Outsourced ACA Compliance Can Help You Avoid Problems Like These
Outsourced ACA Compliance: Luxury or Necessity?
Employers covered under the Affordable Care Act (ACA), often referred to as Applicable Large Employers (ALE), have intense responsibilities in order to comply with regulations. Here, we outline a hypothetical example of an employer who chooses to handle ACA responsibilities in-house with real-world examples of noncompliance events and consequences.
Example: XYZ Manufacturing Co. Experiences ACA Compliance Troubles
XYZ Manufacturing Co., a mid-sized manufacturing company with 120 full-time employees, had been handling its Affordable Care Act (ACA) compliance in-house. The company believed that managing ACA requirements internally would be cost-effective and straightforward.
At first, the HR team at XYZ Manufacturing diligently worked on tracking employee hours, calculating affordability of health coverage, and preparing the required IRS Forms 1094-C and 1095-C for reporting. However, as the complexity of ACA regulations increased and the reporting requirements became more intricate, the company began to face challenges.
- Reporting Errors: Despite their best efforts, the HR team made errors in the IRS reporting forms. These mistakes included inaccuracies in recording employee hours, miscalculating affordability, and failing to report coverage offers correctly. Unfortunately, these errors triggered IRS penalties during the audit.
- Missed Deadlines: The company struggled to meet the tight deadlines for ACA reporting. Filing deadlines for Forms 1094-C and 1095-C are stringent, and XYZs Manufacturing Co. found it challenging to compile all the necessary data accurately within the required timeframe. This resulted in additional penalties.
- Changing Regulations: Over the years, the ACA underwent amendments and updates. XYZ Manufacturing Co. found it difficult to keep pace with the evolving regulations, leading to non-compliance with new requirements and the inadvertent omission of crucial details in their reporting.
- Employee Frustration: The complexity of ACA compliance, coupled with reporting errors, caused confusion among employees. Some employees received incorrect information about their coverage, leading to dissatisfaction and a decline in morale.
- Penalties and Audits: Due to reporting inaccuracies and missed deadlines, XYZ Manufacturing Co. faced substantial IRS penalties. The company was also subjected to an audit, adding further stress and administrative burden.
Outsourced ACA Compliance: Avoiding the Penalties
XYZ Manufacturing Co. recognized the growing complexity of maintaining ACA compliance and the impact penalties have had on their bottom line. They decided to go with outsourced ACA compliance from a reputable third-party administrator. By allowing a trusted partner with expertise to handle their ACA responsibilities, XYZ Manufacturing Co. was freed up to focus on the rest of their HR initiatives, employee engagement, and their other core responsibilities.
This situation, while hypothetical, includes situations that are all too real for ALEs across the country when they choose to handle ACA filing and compliance in-house. A compliance partner like BASIC can help an organization stay compliant and avoid the dangerous financial penalties that could arise. BASIC ACA Elevate is a great solution for employers looking to get their time back, as well as peace of mind to know that the experts have their back.
For more information on how BASIC ACA Elevate could keep your organization compliant, request a proposal today!
