compliance Partner

When selecting a third-party provider like ACA-Track, consider:

• Transparent pricing and no hidden fees for setup, printing, or electronic filing.

• Flexible data integration that works with your existing payroll and HR systems.

• Full customer support with a dedicated advisor.

• Proven expertise in managing ACA complexities with security and accuracy.

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Conclusion

ACA compliance is an essential, ongoing obligation for every Applicable Large Employer. Accurate tracking, timely reporting, and penalty avoidance require a well-structured approach supported by reliable technology.

If you want to be confident that your organization meets ACA requirements without the administrative headache, consider ACA-Track—a proven solution designed to collect, monitor, and report ACA data efficiently.

Start simplifying your ACA compliance journey today, so you can focus on what matters most—running your business.