Whether or not the Affordable Care Act (ACA) is repealed, it is here to stay for some time. Your organization must have processes, systems, and funding to be ACA-compliant.
Identifying full-time employees and ensuring that your ACA systems have accurate, quality data is critical to achieving compliance. Here are a few best practices to get you started.
Align Your Team
The first step in ensuring compliance with the ACA employer mandate is establishing your team’s goals and expectations. This means designating a point person on the HR team who will keep up with new regulations and communicate them to the entire department. This is a key step because it will help prevent confusion and ensure everyone is working toward the same goal.
HR teams must be prepared for some complexities surrounding the ACA employer mandate, especially for employers with many seasonal or hourly wage workers. These companies often need help determining whether employees are full-time or part-time because their hours vary frequently. The ACA rules allow these companies to measure the average hours employees work over a specified period (called a “measurement period”). If they find that an employee on their payroll is consistently full-time, the employer can treat them as such for the following stability period.
These periods can range from 3 to 12 months and are chosen by the employer, so HR professionals need to be familiar with them. Employers must also ensure that their health coverage is considered affordable for employees by calculating how much the employee’s share of the premium costs is relative to their income. If the coverage isn’t affordable, the ACA mandate requires the employer to pay noncompliance fines.
Invest in Technology
Almost every aspect of the ACA Employer Mandate requires a complex computation – and often, these calculations depend on accurate HR and payroll data. Hence, it’s essential to have a robust technology framework that can seamlessly merge slices of key data sets. Having the right ACA compliance partner can save your company time and money. Choose a comprehensive solution that provides both software and service. Ideally, the solution will integrate across platforms for HR, benefits administration, time and attendance, and payroll. This will help ensure consistency and accuracy for ACA reporting. And by working with a comprehensive partner gives you access to expert user guides, training videos, and 24/7 support.
Develop a Communication and Education Plan
For organizations with a diverse workforce, it can be challenging to ensure that all employees are aware of the implications of the ACA. A formal communication plan ensures everyone understands their responsibilities and is prepared for changes.
For example, a university may have various departments, including professors and adjunct professors, student employees, maintenance staff, and various other positions. The nuances of defining who is considered an employee can create confusion over how the ACA applies to these workers. Additionally, educational institutions must often comply with unique ACA requirements due to their tax-exempt status.
HR must provide the organization’s workforce with up-to-date information about ACA compliance. This requires them to deeply understand the complexities surrounding IRS-approved measurement methods, affordability, safe harbors, and limited non-assessment periods.
In addition, finance teams must monitor the costs of employer-sponsored medical coverage to ensure that these costs are not trending upwards toward a threshold where an excise tax (commonly referred to as the “Cadillac” tax) would apply. This is a complicated task for many employers, given the nuances that can apply to their situations and the unique cost-sharing arrangements in their plans. In these cases, it can be beneficial for an organization to enlist the support of a third-party partner that provides a combination of software and end-to-end service.
Hire Third-Party Experts
Whether a company is an ALE or not, navigating the ACA employer mandate is complicated and time-consuming. Many organizations choose to work with third-party experts who can help reduce the risk of costly IRS penalties and ensure full compliance with the ACA. These specialists can assist with determining the number of employees who qualify as full-time equivalents, conducting an aggregated employer group analysis, and preparing and filing accurate and timely annual information returns to the IRS.
A third-party partner can also help employers avoid a perpetual cycle of reacting to new ACA changes by consistently monitoring the law and providing timely updates to their clients. This can include notifications of cost-of-living increases in ACA dollar limits, extensions of ACA reporting deadlines, and guidance on the impact of annual health reform updates to the ACA.
Having fast and easy access to accurate payroll and HR data is essential for the critical computations that drive ACA solutions and compliance. A recent survey indicated that while Benefits and HR staff are the most heavily involved in ACA solution implementation, other key staff functions, such as payroll, can play definable roles and are responsible for a significant share of the reporting, calculation, and verification tasks that underpin ACA compliance.