Compliance with the ACA is a complex process. Fortunately, there are some critical steps employers can take to help ensure they comply with the law.
ALEs can use the ACA Compliance Checklist to review their compliance for 2023 and ensure that they’re ready for year-end. This checklist consists of the following tasks:
Determine if you’re an ALE
So, what is ACA Compliance, then, and how about ALE? ALE stands for Applicable Large Employer, which refers to businesses with 50 or more full-time employees and their equivalents in a calendar year. ALEs must offer health insurance to their full-time employees or pay a penalty.
The IRS requires ALEs to track and count their traditional full-time employees plus the hours of all part-time workers who work more than 120 hours per month. These hours are converted to a full-time equivalent number each month, and the total is added to the employer’s traditional full-time employee count.
Often, the calculation involves multiple factors, such as seasonal employees and variable-hour workers. In addition, if your company is in a controlled group with another entity, the rules are more complex. A cool group includes any commonly owned, related, or affiliated companies. In these cases, you must combine the ALE employee counts from each entity and use this combined number to determine your ALE status. This is a highly complex process, and it’s essential to get it right. The penalties for ALEs can be substantial. A good ACA compliance service will walk you through determining your ALE status.
Review your Group Health Plan
If you sponsor a group health plan, you must make sure your plan is ACA-compliant. This includes ensuring you have monthly breakdowns of your tracking records, which are required for 1095-C filing. This is especially important for self-insured plans, where ACA compliance differs from insured plans.
There are various reasons why it’s beneficial for your business to comply with the ACA. It can improve employee morale and reduce absenteeism, leading to a more productive workforce and a better bottom line.
There are also a variety of tax advantages to offering health insurance. However, it’s crucial to understand that there are many moving parts to stay compliant. One misstep can mean costly fines for your business. Working with an experienced ACA compliance partner like Integrity Data is essential. To help you stay on top of your ACA reporting, we offer a 360-degree tracking solution that ensures adherence to IRS regulations and provides year-round business intelligence. Learn more here.
Determine if you’re Offering Qualifying Coverage
The ACA requires employers to offer their employees affordable, minimum essential coverage. This is called employer responsibility or the “employer mandate.” Larger employers must file Forms 1094-C and 1095-C and provide their full-time employees with a summary of benefits and coverage (SBC) during open enrollment. Employers must also manage pre-tax payroll deductions and ensure their range meets the ACA’s affordability requirements.
Additionally, certain types of health coverage may be exempt from ACA compliance rules if they meet specific criteria. These include religious-based coverage like Samaritan Ministries or Medi-Share and cost-sharing reduction plans such as Health Care Sharing Ministries and Liberty Health Share.
The ACA is a complex and ever-changing law, but there are several steps small businesses can take to ensure compliance. Work with a knowledgeable employment law attorney or insurance broker to understand your responsibilities and develop an ACA compliance strategy. Integrity Data’s 360-degree tracking solution is a great way to automate ACA reporting — internally and for the IRS — and provide year-round business intelligence. Contact us today to get started.
Review your Notices and Disclosures
The ACA introduced new obligations employers must fulfill, including distributing specific notices and disclosures to eligible employees. The ACA Compliance Navigator Checklist tool in PrimePay provides a comprehensive overview of all applicable ACA notices and disclosures, plus guided instructions and requirements to help employers select and create those notices and disclosures to distribute.
The benefits of complying with ACA regulations extend beyond avoiding fines. Complying with ACA can improve employee health, lower healthcare costs, and boost morale. For government contracting businesses, this is particularly important because many of their employees must be enrolled in an ACA-compliant plan to remain eligible for specific federal programs and contracts.
If you’re offering an ACA-compliant group health plan, ensure it meets the minimum essential coverage (MEC) requirements and is guaranteed renewable. You’ll also want to be aware of any changes to the ACA that may impact your current policy or future open enrollment periods. For example, the Department of Health and Human Services established cost-sharing limits, and the IRS Rev. Proc. 2022-34 indexed affordability contribution percentages for the upcoming year.
Review your Forms 1094 and 1095
Reviewing your forms is the final step in ensuring your company complies with the ACA. ALEs must file Forms 1094-C and 1095-C with the IRS each year to report information on the health coverage offered to their employees. This helps the government determine if ALEs comply with the ACA and possibly avoid penalties.
These forms are essential for ALEs that offer self-insured group health plans, as the IRS will need to see the coverage data for each employee to identify whether or not they’re offering minimum essential coverage (MEC) and providing affordable benefits. For this reason, ALEs should consider taking BerniePortal’s introductory course to 1094-C and 1095-C reporting.
This free e-course will teach registrants everything they need to know about preparing for these crucial IRS filings. From understanding the forms and how they work to updates for 2022 and common employee FAQs, participants will leave this BernieU course prepared for the year ahead. View the introductory course on BerniePortal’s ACA Compliance Solution to get started.