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ACA… Your Organization’s Compliance Management is More Important Than Ever

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As the years have passed since the first Affordable Care Act (ACA) Employer Reporting Year (2015) – the Internal Revenue Service (IRS) has continually improved its processes for identifying ACA compliance and information reporting violations.  During this time there has also been several efforts to “Repeal and Replace ACA” (these were not successful) – and court challenges (the most recent Texas v. United States) – which have not changed any aspect of the ACA regulations or associated penalties to employers.

The IRS has clarified via IRS Letter 2019-008 – in no uncertain terms – that the ACA’s employer mandate penalties continue to apply to applicable large employers (ALEs) that fail to offer affordable, minimum value health coverage to their full-time employees (and dependents), and the IRS is actively enforcing penalty collection.

Additionally, employers must report on the health coverage offered to employees by distributing Form 1095-C to its employees and transmit the forms along with Form 1094-C to the IRS each year – or face additional non-filing penalties!

All of this makes your organization’s compliance management more important than ever.  Reducing your penalty risk has never been more vital – here are a few things you can do to protect your company…

  • Verify your data is accurate:  Incomplete or inconsistent data regarding hire dates, term dates, offers of coverage or leaves of absence may all pose problems.  Make sure your organization consistently reviews and maintains your data.

  • Review your health plan strategy:  What type of plans are you offering (MEC or MV)?  Are you considering the affordability of premiums for your lowest paid employees?  Determine if your plans meet the Federal Poverty Line safe harbor – if not, consider whether Rate of Pay or W-2 safe harbor is the best solution (consult with your benefit plan advisor and ACA vendor).

  • Manage personnel changes, acquisitions and FEIN mergers accurately:  ACA compliance is challenging enough – it becomes even more difficult when key players move on (and the ACA tasks fall into unfamiliar hands) or mergers and acquisitions get thrown into the mix.  Understanding how mergers and acquisitions may impact your organization is critical.  When integrating another company’s employee population, attempt to collect as much data from the previous HR/Payroll/ACA/Benefit plan administrators.  Also, create a detailed procedure manual which includes all ongoing ACA compliance tasks which your team can follow.

  • Timely distribute and file your 1095-C Forms:  Ensure your organization’s 1095-C forms are distributed to individuals in a timely manner and be sure to file with the IRS before the annual deadline.  Importantly, note that there is no statute of limitations for non-filed returns.  This means for a company that failed to file a return in 2015, a penalty for this infraction is possible until the return is filed or until the IRS decides to issue a penalty assessment with interest.

  • Spend a few minutes on a regular basis managing your ACA compliance:  Don’t wait until the end of the year to manage your offers of coverage or to begin reviewing data for 1095-C forms.  There should be no such thing as “ACA Season”!  Astute employers will spend a few minutes each month reviewing and recording data – and at the end of the year just a few more minutes and they are complete with ACA.

Don’t leave your ACA compliance strategy to chance.  Work with a credentialed team of experts (Payroll / Benefits / ACA ) who can help you manage compliance concerns, and provide your organization with the integrated support it needs through every step of managing ACA compliance. 

Todd Bellistri