The Affordable Care Act (ACA) has been a nightmare for some and a blessing for others. For businesses, especially the human resources departments, understanding all of the new changes and compliance regulations can be quite a challenge. Failure to comply will mean large fines for companies—even if a company doesn’t realize it isn’t complying accurately.
“There’s nothing like getting a little experience under your belt, especially when it comes to complying with the Affordable Care Act (ACA). But experience in this area is hard to come by,” said Natalie Burg of Forbes, in ‘What Small And Large Organizations Alike Can Learn From The First Year Of Annual ACA’.
The ACA is not only a landmarked health reform, it’s also unchartered territory for businesses when it comes to legal compliance and all that is involved.
According to the Society for Human Resource Management (SHRM), “The landmark health reform legislation enacted in March 2010 is designed to expand the availability of health insurance, reform the regulation of health coverage and restructure its delivery.”
ACA calls for expansion in health care coverages such as:
“The law also prohibits lifetime limits on coverage and arbitrary cancellations of coverage, and it requires that nondependent children up to age 26 be permitted to stay on a parent’s health policy,” said SHRM.
It took many companies and business owners by surprise when the ACA was challenged, yet found constitutional by the courts. “For most human resources and employee benefits professionals across all sized companies, the constitutional validation of the ACA by the Supreme Court was unexpected,” said ADA Research Institute. No more than 10 percent of professionals surveyed were expecting the Supreme Court to uphold the entire law. Consequently, companies may be behind in their ACA preparations.”
“It’s never been more important for employers to have clearly defined worker classifications. Incorrectly defining employees, contract workers and temporary workers has big consequences under ACA — especially this year,” Burg from Forbes said.
Employee classification may be one of the largest areas of confusion. If a company employs 50 or more employees, it is mandated to provide medical health insurance to its full-time employees. However, this can get tricky as HR reviews the employee list and may discount contract employees or others that may have worked more than 30 hours in a week.
SHRM offers this advice:
Calculating whether an organization is subject to the employer mandate should be done monthly, and a record of such calculations should be maintained. Here are the steps:
Collecting and maintaining the correct data is another challenge area. ACA requires specific tax forms and other data to be turned in on a regular basis. The system is new and there are bound to be mistakes; however, it could take up to – and even beyond – 18 months after filing taxes for a company to be notified of a mistake.
“Simply put, don’t trust that your methods were perfect the first time around,” Burg said. The fact that you haven’t heard anything to the contrary yet doesn’t mean anything.”
It is recommended to check and recheck the data yearly for any mistakes or discrepancies. It is also a good idea for periodic checks and updates because of employee turnovers and changes of status.
“That shows good-faith effort to be compliant,” said John Haslinger, vice president of strategic advisory services for ADP. “Otherwise, you’ll probably do the same thing wrong for 2016, 2017 and into 2018. You could be looking at a multi-year penalty.”
“The ACA is a work in progress, and it’s going to keep changing,” said Burg. ““To stay compliant, employers should be asTo stay compliant, employers should be as “To stay compliant, employers should be as To stay compliant, employers should be as vigilant about watching for forthcoming changes as they are about tracking their important employee data.”