What to Include in Your ACA Compliance Policy

Navigating the Affordable Care Act (ACA) can feel overwhelming for many businesses, especially Applicable Large Employers (ALEs) who face strict regulations around health coverage, tracking employee hours, and timely reporting. Developing a clear, thorough ACA compliance policy is critical—not just to avoid penalties but to streamline your processes and safeguard your business.

If you want a reliable, user-friendly solution to manage this complexity, consider ACA-Track. ACA-Track offers comprehensive ACA compliance services tailored to your business needs, including automated tracking, reporting, audits, and error correction.

In this blog post, we’ll break down what should be included in your ACA compliance policy, why each component matters, and how ACA-Track can help simplify your compliance journey.

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Understand Who is Subject to ACA Compliance

Before crafting your policy, clarify if your organization qualifies as an Applicable Large Employer (ALE) under the ACA. This generally means:

• You employ 50 or more full-time or full-time equivalent (FTE) employees during the previous calendar year.

• Full-time means an employee working 30 or more hours per week or 130+ hours per month.

Your policy should include the methodology for counting full-time and FTE employees:

• Track actual hours worked for all employees, including part-time and variable hour workers.

• Calculate FTEs by combining part-time employees’ hours (capped at 120 hours/month each) and dividing by 120.

• Use this data to assess ALE status annually.

Without proper tracking, you risk penalties if employees who should have been offered coverage obtain Marketplace subsidies.

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Employee Hours Tracking Protocol

A robust ACA compliance policy must mandate detailed hour tracking procedures across employee types:

• Track actual hours worked for full-time, part-time, variable-hour, substitute, and paraprofessional employees.

• Integrate data from all sources: payroll, time clocks, manual timesheets, employee mobile entries, etc.

• Establish measurement periods (3-12 months) and stability periods (usually 6 months) as per ACA regulations.

• Regularly monitor hours to identify employees crossing eligibility thresholds (30+ hours/week).

This level of tracking ensures accurate eligibility determinations and helps defend your position in case of IRS audits.

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Health Coverage Offerings and Eligibility

Your policy should clearly define the process for offering health coverage:

• Identify the benefits package that meets the ACA minimum value and affordability standards.

• Specify who qualifies for coverage (typically full-time employees and dependents).

• Document how waivers, leaves of absence, and employee events impact eligibility.

• Maintain accurate records of offers made and accepted/waived.

Clear internal guidelines prevent costly mistakes and establish a consistent approach to coverage.

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ACA Reporting Responsibilities

The policy must outline ACA reporting requirements:

• Prepare and file Forms 1094-C and 1095-C annually with the IRS.

• Provide individualized Form 1095-C to each full-time employee by the required deadline (typically January 31).

• Transmit the 1094-C summary form electronically to the IRS by March 31, using approved electronic formats and Transmitter Control Codes (TCC) when applicable.

• For self-insured employers, include Part III on Form 1095-C reporting enrolled employees and dependents.

Failing to file or furnishing incorrect forms can result in significant penalties.

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Penalty Awareness and Response Procedures

Your policy should prepare your organization for potential IRS penalties and audits:

• Understand the types of penalties, such as late filing fees and employer shared responsibility payments (up to $2,000 per full-time employee).

• Describe the process for responding to IRS penalty notices, particularly the Letter 226-J, which details proposed assessments.

• Designate responsible personnel or departments to manage audit responses and work with legal counsel or ACA compliance experts.

• Ensure procedures for receiving and acting on Marketplace subsidy notices are in place.

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Data Security and Privacy Protocols

Since ACA compliance requires collecting sensitive employee data, your policy must address data security:

• Use encryption and secure transfer protocols (e.g., HTTPS) for all employee data.

• Limit access to personal information on a need-to-know basis.

• Maintain compliance with applicable data privacy laws and best practices.

• Establish protocols for third-party providers to ensure they follow security standards.

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Cross-Departmental Collaboration

Given the data spans multiple departments, your policy should:

• Assign clear roles for HR, Payroll, Finance, and Benefits teams in collecting and validating ACA data.

• Define who holds ultimate ACA compliance responsibility—often the CFO, HR Director, or Benefits Manager.

• Promote regular communication between departments to reconcile data and resolve discrepancies promptly.

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How ACA-Track Supports Your ACA Compliance Policy

Creating and maintaining ACA compliance policies can be complex—but you don’t have to do it alone. ACA-Track offers a trusted, comprehensive solution that includes:

• Full employee hour tracking across all employee types with integration to payroll and HRIS systems.

• Automatic eligibility monitoring and alerts for compliance thresholds.

• Monthly Line Code audits to verify your 1095-C reporting accuracy.

• Electronic filing of XML files with the IRS, including TCC management.

• Correction services for ACA reporting errors.

• A customizable dashboard and intuitive user interface designed to streamline your workflow.

• Robust data security standards to protect sensitive employee information.

• A dedicated Client Success Advisor to guide you through every step.

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Final Thoughts

An effective ACA compliance policy is essential for protecting your business from penalties and ensuring employees receive the healthcare coverage they are entitled to. By including clear protocols for employee hour tracking, coverage offers, reporting, penalty responses, data security, and departmental collaboration, you build a strong foundation for ACA compliance.

To simplify compliance and reduce risk, explore how ACA-Track can support your organization with a proven, scalable ACA compliance solution tailored to your business size and needs.

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Feel free to reach out if you’d like a deeper dive into any specific aspect of ACA compliance or help in building your policy!