What is the importance of tracking employee hours for ACA compliance?

The IRS requires employers to track the hours worked by employees, especially those in variable-hour or part-time positions, to determine whether they meet the eligibility criteria for ACA coverage. ACA-Track automates the collection of employee hours from payroll and timekeeping systems, ensuring accurate tracking for compliance.

What forms must be filed with the IRS for ACA compliance?

Employers must file **Form 1094-C** and **Form 1095-C** with the IRS to report on employee health coverage. ACA-Track automates the generation and e-filing of these forms, ensuring compliance and accuracy in reporting.

How does ACA-Track help businesses avoid penalties in ACA reporting?

ACA-Track minimizes the risk of penalties by providing real-time data monitoring, automatic audits of employee hours, and error detection in ACA forms before they are submitted. This ensures that all necessary data is reported correctly, and any discrepancies are identified and corrected.

What happens if the IRS finds errors in ACA reports?

If the IRS identifies errors in ACA reporting, employers may face penalties. ACA-Track simplifies error correction by automatically detecting discrepancies in the data and allowing users to make adjustments before filing. If an audit occurs, ACA-Track stores all ACA-related data in one secure location, making retrieval easy.

What the IRS Looks for in ACA Reporting | ACA Compliance with ACA-Track

What the IRS Looks for in ACA Reporting

The Affordable Care Act (ACA) has introduced complex reporting requirements for employers, especially those classified as Applicable Large Employers (ALEs). As the IRS continues to enforce compliance, it’s crucial for organizations to understand the data that must be submitted and how to ensure their reports meet the stringent standards of the ACA. ACA-Track, a proven ACA compliance solution, simplifies the process by offering comprehensive tools for tracking employee hours, filing reports, and maintaining secure records. This post dives into the key components of ACA reporting and what the IRS looks for when reviewing submissions.

Understanding ACA Reporting Obligations

What is ACA Reporting?

The ACA mandates that Applicable Large Employers (ALEs) report on the health coverage they offer to employees. Specifically, they must file Form 1094-C (Transmittal of Employer-Provided Health Insurance Offer and Coverage Information Returns) and Form 1095-C (Employer-Provided Health Insurance Offer and Coverage). These forms help the IRS determine whether an employer is fulfilling its responsibility to provide affordable health insurance to full-time employees.

Who is Required to Report?

The ACA reporting requirements apply to Applicable Large Employers (ALEs). An ALE is a company that employs 50 or more full-time equivalent employees in the preceding year. The determination of ALE status is based on the size of the workforce, including both full-time and part-time workers, and the total number of hours worked by part-time employees.

If your business is an ALE, ACA reporting is a critical task to ensure compliance and avoid penalties.

Key Forms for ACA Reporting

Form 1095-C: This form provides detailed information about the health insurance coverage offered to each full-time employee, including the type of coverage and the affordability of the insurance.
Form 1094-C: This is a transmittal form that summarizes the information provided on all the Form 1095-C forms for an employer. It is sent to the IRS.

These forms must be filed annually and are used to determine whether the employer is liable for shared responsibility payments if employees receive a premium tax credit through the Marketplace.

What Does the IRS Look for in ACA Reporting?

Accuracy and Completeness of Information

The IRS closely examines the accuracy and completeness of the data provided in ACA forms. This includes verifying the following key details:

Employee Coverage Status: The IRS checks if each employee was offered affordable health coverage that meets the minimum value standards.
Full-time Employee Designation: Employers must correctly identify full-time employees, as well as track and report whether each worker is eligible for coverage based on their hours worked.
Insurance Offer Data: The IRS ensures that the information about insurance offers is consistent and accurately reflects whether the employee was offered coverage and whether it met the affordability and minimum value requirements.
Correct Employer Identification: The IRS checks for correct Employer Identification Numbers (EINs) and ensures that all submissions are filed under the correct employer identification.

Reporting Deadlines and Compliance

The IRS has specific deadlines for filing forms:

Form 1095-C must be distributed to employees by January 31 each year, though the deadline may sometimes be extended.
Form 1094-C must be filed with the IRS by March 31 for electronic submissions (February 28 for paper submissions).

Failing to meet these deadlines or submitting incomplete or incorrect forms can lead to penalties. Employers must ensure that they are not only compliant with these deadlines but also that the data is accurately reported.

Penalties for Non-compliance

The IRS has strict penalties for non-compliance. Employers can face penalties for:

Failure to file required forms or file them late.
Incorrect or incomplete filings, which can result in fines per return or statement.
Failure to offer coverage that meets ACA standards, which may trigger shared responsibility payments, often referred to as the “employer mandate penalty.”

In recent years, the IRS has issued penalty letters (e.g., IRS Letter 226-J) to employers found in violation of ACA regulations. These penalties can be substantial and often require immediate action to address errors or omissions.

How ACA-Track Simplifies Compliance

ACA-Track is designed to alleviate the complexities of ACA reporting. Here’s how the platform helps employers stay compliant:

1. Employee Hours Tracking

ACA-Track allows employers to track actual hours worked by all employee types (full-time, part-time, variable hour). It integrates with payroll systems and HRIS, ensuring the data is accurate and up-to-date.

2. Monthly Line Code Audits

The platform performs monthly line code audits for Form 1095-C, ensuring that each employee’s status is correctly reflected in their report, whether they are full-time, part-time, or eligible for health insurance coverage.

3. Automated Reporting

ACA-Track automates the generation of Form 1094-C and 1095-C, ensuring compliance with federal and state reporting requirements. The platform files these forms electronically with the IRS, minimizing the risk of errors.

4. Error Correction

If errors are identified during the ACA reporting process, ACA-Track allows users to fix reporting errors and re-submit forms to the IRS. This feature is crucial for avoiding penalties associated with incorrect filings.

5. Dedicated Client Success Advisor

For businesses looking for expert support, ACA-Track provides a dedicated Client Success Advisor who will guide them through the compliance process, answer questions, and offer solutions tailored to the business’s needs.

6. Comprehensive Data Management

ACA-Track consolidates all ACA-related data, including employee hours, coverage details, and more, in a secure, cloud-based platform. This ensures that the data is easily accessible and audit-ready in case of an IRS audit.

7. Integration with Payroll and HR Systems

With seamless integration, ACA-Track collects data from multiple systems, including timekeeping systems, payroll, and HR platforms. This eliminates the need for manual data entry and reduces the risk of errors.

Conclusion

ACA compliance can be a daunting task for businesses, but it is crucial to avoid costly penalties and maintain good standing with the IRS. ACA-Track offers a comprehensive, secure, and efficient solution to streamline the ACA reporting process. By tracking employee hours, ensuring data accuracy, automating report generation, and offering dedicated support, ACA-Track ensures that employers can confidently meet the IRS’s stringent requirements.

For more information about ACA-Track and how it can help with ACA compliance, visit ACA-Track. With ACA-Track, you can take the stress out of ACA reporting and focus on growing your business.