Implementation of the Affordable Care Act (ACA) may go down in history as having had the single, most profound impact on the way small businesses operate over the next several decades. The tentacles of the ACA reach so deep that virtually no small business will be left unaffected. Therefore, ACA compliance needs to be near the top of the list of priorities when dealing with payroll and accounting.
BenefitMall clients are well aware that we are more than just a basic payroll service. We offer a full range of payroll, accounting, and back office services that include helping our clients maintain compliance with ACA regulations. If you are struggling at all with compliance, we can help.
In light of our experience in this arena, we know how easy it is for small businesses to make mistakes that could get them in trouble. According to a June 7 (2016) press release from California-based First Capital Consulting, the four most common ACA compliance mistakes resulting in excessive fines are:
1. Improper Application of EA Rules
Employer aggregation rules were put in place to help certain kinds of small businesses determine their applicable large employers (ALE) status. This status needs to be determined in light of the fact that certain provisions of the ACA only apply to larger employers.
Improper application of employer aggregation rules might result in a company incorrectly classifying its ALE status, thereby avoiding some of the provisions that apply only to larger companies. The government does not look kindly on these kinds of errors regardless of whether they were made in ignorance or with purpose.
2. Improper 1095-C Entries
Form 1095-C is the form employers use to fulfill the legal requirement to provide health insurance statements to their employees on an annual basis. The form must be filed by all large companies that qualify under ALE rules.
Improper entries on lines 14 through 16 of this form deal directly with what is known as 'transition relief' for companies whose health plans do not follow the standard calendar year. Such improper entries can result in severe penalties if the IRS discovers them.
3. Lack of Minimum Value Certification
The law generally requires employers to use a minimum value calculator to make sure the health plans they offer cover at least 60% of the total allowable costs employees are expected to incur under the plan. Companies are also required to certify this minimum value. Failing to certify is another costly mistake that could result in substantial fines.
4. Lack of Affordability Verification
Lastly, employees are also expected to verify the affordability of their health plans for the purposes of determining employee eligibility for government subsidies. Employers have several options for doing this depending on their group of employees. While there are many methods, a failure to verify affordability could land a company in serious trouble.
Things Will Not Get Less Complicated
Even though the ACA was signed into law in 2010, nobody really knows all of its implications. We only get limited amounts of information as various parts of the law are officially implemented. In short, ACA compliance will not get any less complicated in the future. In fact, we expect it only to get worse in the years ahead. Nearly every other government program we have to look at as examples bear this out.
ACA compliance is a serious matter that companies cannot afford to ignore. If your payroll service does not offer assistance in this arena, it might be time to change providers. BenefitMall is standing by to work with you to guarantee compliance, both now and in the future.
Check out how our ACA Compliance tool can help you keep pace.