Best practices for ACA compliance involve monthly tracking, accurate documentation, and data quality management. But what is ACA Compliance? Compliance with the Affordable Care Act (ACA), the term given to the comprehensive healthcare reform statute and its subsequent revisions addressing health insurance coverage, healthcare costs, and preventative care, is known as ACA compliance. Making cheap health insurance available to more people is one of its three main objectives.
Determine Your Business’s ACA Status
If your business has 50 or more full-time employees and full-time equivalents (FTEs), it is considered an Applicable Large Employer (ALE). This classification triggers an employer mandate that requires businesses of this size to provide affordable health insurance coverage to their workers. This mandate is a component of the Patient Protection and Affordable Care Act, or Obamacare.
If you’re unsure whether your business is an ALE, it’s important to determine this for several reasons. Not only does this help you understand your responsibilities as an employer, but it also affects how much of your employee population may qualify for tax credits if they purchase individual insurance on their own. In addition, determining ALE status is essential for meeting year-end reporting requirements.
To calculate your ALE status, start with your total number of FTEs and add up the hours worked by your hourly and salary-paid employees during 12 months. Then, divide that number by the total months in the testing period to find your average monthly work hours.
Identify Your Full-Time Equivalent Employees
To determine whether the ACA’s employer mandate applies to your business, you must know how many full-time equivalent employees you have. This is done by calculating your total number of FTEs, the sum of your full-time employees plus a portion of your part-time workers’ hours. You can calculate FTEs using one of several methods, but the most accurate is to divide the total number of hours your employees work each month by 30.
FTEs determine whether you’re considered an applicable large employer (ALE), meaning you must offer your employees minimum essential coverage or pay the penalty. In addition, you must report to the IRS and your employees about the health insurance coverage you provide. This is done by filing Forms 1094 and 1095.
Keeping up with the latest changes to the ACA can be difficult, but all businesses need to understand the law and their obligations. Doing so can help you comply with the law and avoid penalties and fines.
Furthermore, being compliant with the ACA may help you maintain your competitiveness by enabling you to provide your staff with high-quality, reasonably priced healthcare solutions. This can then enhance the general health and happiness of your staff members. Finally, it might assist you in lowering the cost of your health insurance.
Identify Your Health Insurance Coverage Options
The ACA is complex, and keeping up with compliance is a challenge for small businesses. However, companies can take several steps to ensure they follow the law and avoid unnecessary penalties. The first step is to understand how the ACA applies to your business. Then, you can work with an attorney or tax specialist to establish a compliance program.
The next step is to identify your health insurance coverage options. Remember, the ACA requires that employers offer employees a plan that meets certain standards. In addition, large employers must use forms 1094 and 1095 to report the coverage they provide to the IRS.
In addition, you must provide employees with a standard Summary of Benefits and Coverage (SBC) form that clearly explains their available coverage options. This information is required to be provided within 90 days of the employee becoming eligible for coverage.
If you do not offer a qualified health care plan or your existing plan does not meet ACA standards, you may be subject to an Employer Shared Responsibility Payment (the “penalty”).
Develop an Employee Communication and Education Plan
The ACA is a complex law, and keeping track of a business’s compliance obligations can be challenging. However, there are tools available to help businesses meet their requirements. ACA compliance software allows organizations to automate tasks and reduce the burden on HR staff members. It also helps to ensure the accurate generation and filing of 1094/1095 forms, helping to avoid costly errors and omissions.
Developing an employee communication and education plan is critical to complying with the ACA. The plan should explain the ACA’s employer mandate and how it applies to your company. It should also outline the different health insurance options available to your employees. Additionally, the plan should outline any potential penalties associated with non-compliance.
Specific businesses must be ACA compliant, known as Applicable Large Employers (ALE). These companies are defined as having 50 or more full-time equivalent employees who work an average of 30 hours a week. Additionally, the ACA requires ALEs to offer their employees health insurance that meets certain standards. If you’re not an ALE, it’s important to keep up with the latest changes in healthcare laws to ensure your business complies. Otherwise, you could face hefty fines. Consider partnering with a qualified benefits expert or employment lawyer to reduce risk.