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Crucial Steps for ACA Compliance

Mar 02 2016, by PEOPLE in Sales

This year is a big one for employers because 2016 is the first year for ACA reporting and audits. All of the ACA forms and rules are complicated, so it’s no wonder that employers are feeling nervous and overwhelmed. Follow these crucial steps for ACA compliance and you’ll be off to a good start.

First and foremost, employers will need to identify their full time employees. For 2016, companies that have 50 or more full-time employees, or full-time equivalent employees, must offer the minimum essential coverage to at least 95% of their employees. However, the tricky part for employers during this ACA compliance step is trying to figure out who qualifies as full-time and full-time equivalent. Luckily, the IRS has a formula that you can use to plug in your data and see how many full-timers you have. A great way to ensure the accuracy of your data is to start using technology to track employee hours. It’s easy to make mistakes on timesheets, especially when you factor in overtime and holiday hours. Some good HR software will manage this for you, making ACA compliance a little easier.

The next step for employers is to track and document your company’s compliance with employer-mandate requirements. You’ll want to have proof that the right amount of coverage was offered to the right amount of full-time employees. Make a note of the date when each offer occurred for each employee as well as the dates when an employee may have chosen to waive the coverage. This is all evidence that will build your case if you do come under scrutiny. Review the instructions on the 1094 and 1095 forms to make sure you have all the required information at hand. This is also a great time to create a process to track and store all this information in one place for the remainder of the year to make ACA compliance even simpler next time.

There is also an additional step that employers must complete when they are preparing tax forms in order to be ACA compliant. Employers must report the cost their employer-sponsored group health plans in order to show employees the total cost of their healthcare in regards to their specific plan. There are some exceptions that employers should make note of, however. One situation involves employers who provided retired and former employees with healthcare coverage but didn’t provide a W-2. These employers don’t need any documentation to report the cost of their coverage. Employers who distribute fewer than 250 W-2s also don’t have to worry about reporting the cost of coverage. If you do have to report the cost of coverage, remember to include the entire cost, both your contributions and the employees’s.

The last step in ACA compliance is educating your employees. If ACA compliance is this confusing for you, it’s just as confusing if not more so for your team. Walk them through this process and help them understand the new forms and laws and how they are being affected.