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Don’t Compromise on ACA Compliance

David Reid
November 30, 2015

Maintaining ACA Compliance has become significantly more costly and challenging for employers.

The Trade Preferences Extension Act of 2015 more than doubles the original penalties assessed when an employer fails to file ACA’s new forms 1094 and 1095. And if that’s not enough to throw employee benefits specialists and HR departments into a tizzy, now employers must also work through the ramifications of the PACE Act, which amends the definition of a “small employer” To further the level of confusion, the PACE Act also allows states to refine the amended definition.

The world of employee benefits is becoming more and more complex. There are so many variations with properly purchasing, managing and documenting an employee health insurance program. If an employer doesn’t maintain ACA compliance, hefty fines will be levied.

The Complexities of ACA Compliance Include:

  1. For a company with 75 employees, failure to file a 1095-C for each of your employees could result in a penalty of up to $18,750 (at $250 per form).
  2. If in a state that moves forward with the definition of small employers as being between 50 – 99 employees, ACA reporting is complicated by community rated, age banded rates. Every employee between the age of 24 and 65 will have a different premium rate. The complexity of an employer’s ‘Affordability Test’, required by the ACA becomes arduous.
  3. If in a state that chooses not to expand the definition of a ‘small employer’ to 99 employees, there is a whole different set of complexities. Employers are no longer protected by community rating and employees, in some instances, are subject medical underwriting. The process of ‘shopping’ for a competitive rate among several providers requires employers have employee complete several sets of lengthy health underwriting forms. This also adds uncertainty about final pricing.
  4. An employer that shares the premium cost with each employee 50/50 will realize that virtually every employee will have a different ‘net cost’. This differing net cost needs to be compared to each individual employee’s W-2 wage to determine if this cost is ‘affordable’. In some cases, employers are required to apply this test EACH MONTH of the year and report that result on 12 separate boxes on forms 1094 and 1095.

Technology solutions exist today that assist with the transactional requirements of ACA. Software is available to easily set up and manage benefit administration on behalf of clients. This is cutting edge technology that automates compliance testing and reporting. It can also provide a single point of entry for health data, if required, that populates multiple carrier quoting requirements.

Some developers of this type of technology are seeing the potential profit and have decided to move beyond their core competency by actually selling the benefits in addition to the transactional software. New technology brokers are rapidly entering the market through a practice known as “broker of record change”. Employers sign existing insurance over because they believe the technology will take care of all of the intricacies around ACA.

However, this model isn’t working for employers. New technology brokers are under criticism for a lack of quality service. Some of the largest technology brokers offer no onsite, personalized service. Employers soon realize that technology without personalized support does little to improve actual benefits or fine-tune the cost of a company’s benefits program.

Don’t compromise by choosing a technology over a broker who embraces technology. Both are essential to achieve ACA compliance while having the best employee benefits program for the business.

An employee benefits program requires more than hitting a specific price point. It also demands more than digitizing paperwork.

The model that provides the greatest value to employers combines the advantages of technology with the value of a seasoned broker with in-depth benefit knowledge. This solution has proven time and time again to deliver the highest level of satisfaction.

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