Top 3 Challenges of ACA Compliance

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With 2016 being the first year of mandatory ACA reporting, HUB International expected ACA compliance to be among the top concerns of business executives in their 2016 survey. It is. But surprisingly enough, two other concerns were more important according to survey respondents: employee wellness and management costs. By this time next year, it is quite likely that ACA compliance will top them both.

This first year of reporting has already presented enough problems that the IRS announced they would not be stepping up enforcement efforts for the foreseeable future. They have said that companies that failed to meet reporting requirements would not face penalties if they file their documents in a timely manner, and they made an honest effort to comply with the original June reporting deadline.

Looking forward to next year, the top three concerns regarding ACA compliance cited by survey respondents are:

  1. Staying in business
  2. Calculating affordability
  3. Calculating full-time equivalents.

ACA Compliance and Stay in Business

More than 60% of the 400 survey respondents claim to be concerned that maintaining ACA compliance may make staying in business a struggle. That’s not to say these executives believe their companies will fold, but that remaining profitable is going to be a bigger challenge than ever. That is a telling statistic.

It could be that the dim view is due in large part to misunderstandings and misconceptions where ACA compliance is concerned. After all, being faced with the unknown tends to create negative perceptions. It could also be that the vast majority of small and medium-sized businesses will get a handle on ACA compliance more quickly than larger corporations because they tend to work with small business payroll services which make it a priority to understand compliance issues.

Calculating Affordability of Insurance

A big part of ACA compliance is calculating affordability of certain insurance options. This is necessary because companies are required to offer a health insurance plan that is, by government standards, affordable for employees. The problem business managers have is one of no concrete benchmarks for affordability.

Again, a payroll services company might be better equipped to calculate affordability based on their detailed knowledge of everything payroll. Their access to a tremendous amount of comparative data creates a much clearer affordability picture for employers.

Calculating Full-Time Equivalents

The last challenge is a direct result of the ACA’s mandate to cover all full-time employees and those with equivalent status – even if they don’t put in a 40-hour workweek. Legislators created such a low benchmark for this rule that the line between part-time and full-time workers is blurry, at best.

A correct calculation of full-time equivalents is necessary to ensure a company is offering affordable health insurance to every eligible worker. Failing to do so will eventually lead to significant fines once the IRS begins more aggressive enforcement.

Making the Best of It

If government programs like Medicaid and Medicare are indicative of the future of health insurance in America, things could get worse before they get better. That’s why it is imperative for companies of all sizes to get a handle on ACA compliance as soon as possible. The longer it takes for a company to achieve compliance the more hurdles will have to be overcome to do so.

It’s like putting out a fire. Firefighters want to knock it down as quickly as they possibly can so that it doesn’t create a much bigger problem later on. For the small business, achieving ACA compliance is probably best done by working with an experienced small business payroll provider.

December 2017
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