To Really Be ACA-compliant, Employers Have To Show They Did Their Homework

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Pass vs Fail imageThere are two students: one is an A student and other is failing.

As the teacher, you look first at their tests and see that both students are passing every test. You scratch your head and wonder why one is failing. As you research further, you realize that the failing student isn’t turning in the work and is only showing up for the tests. Their grade is getting penalized because of the lack of work being turned in.


What does this scenario have to do with Affordable Care Act (ACA) and employer compliance?


The failing student is the employer complying only with the spirit of the law by offering great insurance benefits to employees. That employer is not complying with the letter of the law, which stipulates the second, lesser-known part of ACA compliance – detailing for the IRS, every year and in super-complicated monthly breakdowns, exactly what is being offered and to which employees. This student doesn’t seem to understand that just because you ace the test doesn’t mean you’ll automatically get a good grade.


For actual compliance with the ACA employer mandate, employers have to comply with the coverage mandate; that is, offer health insurance of a certain standard to full-time employees and document, for employees and the IRS, exactly what was offered.


So, going back to our example, employers must be aware that they are required to show the teacher (the IRS) all the homework they did – even when they are acing test after test.


By not compiling and finding ways to process the information needed to create the detailed reports that are required for a passing grade in the IRS class room, you are setting yourself up for more than failing a class: Your company is looking at accruing steep monetary penalties of $500 per required return. That risk translates to $500 per full-time employee. This is not something you should just shrug your shoulders at – because you assume you have complied sufficiently by providing quality health coverage.  With 51 full-time employees x $500 per required return, the penalty you are looking at for a failing grade is $25,500.


Is that really a cost you want to absorb?


So let’s start looking at what it takes to prepare for an A grade for ACA reporting compliance. You must take a look at your employee’s hours – not just hours of work on the job, but their overall hours of service to the company. Factors that need to be taken into consideration when compiling employees’ service hours include jury duty, military duty and FMLA absences, just to name a few. These hours must be documented on a monthly basis for all employees – hourly and salaried. What you also need to account for monthly are attributes of the coverage you offer.


This type of detailed reporting is not something you can just compile on a spreadsheet. To assure that all the required data is captured and processed accurately, you need automation.


Don’t push this homework assignment down the road! Your due date for the 1095-C (the IRS form that needs to go to your employees) is March 31, 2016.


To learn more about trusted, easy-to-use and quick-to-implement software that has your back for this new IRS reporting, attend our next introductory webinar on ACA reporting for employers.

by Integrity Data

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