ACA Reporting and Handling Compliance Changes

Benefits Case Study Human Resources Insurance

The vast systematic change brought by the Affordable Care Act came with an entirely new set of IRS reporting requirements that employers would need to complete on an annual basis. The specific requirements and documentation that need to be submitted vary depending on company size, and many companies who were experiencing growth or organizational change at the time of the law’s implementation found it difficult to understand and adhere to the new reporting requirements. Many small businesses without full-time HR staff found it necessary to outsource these duties to outside consulting services to meet these rigorous standards. As such, those who were unaware of the extent of the new employer requirements faced an increased risk of falling out of IRS/DOL compliance or facing litigation if they neglected to seek consultation from HR and benefits experts who had been trained on the subject.

Summit recently began working with a multi-site automotive retailer in the Midwest who needed assistance in the ACA reporting of all full-time employees at the company. Summit was brought in as a consultant to assist with the reporting process and ensure the group was remaining compliant. During the analysis that was conducted to identify all full-time and benefits eligible employees in 2018 on whom to report, Summit identified eligibility tracking and affordability issues that the employer was unaware of, that their prior consultant did not catch, and had been misreported to the IRS in prior years that could make the group subject to penalties in the event of an audit.

Although it was understandable how the group’s change in HR associates combined with their significant employee turnover made their full-time employee identification difficult to track, it was clear that a process needed to be implemented to provide consistent and accurate employee tracking to avoid significant penalties in the future.

Summit’s Solution

Summit’s Benefit Specialists met with the company’s CFO and four members of their HR team to review the issues at hand and the potential liability. Facing over $600,000 in risk of potential fines and penalties, company leadership was committed to eliminating such risk to ensure a smooth path toward future growth and prosperity.

With clients of all sizes and spanning many different industries, Summit’s Benefits Specialists were familiar with the various processes by which a company can accurately track an employee’s work status and benefits eligibility to meet the criteria of the ACA. These processes would now be implemented into the client’s HR practices to ensure that every part-time and full-time employee at each of their locations was being tracked and reported correctly. From the beginning of the onboarding stage through an employee’s entire tenure with the company, the number of hours they worked would be carefully audited on a regular basis to make sure their benefits eligibility status and offer of coverage was reported correctly to the employee and to the IRS.

The initial audit of the client’s current workforce and the installation of the new eligibility tracking and employee affordability changes has eliminated the potential risk they were facing. Going forward, the CFO and HR’s concerns about DOL and IRS audits with respect to benefits eligibility, ACA reporting and the potential for significant penalties could be alleviated. Additionally, accurate tracking would allow Summit to evaluate their benefit policies to make sure they were performing consistently with the financial goals of both the company and their employees.

Shannon Day

Operations Manager- Group Benefits

These Results Are For Illustrative Purposes Only And Should Not Be Deemed A Representation Of Future Results. Circumstances, Solutions, And/Or Results Are Based On Specific Facts Tied To Unique Client Situations. Favorable Results Cannot Be Guaranteed Even In A Similar Scenario. Each Specific Set Of Circumstances Will Differ Depending On Client Needs And Profile. Actual Results May Be More Or May Be Less Than Those Shown. Past Performance Does Not Guarantee Future Results. This Assessment Is That Of The Writer, And Not The Recommendations Or Responsibility Of Cetera Advisor Networks LLC Or Its Representatives.