What does the Affordable Care Act require regarding employee hours tracking?

The ACA requires Applicable Large Employers to track employee hours accurately to identify full-time employees (working 30+ hours per week) who must be offered health insurance. This tracking is necessary for compliance with coverage offers and IRS reporting.

How does ACA-Track help employers manage the complexities of employee hours tracking?

ACA-Track integrates data from various sources including payroll, timekeeping, and HRIS systems to collect actual hours worked for all employee types. It monitors eligibility thresholds and automates IRS reporting, reducing manual effort and errors.

Why is it important to track hours for part-time and variable hour employees under the ACA?

Tracking part-time and variable hour employees is important because their hours can fluctuate above or below the ACA full-time threshold during measurement periods. Proper tracking ensures employers identify employees who must be offered health coverage and avoid penalties.

What penalties can employers face if they fail to track employee hours correctly?

Employers who fail to accurately track employee hours risk IRS penalties, including fines for not offering coverage to eligible employees and penalties for incorrect or late ACA reporting. These penalties can be substantial and may increase with repeated violations.

Can ACA-Track assist with IRS audits and correcting ACA reporting errors?

Yes, ACA-Track stores all ACA data securely in one location for easy retrieval during audits. It also performs error detection and correction before filing to minimize reporting mistakes and supports employers in responding to IRS inquiries.

ACA Compliance Made Easy: Importance of Tracking Employee Hours

Why Tracking Employee Hours Is Critical Under ACA

The Affordable Care Act (ACA) has profoundly impacted how employers manage and report employee health coverage. For Applicable Large Employers (ALEs) — those with 50 or more full-time equivalent employees — compliance means more than just offering health insurance. It requires accurate tracking of employee hours to determine eligibility, properly offer coverage, and meet IRS reporting requirements. Failing to track hours precisely can expose companies to hefty penalties and compliance headaches.

If you’re navigating ACA compliance, a trusted partner like ACA-Track can make all the difference by simplifying and automating this complex process.

Understanding the Importance of Tracking Employee Hours Under ACA

Who Is an Applicable Large Employer (ALE)?

Under the ACA, ALEs are employers with 50 or more full-time employees or full-time equivalents (FTEs). The IRS calculates FTEs by combining hours worked by part-time and variable hour employees. This makes tracking all employee hours, including part-time and variable hour workers, crucial to accurately determine ALE status and eligibility for health insurance coverage.

What Constitutes a Full-Time Employee?

A full-time employee is someone who works an average of at least 30 hours per week or 130 hours per month. To comply with ACA requirements, employers must track hours worked carefully to identify which employees meet these thresholds over the applicable measurement periods.

Why Is Tracking Part-Time and Variable Hour Employees Essential?

Part-time and variable hour employees’ schedules fluctuate, which means employers must monitor their actual hours worked during measurement periods to determine if they have crossed the full-time threshold. Without this data:

Employers cannot prove an employee worked fewer than 30 hours on average.
Employees may seek marketplace subsidies unfairly.
Employers risk shared responsibility penalties if coverage was not offered when legally required.

Consequences of Not Tracking Hours Accurately

Failure to track and document employee hours leads to compliance risks including:

Penalties for failing to offer coverage to eligible employees.
IRS Letter 226-J penalty notices, demanding corrective action and penalty payments.
Increased audit risk and potential fines, sometimes reaching thousands of dollars per employee per month.

How ACA-Track Makes Employee Hours Tracking and ACA Compliance Easy

Tracking employee hours is complex due to variable schedules, multiple employee types, and the intricacies of ACA rules. ACA-Track offers a comprehensive, user-friendly solution to streamline this process.

1. Collect – Comprehensive Hours Data

ACA-Track collects actual hours worked for all employee types — including full-time, part-time, variable hour, paraprofessional, and substitute employees — by integrating with:

Timekeeping systems
Manual timesheets
Automated time clocks
Mobile device entries
Payroll and HRIS platforms

This ensures a single source of truth for accurate hour tracking.

2. Monitor – Employee Eligibility Alerts

ACA-Track monitors employee eligibility thresholds in real time, providing advance alerts when employees approach or exceed full-time status. It tracks key employee events like waivers and leaves to maintain compliance with ACA measurement and stability periods.

3. Report – Accurate ACA Reporting

ACA-Track electronically generates and files IRS-required ACA forms:

1094-C transmittal forms
1095-C employee statements

It supports both federal and state reporting, performs monthly line code audits, fixes reporting errors, and files electronic XML submissions to the IRS. Plus, it keeps all ACA data organized for quick retrieval during audits or state exchange requests.

Key Features of ACA-Track That Ensure Compliance

Customizable Dashboards: View and sort ACA data exactly how you want.
Snapshot Summaries: Preserve ACA data views at specific points in time for audit trails.
Flexible Configuration: Customize measurement, administrative, and stability periods, as well as thresholds and waiver codes.
Data-Driven Analysis: Export data, apply filters, and receive color-coded warnings for data anomalies.
Secure Cloud Platform: SOC 2 Type 2 compliant, encrypted data, and secure HTTPS transmissions protect sensitive employee information.

Beyond Tracking: ACA Reporting and Penalties

What Data Is Needed for ACA Reporting?

Employers must collect and report detailed data, including:

Employee full-time or part-time status
Hours worked per measurement period
Insurance offers made and coverage accepted or waived
Hire, termination, and status change dates
Employer Identification Number (EIN) and IRS reporting authorization

This data often comes from payroll, HR, benefits, and finance departments — making centralized tracking critical.

Reporting Deadlines Employers Must Know

Employee 1095 forms due January 31 (with occasional IRS extensions).
Employer 1094 transmittal to the IRS due March 31 each year.
ALEs with 250+ employees must file electronically and obtain a Transmitter Control Code (TCC).

Penalties for Non-Compliance

Non-compliance can result in substantial penalties:

$50 to $270 per return for late filings, escalating if filings are very late or missing.
Shared Responsibility Payment of $2,000 per full-time employee if coverage is not offered.
Penalties can accumulate to hundreds of thousands or even millions for larger employers.

Who Should Manage ACA Compliance in Your Organization?

Because ACA data touches multiple departments, collaboration among HR, Payroll, Benefits, and Finance is essential. Many companies designate the Chief Financial Officer, HR Director, or Benefits Director to oversee compliance. Utilizing a dedicated ACA compliance service like ACA-Track can unify efforts and simplify the process.

Why Choose ACA-Track for Your ACA Compliance Needs?

ACA-Track offers a proven, affordable, and fully integrated ACA compliance solution tailored to the needs of businesses, organizations, and clients of any size. With a dedicated Client Success Advisor, ACA-Track supports you every step of the way — from hour tracking and eligibility monitoring to federal reporting and error resolution.

By choosing ACA-Track, employers can confidently navigate ACA complexities, reduce risk of penalties, and streamline employee health coverage compliance.

Ready to simplify your ACA compliance?

Explore how ACA-Track can help you collect, monitor, and report employee hours and ACA data with ease and accuracy.

Visit ACA-Track today.