Navigating New ACA Compliance Terrain: Effective Strategies for Employers
The Affordable Care Act (ACA) landscape is continually shifting, presenting new challenges for businesses, especially Applicable Large Employers (ALEs). Recent legislative changes like the Paperwork Burden Reduction Act (PBRA) and the Employer Reporting Improvement Act (ERIA) have introduced nuanced adjustments to ACA compliance. These alterations aim to simplify procedures but often complicate compliance efforts. Understanding these changes and strategizing effectively is crucial for maintaining compliance and avoiding penalties.
Adapting to the Paperwork Burden Reduction Act (PBRA)
The PBRA modifies how employers can distribute Forms 1095-C to their employees. While it now permits employers to furnish these forms only upon request, this freedom comes with its own set of challenges:
- Communication Clarity: Employers must ensure that notifications about the availability of Form 1095-C are conspicuous and accessible. It’s imperative to communicate through clear, straightforward language how employees can request their forms.
- Request Management: Setting up a robust system to manage and track these requests is vital. Employers should be prepared to deliver the forms swiftly—within 30 days—to meet compliance standards and avoid IRS penalties.
- Delivery Method Preference: Employers need to accommodate employee preferences for receiving their forms, whether electronically or on paper.
Employer Reporting Improvement Act (ERIA) Adjustments
The ERIA brings significant changes, particularly regarding the electronic delivery of Forms 1095-C:
- Consent for Electronic Delivery: It is essential for employers to obtain and manage consents for electronic delivery of ACA forms. A system should be in place to handle revocations of this consent and switch back to paper delivery as needed.
- Data Retention: With a new 6-year statute of limitations on Employer Shared Responsibility Penalties, maintaining accurate employee data and form transmission records becomes more critical than ever. Employers must ensure they have the processes or partnerships to store and retrieve this data reliably.
Federal vs. State Compliance
Despite federal legislative adjustments, state requirements for health coverage reporting in places like California, New Jersey, Rhode Island, and Washington, DC remain unchanged. Employers must:
- State-Specific Fulfillment: Continue to furnish Form 1095-C to all eligible employees in these states, regardless of federal provisions.
- Track Employee Residency: Develop a method to monitor and record employee address changes throughout the year to identify residency in these states, ensuring compliance with local laws.
Developing a Proactive ACA Strategy
In response to these evolving requirements, employers must:
- Review and Revise Processes: Regularly update internal procedures to align with the latest ACA guidelines. This includes refining methods for form management, employee communication, and data storage.
- Seek Expert Assistance: Consider partnering with an ACA compliance expert or service provider who can offer guidance, manage complexities, and help navigate the nuances of ACA reporting.
Conclusion
While the intention behind the legislative updates is to alleviate some of the burdens on employers, they also introduce layers of complexity that can impact your organization. Proactive planning and implementation of effective strategies are essential to navigate this evolving compliance landscape and avoid potential penalties.
