This marks the tenth year of reporting under the Affordable Care Act (ACA). For employers with 50 or more full-time employees or equivalents, self-insured employers (regardless of size), or health insurance providers, ACA reporting might seem like old hat by now. Accountants, PEOs, payroll companies, and a slew of other service providers offer these reporting services. Let’s face it: ACA reporting has become commoditized. On the surface, it’s cut and dry — easy peasy. It’s the kind of task that feels like it could be done with your eyes closed. Right?
So why are you still thinking about it? Because it’s easy — until it isn’t.
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The risks of ACA reporting mistakes are real. You may have heard stories from peers about businesses blindsided by scarily high ACA penalty letters, stemming from either improper filing or complete failure to file. You’ve likely done the mental math for your own organization: The penalty amounts, which can reach up to $330 per employee per month, quickly add up to staggering sums. Suddenly, what seemed like a small, routine task feels more like a high-stakes gamble — especially if you’re relying on someone without deep ACA expertise to handle it.
You wouldn’t ask your dentist to perform brain surgery. So why rely on a non-expert for your ACA filings?
Common pitfalls of ACA reporting
Even in the most straightforward scenarios, ACA reporting offers ample opportunities for errors. Over the last decade, we’ve assisted countless clients in meeting this critical compliance obligation. Along the way, we’ve encountered — and corrected — virtually every type of error imaginable.
Let’s explore some of the most common complexities that trip up non-experts:
- Seasonal workers or variable hours: Tracking eligibility for employees with fluctuating work schedules is challenging. Incorrectly identifying who qualifies as full-time under ACA standards can lead to underreporting or noncompliance.
- Classed employee contributions: Employers often establish different contribution tiers based on factors like age, job position, or other criteria. Accounting for these variations requires meticulous attention to detail.
- Employee status transitions: When part-time employees transition to full-time or terminated employees are rehired, it creates additional layers of complexity in the tracking and reporting process. Missteps here can trigger penalties.
- Multiple EINs or collectively bargained employees: Even seemingly minor complications, such as managing multiple EINs or filing for unionized employees, can lead to costly errors if mishandled.
The cost of “easy” ACA reporting
Many organizations turn to generalists — payroll companies, for instance — for ACA reporting. These providers often market their services as simple, one-size-fits-all solutions. However, the reality is that ACA reporting isn’t a mere checkbox. It requires a nuanced understanding of both IRS guidelines and the unique intricacies of each employer’s workforce.
For example, consider a scenario where a company hires seasonal workers during the holiday rush. Without proper tracking, these employees might be misclassified, resulting in penalties for failing to offer coverage to eligible individuals. Similarly, errors in calculating affordability for employees with classed contributions can lead to significant compliance issues.
Peace of mind through expertise
The ACA reporting process may seem straightforward, but the stakes are too high to leave it to chance. Whether it’s tracking seasonal workers, managing multiple EINs, or navigating the complexities of collectively bargained employees, every detail matters.
So, if you find yourself thinking about ACA reporting, take the opportunity to engage an expert who can do it right. Don’t let a seemingly simple task turn into a costly mistake.
David A. Saltzman is Chief Strategy Officer at MZQ Consulting, LLC.
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