Since its enactment in 2010, the Affordable Care Act (ACA) has introduced several key reforms aimed at expanding healthcare access and providing critical protections for employees. For employers, ACA compliance can seem complex, but understanding these requirements is essential to avoid costly penalties and ensure robust benefits offerings. In this ACA compliance checklist, we’ll cover the evolution of ACA reforms and provides actionable insights on compliance, reporting, and adherence to annual updates.
ACA reforms since 2010: Impact on employers
The ACA brought sweeping changes, from introducing new employer mandates to updating reporting requirements and adjusting minimum standards for health coverage. These reforms require employers to stay vigilant, ensuring their benefits offerings meet ACA standards, prevent penalties, and protect employee access to affordable health insurance.
Since the ACA mandates regular updates — such as cost-of-living adjustments and revised preventive care guidelines — employers must keep track of new changes each year.
Determining employer status and requirements
To comply with the ACA, employers must first determine if they are classified as an Applicable Large Employer (ALE). ALEs, defined as having 50 or more full-time employees, are subject to ACA’s Employer Shared Responsibility provisions, which outline specific health coverage requirements.
Calculating full-time equivalent (FTE) employees
Employers calculate FTEs by adding full-time employees (those working 30+ hours per week) with part-time employees’ hours converted to full-time status. This combined number helps determine ALE status.
Health insurance offering requirements
ALEs must offer minimum essential health coverage to at least 95% of their full-time employees and dependents to avoid penalties. Coverage must also meet affordability and minimum value standards under the Employer Shared Responsibility provisions.
ACA reporting obligations for employers
Annual reporting is a critical component of ACA compliance, requiring ALEs to submit forms to the IRS and provide statements to employees. Here’s what employers need to know
Forms 1094-C and 1095-C
These forms document the health insurance coverage offered to employees. The 1095-C provides details on each employee’s health coverage, while the 1094-C is the transmittal form sent to the IRS. Deadlines for filing typically fall in the first quarter of the year, with forms due by March 31 for electronic filing.
Employee notifications
Employers are also responsible for providing additional notices to employees, including the Health Insurance Marketplace notification and a Summary of Benefits and Coverage (SBC), to ensure transparency about coverage options.
Tracking employee hours to ensure ACA compliance
Accurate tracking of full-time and FTE employee hours is essential to ensure ACA compliance. Two main methods are available for calculating eligibility
Monthly measurement method
This method calculates employee hours on a monthly basis to determine eligibility.
Look-back measurement method
This option allows employers to assess employees’ full-time status over a specific measurement period, making it easier to determine eligibility for seasonal or variable-hour workers.
Documenting compliance and affordability determinations based on these tracking methods helps protect against penalties and ensures adherence to ACA requirements.
Plan design and adjustments for ACA compliance
Adjustments to health plan design are often necessary to remain compliant with the ACA’s cost-sharing limits, employee contribution rates, and affordability standards.
Cost-sharing limits and contribution adjustments
Each year, the ACA adjusts cost-sharing limits, including out-of-pocket maximums, requiring employers to ensure their plans meet these thresholds.
Minimum value and affordability
Health plans must provide minimum value (covering at least 60% of total allowed costs) and be deemed affordable (generally less than 9.5% of an employee’s household income). Employers can use Safe Harbor methods to demonstrate affordability, including basing contributions on the federal poverty level or employee income.
Meeting key ACA reporting deadlines
Timely filing of Forms 1094-C and 1095-C is essential to ACA compliance, with key deadlines for submission
Paper filing deadline: February 28 for paper filings of Forms 1094-C and 1095-C.
Electronic filing deadline: March 31 for electronic filings.
Employee statements: Individual 1095-C forms must be provided to employees by January 31 to meet ACA requirements.
Late filings or incorrect forms can result in significant penalties, underscoring the importance of adhering to these deadlines.
Maintaining ACA compliance with ebm
Our standalone ACA reporting service helps employers simplify compliance by handling the complexities of Forms 1094-C and 1095-C filing, so you can focus on more strategic initiatives.
Leave ACA reporting to us — protect your business from non-compliance penalties, and simplify your reporting processes. Learn more about how our ACA reporting solution can streamline compliance.
The information contained in this article is provided for informational purposes only and should not be construed as legal advice on any subject matter. The reader should not act or refrain from acting on the basis of any content included in this article without seeking tax, legal, or other professional advice. The contents of this article contain general information and may not reflect current legal developments or address the reader’s situation. ebm disclaims all liability for actions the reader takes or fails to take based on any content within this article.
