The Affordable Care Act (ACA) has been a significant piece of legislation for employers since its enactment. Designed to expand access to affordable healthcare, the ACA includes several mandates that require careful attention, especially from employers classified as Applicable Large Employers (ALEs). Ensuring ACA compliance is not just about avoiding penalties—it’s also about supporting employee well-being and maintaining trust in the workplace.
What Is ACA Compliance?
ACA compliance refers to the requirement that ALEsthose with 50 or more full-time employees or equivalentsmust offer affordable, minimum essential health coverage to at least 95% of their full-time staff. Additionally, employers must report this coverage annually to both the IRS and their employees using Forms 1094-C and 1095-C.
These forms document whether health coverage was offered and whether it met affordability and minimum value standards. Failure to comply with these reporting obligations or coverage mandates can result in significant IRS penalties.
The Role of 1095 Software in Simplifying Compliance
Keeping up with the complex rules and annual reporting deadlines can be overwhelming for HR departments, especially in large or growing organizations. This is where 1095 software comes in. Designed specifically to streamline the process of ACA reporting, 1095 software automates the collection of employee data, calculates offer codes, generates required forms, and handles electronic filing with the IRS.
By using dedicated tools like 1095 software, companies reduce the risk of errors and omissions, stay on top of changing regulations, and ensure timely submission of required documentation. It also simplifies form distribution to employees, which must be done by January 31st each year.
Common Compliance Challenges
Despite the availability of automation tools, many employers still face challenges with ACA compliance. These include:
- Tracking employee hours accurately, especially for part-time or seasonal workers.
- Determining affordability thresholds under changing IRS guidelines.
- Managing multiple benefits plans across various locations or subsidiaries.
Without a reliable system in place, these tasks can become labor-intensive and error prone.
Staying Ahead of ACA Changes
The regulatory landscape is continuously evolving. Employers should stay informed through IRS updates and work closely with legal or compliance advisors to adapt their practices accordingly. Regular audits and reviews of employee classification, benefits offerings, and reporting processes are essential.
Implementing a robust ACA compliance strategysupported by 1095 software is the best way for organizations to avoid penalties, ensure transparency, and provide consistent employee coverage.
ACA compliance is more than a regulatory checkbox. It reflects a company’s commitment to employee health and legal responsibility. By leveraging technology and staying informed, employers can navigate ACA requirements efficiently and confidently.