More than half of surveyed companies find ACA compliance burdensome, new study shows

In a recent survey, more than 50% of company officials said compliance with Affordable Care Act (ACA) requirements is overly burdensome. More than half (55%) said employee misclassification is the most common potential problem when it comes to ACA compliance. And 1 in 4 respondents said they had been audited by the IRS for potential non-compliance.

The survey, from TRUSAIC and Creelman Research, recently gathered data from 244 professionals involved with ACA compliance. The research showed that ACA compliance is especially burdensome for companies with large numbers of low-paid, variable work employees and low participation in company health plans. Overall, although many companies found it burdensome, a majority also reported it was easy to comply with ACA regulations.

“Our research data shows that many organizations find ACA compliance difficult to do, tedious, and time consuming. Despite their best efforts, organizations often face fines from the IRS for late or inaccurate filings,” the report says.

Mixed responses, but more burdensome for certain types of businesses

The study said that 53% of respondents said their ACA compliance requirement were overly burdensome, 21% said the requirement were somewhat burdensome, and 27% said the requirements were not burdensome.

The researchers noted that the burden differs significantly by the type of business in questions. “Employers with only a few eligible workers will find compliance quick and straightforward,” they wrote. “Those with large numbers of eligible workers and high turnover face significant difficulties.”

Time is the biggest burden when it comes to ACA compliance, the study found. Among respondents, 69% said their companies spend more than 80 hours a year on ACA compliance. And the many different tasks involved in compliance, including data verification, software issues, documentation of changes, and understanding codes, can be challenging for companies who cannot afford compliance specialists.

“Compliance with ACA regulations is relatively easy for organizations with mainly white-collar workers or high-wage, full-time salaried workers where an offer of health insurance is made right away,” the report says. “It is harder for organizations with lower-paid, variable-hour workers where there are low levels of participations in the organization’s health plan.”

The survey did find that some companies said compliance was easy, despite the numbers on the burden of the work. When asked how difficult it was to comply with ACA regulations, 45% said it was moderately to very difficult; 40% said it was easy, and 16% said it was very easy.

This finding was accompanied by data showing that many companies felt confident they were in compliance with ACA rules (78% said confident or very confident). At the same time, 1 in 4 said they had been audited by the IRS for potential ACA non-compliance.

How to improve compliance

The researchers found that two approaches have been the most common in successfully complying with ACA regulations. Nearly 60% of companies (59%) said that developing a dedicated internal team on ACA compliance had helped with the issue; while 40% said outsourcing ACA compliance to a vendor had helped. An additional 32% said using ACA compliance software had helped, and 30% said developing a dedicated external team had helped — suggesting that companies were using a variety of tools.

A strong majority, 57% of respondents, said they expected to have an in-house compliance team in the future, the study found. One area that does not seem to be working out for employers: 51% of respondents said they currently outsourced compliance to payroll providers, but only 22% said they planned to do so in the future.

Read more: ACA’s Employer Mandate: IRS announces higher penalties for noncompliance

The report concluded by saying for many companies, ACA compliance is both important and difficult. Therefore, the researchers said it is vital for HR departments to get a better understanding of what challenges they face in this area. They then will need to clearly communicate the organization’s needs to the company’s leaders.

“Leaders may not understand the nuances of ACA compliance. It’s up to HR to educate them about the complexity and risk,” says Robert Sheen, CEO of TRUSAIC.