If you’re a business owner, managing Affordable Care Act reporting might seem like a big task. With all the forms, codes, and deadlines, it’s easy to feel overwhelmed. ACA reporting is important for businesses that qualify as Applicable Large Employers (ALEs) and must provide health coverage information to the IRS.
Luckily, there are ways to simplify this process. In this guide, we’ll cover everything you need to know to streamline your ACA reporting, from understanding the requirements to choosing the right tools and avoiding common mistakes.
1. Understanding ACA Reporting Requirements
The first step in streamlining your ACA reporting process is to understand the basic requirements. If your business qualifies as an Applicable Large Employer (ALE), which generally means having 50 or more full-time or full-time equivalent employees, you are required to comply with ACA regulations. One of the main responsibilities of ALEs is to file Form 1095-C, which details the health coverage offered to employees.
Form 1095-C has three parts. Part I collects general information about the employee and employer, Part II provides details about the health coverage offered, and Part III records information on individuals covered under self-insured plans. The form also uses a series of codes that indicate the type of coverage offered and whether the coverage meets affordability and minimum value standards. Understanding these details is essential, as inaccuracies can lead to penalties.
2. Choosing the Right Tools for ACA Reporting
One of the best ways to simplify ACA reporting is to use reliable software tools. Having specialized ACA reporting software can significantly reduce the time and effort involved in managing Form 1095-C and other reporting requirements. Tools like 1095EZ Online are designed specifically for ACA compliance, making it easier to complete and file the required forms accurately.
This tool provides templates and guided steps that reduce the chances of errors in data entry and code selection. With such a tool, you can input employee information, verify the required details, and generate Form 1095-C accurately. By using software, you also get reminders for filing deadlines, ensuring that you won’t miss important dates.
This approach saves time, improves accuracy, and allows you to handle reporting with confidence, especially when complex situations arise, such as determining eligibility and affordability.
3. Setting Up Efficient Data Collection Processes
Another important step in streamlining ACA reporting is organizing your data collection processes. Accurate ACA reporting relies heavily on having up-to-date and well-organized employee data, especially for information like work hours and health coverage details. To make this process efficient, consider setting up a system for regularly collecting and updating employee data.
You might integrate ACA reporting needs into your payroll or HR software so that important data like employee hours, salaries, and benefits information is consistently up-to-date. By setting up a reliable system for tracking and updating employee data, you’ll make it much easier to handle ACA reporting without scrambling for last-minute details.
4. Training Your HR Team on ACA Compliance
An organized and informed HR team is key to maintaining smooth ACA compliance. Your HR and payroll staff play a major role in gathering and managing the information required for Form 1095-C, so it’s essential they’re well-trained on ACA guidelines. Training your team on ACA compliance not only reduces the chance of errors but also boosts overall confidence in handling the process.
Start by educating your team on the basics of ACA reporting requirements, including which employees qualify as full-time, the necessary data for Form 1095-C, and the codes used on the form. If you’re using a tool, provide them with training on how to use the platform effectively. Consider periodic updates or refresher courses so that your team stays informed about any changes to ACA regulations or reporting requirements.
5. Meeting Important Deadlines
ACA reporting has strict deadlines, and missing them can lead to penalties. Each year, Form 1095-C must be provided to employees by January 31 and filed with the IRS by February 28 (or March 31 if filing electronically). To stay on top of these dates, consider setting up a reporting schedule that includes reminders.
You can break down the reporting timeline into steps, such as preparing employee information by the end of December, reviewing data in early January, and finalizing Form 1095-C before the end of the month. By setting internal deadlines a week or two before the actual due dates, you’ll have extra time to catch and correct any errors. This approach prevents last-minute rushes, reduces stress, and helps ensure that your reporting process stays on track.
6. Common Mistakes to Avoid in ACA Reporting
Even with a good system in place, mistakes in ACA reporting can still happen. Being aware of common pitfalls can help you avoid them. One frequent error is misclassifying employees, such as failing to recognize when part-time hours add up to a full-time equivalent. Another is selecting the wrong codes on lines 14 and 16 of Form 1095-C, which indicate the type of coverage offered and whether it meets affordability standards.
To prevent these errors, double-check employee classification regularly and review the instructions for Form 1095-C codes. By staying vigilant about potential mistakes, you can save time, avoid frustration, and minimize the risk of penalties.
7. How Ongoing Support Simplifies Future ACA Reporting
Each year, you’ll need to file Form 1095-C for your full-time employees, so setting up a consistent and organized process can save you time in the future. One way to ensure smooth reporting in the years to come is to keep your data organized and regularly updated. After each filing season, take note of what worked well and any areas where you could improve.
Maintaining an organized approach throughout the year is beneficial, even if you don’t need to file until the next January. By planning ahead and making ACA reporting an ongoing task rather than a yearly scramble, you’ll streamline the process, save time, and stay ready for future reporting requirements.
Streamlining ACA reporting for your business doesn’t have to be complicated. By understanding the requirements, choosing the right tools, setting up efficient data processes, and training your HR team, you can handle ACA compliance with confidence. Staying organized, meeting deadlines, and avoiding common mistakes also go a long way in making reporting a manageable task.
With a proactive approach, ACA reporting becomes a straightforward process that keeps your business compliant, reduces stress, and saves you time year after year.
