4 Tips to Affordable Care Act Compliance

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HR is fraught with compliance requirements, and benefits compliance requirements will be increasing as more long awaited Affordable Care Act (ACA) mandates trickle into effect.

Determine Your Liability

By now employers know the mandate well – if you employ 50 or more full-time employees, those who work an average of 30 or more hours per week, you must offer “affordable” health insurance that meets “minimum value” standards. Employers should be taking action now to ensure they know how many hours their variable hour employees work to determine if they’ll meet this obligation by the deadline.

  • TIP : Run reports on a regular basis to track this data, and to determine the measurement period you want to use to calculate average hours worked; employers can use a measurement/stability period of up to 12 months as long as it’s applied consistently.

New reporting requirement

This August the IRS released a draft of Form 1095-C that will be required of employers beginning in 2016 for calendar year 2015. The draft and instructions can be found at www.IRS.gov/draftforms.

Form 1095-C reporting requirements vary depending how your plan is funded, but employers should be maintaining and safeguarding information on not only employees, but dependents covered under their health plans. This includes social security numbers and dates of birth. In some instances the insurance company will have to report this information, but in some cases it may be up to the employer. Insurance companies may also look to employers to obtain this data if they don’t have it on file.

  • TIP: Require this information during your next Open Enrollment and maintain securely in your HRMS.

Employers must also keep records on who was eligible for and offered insurance during each month of the year.

  • TIP: Run monthly reports from your HRMS so this information can be accessed easily when it comes time to report.

These tasks become more complex if you employ a lot of variable hour employees, or if you don’t use an automated system to capture the information needed to comply with the new reporting requirements.

Disclosure Notice Requirement

This requirement went into effect in 2013 and calls for employers to provide a Summary of Benefits and Coverage (SBC) to employees, outlining medical plan details in a set format. This must be provided upon application for coverage, following each plan renewal, and when material changes are made to the plan. Electronic delivery is allowed if enrollment/renewal is electronic.

  • TIP: Use a HRMS for online benefits enrollment, an onboarding platform to send the SBC to new hires before they elect coverage, and the HRMS to house this document as well as to store other benefit plan documents, providing employees one place to easily access all their benefits information.

With new deadlines looming, now is the perfect time to begin shoring up your internal data and streamlining processes. If this is done early and simplified by automating, compliance won’t prove to be such a daunting task. This will allow Benefits Managers to focus on developing a strategic benefits plan to attract and retain a competitive workforce, and to control benefit costs by promoting a healthy culture in the workplace and educating employees to be more informed health care consumers.

The information included in this post is provided as a courtesy to assist in your understanding of the impact of certain regulatory requirements and is not intended to be tax or legal advice. This information is a very general overview of detailed IRS rules, additional information is available by visiting www.irs.gov.

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