The Affordable Care Act is over 900 pages long. That’s a complicated document for an HR team to deal with! On top of that, it’s constantly changing with the ebb and flow of politics. So how can an HR department with enough on its plate already keep up?
The Affordable Care Act is only relevant to applicable large employers, or ALEs, which are defined as businesses with over 50 full-time employees. In order to stay compliant, ALEs submit IRS forms 1095-C and 1095-B to report that they offered eligible employees minimum essential health coverage with a minimum value of at least 60% of their benefits.
Once employers determine their eligibility, they must distribute copies of the previous year’s 1095-Cs to employees by January 31. There are then two separate deadlines for filing. Employers filing by paper must do so by February 28. Those who e-file have until March 31.
That’s a short window. HR teams dedicate entire workdays to ensure correct employee benefits data for filing before the deadline. For companies with hundreds or thousands of employees, that’s whole weeks of work. And because ACA guidelines are so intricate, one little mistake can result in big IRS penalties.
Luckily, there’s a software category made to streamline the process. ACA compliance solutions are designed to collect and file ACA forms automatically, while proactively mitigating the risk of IRS fees. Here are some reasons why they’re worth it.
Manual healthcare filing takes hours of hands-on work. Hiring a benefits coordinator is one choice, but the costs of onboarding, salary, and benefits for a new employee add up quickly. For certain smaller ALEs, that may not be an option.
Instead of dumping ACA responsibilities on an already-busy HR team member, an ACA compliance solution will ease the workload. You can decide what’s best for your business, whether that means outsourcing the work to a third-party or using software to automate the process.
HR teams aren’t paid to be Obamacare experts, they’re paid to take care of their company’s people. The law is so granular, that interpreting reporting requirements is become a full-time job. Most vendors have whole teams dedicated to understanding the ins-and-outs of ACA compliance. Instead of hoping for accurate reporting, you can rest assured that experts are taking care of it for you.
ACA compliance solutions integrate with your existing payroll software to gather employee data. Though these integrations are typically seamless, sometimes information gets lost along the way.
IRS penalties can add up to over $250 per missed or inaccurate form. ACA compliance solutions have detailed dashboards with notification systems built in, so if certain employee or coverage information is missing you’ll know with time to spare.
There are a wide range of ACA compliance solutions. Some operate like PEOs by outsourcing all of the work to a third party organization. Other are software solutions that add onto your payroll & benefits software. No two companies are alike, so it's important to think about your specific use case. Be sure to check out our detailed ACA compliance solution guide to help you make your decision, with detailed information on vendors, benefits, pricing, and more.
This post originally appeared on SelectSoftware's blog where we write about the latest in HRTech.
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