employer Guide: navigating aca compliance as an applicable large employer

In today’s dynamic employment landscape, staying compliant with healthcare regulations is crucial for employers. The Affordable Care Act (ACA), signed into law in 2010, brought significant changes to the healthcare system, including requirements for employers to offer health insurance to eligible employees. As an Applicable Large Employer (ALE) under the ACA certain responsibilities and compliance requirements now apply to your organization. Here’s what you need to know and steps you can take to navigator ACA compliance effectively:

Understanding ALE Status 

1. Definition of ALE: An ALE is an employer with 50 or more full-time equivalent employees (FTEs) during the previous calendar year. Full-time employees are those who work, on average, at least 30 hours per week or 130 hours per month.

2. Determining FTE Count: Calculate your FTE count by combining the total hours worked by all employees (including part-time employees) in a month and dividing by 120. This will help determine if you meet the threshold for ALE status. 

ACA Compliance Steps for ALEs: 

1. Offering Minimum Essential Coverage (MEC): 

• ALEs must offer Minimum Essential Coverage to at least 95% of full-time employees and their dependents to avoid potential penalties.

• The coverage offered must meet affordability and minimum value standards set by the ACA.

2. Employer Shared Responsibility (ESR) Provision: 

• Ensure compliance with the ESR provision, also known as the “employer mandate”, which requires ALEs to offer affordable health insurance that provides minimum value to eligible employees.

• Track and monitor employee hours to determine full-time status and eligibility for coverage.

3. Reporting Requirements: 

• File Forms 1094-C and 1085-C annually with the IRS.

• These forms provide detailed information about the health insurance coverage offered to full-time employees and are used to assess compliance with the ACA employer mandate.

• Stay up to date about ACA Reporting deadlines. Typically, these occur early in the years (i.e. January 31^st for distributing Form 1095-C to employees and February 28^th/March 31^st for filing forms with the IRS) 

Tips for Ensuring ACA Compliance:

1. Consult With Experts: Consider seeking guidance from your RSA Team and/or legal advisors to ensure accurate interpretation and implementation of ACA regulations.

2. Invest in HR Technology: Implement robust HR and payroll systems that can accurately track employee hours, manage benefits enrollment, and generate required ACA reports. 

• IMPORTANT – Don’t forget to ask your RSA Team how Employee Navigator can help you. 

3. Educate Employees: Provide clear and transparent communication to employees about their health insurance options, enrollment process, and rights under the ACA.

4. Stay Updated: Regularly monitor updates and changes to the ACA regulations issued by the IRS and other governing bodies to stay compliant with evolving requirements.

Becoming an ALE signifies growth and success for your organization but also brings added responsibilities in terms of ACA compliance. By understanding your obligations, taking proactive steps, and leveraging available resources, you can navigate ACA compliance effectively while supporting the well-being of your workforce.

If you have any questions or need further assistance with ACA compliance, please contact your Relationship Manager to discuss your needs in greater detail. If your are not a current client of Rose Street Advisors, please feel free to contact us at 269-552-3200 or contact@rosestreetadvisors.com to speak with someone.