The Affordable Care Act (ACA) introduced comprehensive regulations that directly affect how employers provide health insurance coverage to their workforce. For organizations subject to these requirements, staying on top of ACA compliance represents a legal obligation and an opportunity to support employee well-being while avoiding costly penalties.
Modern HR leaders understand that ACA compliance extends beyond simply offering health coverage. Organizations that approach compliance strategically gain competitive advantages through reduced regulatory risk, streamlined reporting processes, and enhanced employee benefits programs. Understanding the rules, reporting requirements, and available tools makes this complex process more manageable and sustainable.
Who Needs to Comply with ACA Regulations
Employers that fall under the category of Applicable Large Employers (ALEs) are required to follow ACA regulations. The IRS defines ALEs as organizations with an average of 50 or more full-time employees, including full-time equivalents, during the previous year.
These employers must offer affordable health coverage for minimum value to their full-time employees and dependents. They also have annual reporting obligations that help the IRS track compliance and ensure appropriate tax credit distribution.
Smaller employers may not be subject to the same requirements, but can still choose to provide coverage as a competitive advantage for talent attraction and retention. Organizations approaching the 50-employee threshold should prepare for compliance requirements to avoid last-minute scrambling.
Key ACA Compliance Requirements for Employers
Employers must navigate a complex set of ACA requirements to stay compliant and avoid penalties. Understanding key requirements around employer shared responsibility provisions, reporting obligations, and employee eligibility is essential for all businesses. Failure to meet these regulatory standards can result in significant financial repercussions, including excise taxes and fines that impact company finances and reputation.
Offer Affordable Coverage
Employers must provide health coverage that costs employees no more than a set percentage of their household income. The affordability threshold is adjusted annually and applies to the lowest-cost self-only coverage option.
Meet Minimum Value Standards
The coverage offered must pay at least 60% of the total cost of medical services for a standard population. Plans must also include substantial coverage for physician services and inpatient hospitalization.
Provide Coverage to Dependents
Full-time employees' children under age 26 must be eligible for coverage under the employer's health plan. While employers are not required to contribute to dependent coverage costs, they must make it available.
File and Furnish Required Forms
Employers must file Forms 1094-C and 1095-C with the IRS each year and provide employees with a copy of Form 1095-C by specific deadlines. Accurate and timely filing is essential for avoiding penalties.
Penalties for Non-Compliance
Failing to meet ACA requirements can result in significant financial penalties that severely impact organizational budgets. For example, if an ALE does not offer coverage to at least 95% of full-time employees and one employee receives a premium tax credit, the employer may face penalties under the Employer Shared Responsibility Provisions.
Additional penalties can apply if the coverage offered is unaffordable or does not meet minimum value standards. These fines can accumulate quickly across multiple employees, making proactive compliance a financial necessity and a strategic priority.
Organizations that experience penalties often discover that investing in proper compliance systems costs significantly less than paying fines and dealing with regulatory scrutiny.
How ACA Compliance Software Can Help
Managing ACA reporting and monitoring manually is often time-consuming, error-prone, and expensive for organizations with complex workforces. ACA compliance software helps employers automate and streamline key compliance tasks while reducing risk.
Track Employee Eligibility
Software automatically tracks hours worked and determines which employees qualify as full-time based on measurement and stability periods, eliminating manual calculations and reducing classification errors.
Automate Reporting
Generate and file accurate IRS forms without manual data entry, ensuring timely submissions and reducing the risk of penalties for late or incorrect filings.
Monitor Affordability and Coverage
Continuously monitor the affordability of plans and ensure they meet minimum value standards, with automatic alerts when adjustments are needed.
Reduce Risk of Penalties
Automated compliance checks and validation processes reduce the likelihood of mistakes that lead to costly fines and regulatory complications.
Discover ACA Compliance Software from TruPay
TruPay's ACA compliance software helps employers stay ahead of requirements with automated tracking, accurate reporting, and comprehensive compliance monitoring. The platform integrates seamlessly with payroll and HR systems to provide real-time visibility into compliance status.
Organizations that choose TruPay's solution benefit from reduced administrative burden, improved accuracy, and peace of mind knowing their ACA obligations are being met consistently. The integrated approach within the InspireHCM platform eliminates data silos and ensures compliance information flows seamlessly across all HR functions.
By leveraging automated compliance tools, HR leaders can save valuable time, avoid penalties, and focus more energy on strategic initiatives that support workforce development and organizational growth.
Ready to simplify your ACA compliance process? Request a demo to see how TruPay's solution can transform your approach to healthcare compliance management.
Resources
https://www.trupay.com/software-solutions/aca-compliance-management
https://www.irs.gov/affordable-care-act/employers
https://www.irs.gov/affordable-care-act/employers/employer-shared-responsibility-provisions
