ACA Compliance Requirements, Reporting & Guidelines

Use the FTE calculator in RUN Powered by ADP® (RUN) to determine your number of full-time and full-time equivalent (FTE) employees. In general, if you had a combined total of 50 or more full-time and FTE employees in the 2023 calendar year, you need to complete and file Forms 1095-C and 1094-C in 2025. The ADP system and file feed from my payroll system to their system works like a charm.

Employers are encouraged to seek assistance through legal counsel, tax professionals, or insurance brokers when filing these forms. Tomassetti says that one of the key lessons we’ve learned since the implementation of the ACA is that clients need a provider not only to help get forms out the door, but also to simplify the ACA process for them. In this adp aca post, Michele Tomassetti, DVP/GM of Health Care Reform in ADP’s Compliance Solutions business unit, provides takeaways on four key questions for readers looking to manage ACA compliance. The Affordable Care Act was enacted in 2015, and since its inception, organizations have faced the challenge of understanding and complying with its mandates. To combat this, employers have turned to outside providers to handle some or all of the ACA’s components.

Individual/family coverage

Additionally, employers are required to submit Form 1094-C, Transmittal of Employer-Provided Health Insurance Offer and Coverage Information Returns, solely to the IRS. This form acts as a cover sheet including aggregate data, such as the number of full-time employees per month and the tally of issued 1095-C forms. Some states have implemented laws similar to the ACA, mandating annual reports with varied reporting methods, formats, and deadlines. Despite these differences, they all share a similar compliance approach. ACA compliance refers to the adherence to the various requirements and regulations set forth by the Affordable Care Act. This involves ensuring that health insurance plans meet the standards of coverage and affordability as defined by the ACA.

Mitigating potential risk

• Employers that are not ALE members and offer self-insured health coverage use this form to report certain information to covered individuals and the IRS about the months of coverage offered to employees.
• Plans must cover essential health benefits, offer preventive services at no cost, and cannot deny coverage for pre-existing conditions.
• Applicable Large Employers are generally employers that, together with other employers in their controlled group, employed 50 or more full-time and full-time equivalent (FTE) employees in the prior calendar year.
• Employers also have to fulfill all ACA reporting requirements for the IRS, as well as any applicable states that have similar laws.
• “The ACA being repealed is incredibly unlikely — it’s here to stay. At the end of the day, it’s likely to be more complex,” she says.
• Tomassetti says that one of the key lessons we’ve learned since the implementation of the ACA is that clients need a provider not only to help get forms out the door, but also to simplify the ACA process for them.

Since most employers won’t know their employees’ household incomes, safe harbor calculations may be used as alternative methods to determine affordability. Traditional safe harbors include W-2 wages, rate of pay and the federal poverty level. The use of other safe harbors depends upon the type of plans offered, i.e., traditional vs. individual coverage health reimbursement arrangement (ICHRA) plans. We are a global leader in human resources technology, offering the latest AI and machine learning-enhanced payroll, tax, human resources, benefits, and much more. Penalties are triggered when one or more of your full-time employees gets a subsidy toward Marketplace coverage. Some states have recently enacted their own reporting requirements related to health coverage.

Step 5: Communicate with Employees

For employers, compliance also includes offering health insurance to full-time employees, reporting health coverage information to the IRS and adhering to specific employee classification guidelines. The ACA is intended to ensure that certain employers offer health coverage to their employees that meets the ACA’s requirements for coverage and affordability. For employers subject to the ACA, compliance entails offering the required health coverage to full-time employees, submitting health coverage information to the IRS, and following specific guidelines for employee classification. It’s crucial for businesses to understand and comply with the ACA’s requirements to avoid penalties. Businesses that are considered an ALE must provide minimum essential health coverage that is affordable and meets minimum value requirements to at least 95% of their full-time employees (including dependents). Employers also have to fulfill all ACA reporting requirements for the IRS, as well as any applicable states that have similar laws.

• Each year, employers are required to file Form 1095-C with the IRS and provide a copy to all employees who were full-time or were enrolled in self-insured coverage for one or more months during the year.
• Streamline HCM and post-payroll compliance with the only all-in-one compliance solution.
• Traditional safe harbors include W-2 wages, rate of pay and the federal poverty level.
• This article draws upon the expertise of seasoned professionals like Ellen Feeney, Vice President, Counsel at ADP, who has provided valuable insights in our previously published articles.
• ALEs are required to provide health insurance to at least 95% of their full-time employees, as well as the dependents of those employees, or they may be subject to penalties.
• HR or benefits systems (even if you don’t use ADP for payroll & HR).
• Some states have implemented laws similar to the ACA, mandating annual reports with varied reporting methods, formats, and deadlines.

What is ACA compliance?

Benefits have a major impact on your business and your ability to recruit and retain talent in a competitive market. Or integrate our benefits administration solutions into your current HCM system. ACA compliance for individual and family coverage involves meeting the standards set by the Health Insurance Marketplace. Plans must cover essential health benefits, offer preventive services at no cost, and cannot deny coverage for pre-existing conditions. Failure to meet these deadlines can result in penalties from the IRS.

This form is also used by insurers to show coverage provided to individuals under a fully insured plan. If you are a small employer that offers health coverage, your insurer will report on your behalf, unless you are self-insured. This requirement persists despite the removal of the individual mandate penalty and failure to comply can result in significant penalties. Accurate tracking and reporting of employee work hours, health coverage offers and plan details are crucial for maintaining compliance.

Some of these include hiring, benefit offerings, job status change, payroll, etc. Employers should check that their data entry processes are standardized to ensure the accuracy of employee data in a timely fashion. Miscalculations in your monthly results, can trigger an IRS penalty which are assessed monthly. This requirement means that there’s a risk of data conflict, which can lead to penalties. Understanding and adhering to the Affordable Care Act is vital for every organization. This guide, rich with insights from experts like Ellen Feeney, is designed to empower you with the knowledge needed to navigate ACA compliance confidently.