ACA Data Reporting: Managing ACA Data Complexity
Understand collecting and tracking employee information to maintain compliance with the ACA's employer mandate.
ACA reporting requirements: 6 different data sources with 170+ data points
The implementation of the Affordable Care Act (ACA) in the United States has significantly altered the landscape of employer-provided healthcare. One of the most demanding aspects for employers are the requirements to gather, calculate, and track employee or ACA data to ensure compliance with the ACA's employer mandate. This mandate needs documentation and evaluation, which presents a challenge for organizations with more than 50 employees.
See FAQs at the end of this article.
Understanding ACA employee data
A critical component to managing ACA compliance is the collecting and organizing employee data. Each employee has many pieces of information collected by employers, ranging from demographics, employment status, and benefit coverage information. Employers will manage approximately 170 different employee data points to address the ACA's requirements.
Consider:
- How many people in your organization handle employee or ACA data?
- Do different people in the organization work together to ensure that each employee's data is accurate?
- When collecting data does each area of the organization's responsibility time periods match?
- Will the IRS assess an employer penalty if health insurance coverage is removed from an employee who switches from a full-time position to a part-time position?
- What do you do if there are post IRS submission errors such as forms returned due to name and Social Security Number mismatch or errors in employee and/or dependent data?
The volume and variance of data introduces complexity from the beginning, requiring streamlined Human Capital Management (HCM) technology solutions and consistent business practices for accurate tracking. Moreover, the process of gathering and verifying this data can be difficult and time consuming.
Employers must ensure the accuracy and completeness of each data point, relying on as many as 6 different data sources such as payroll, human resources, leaves of absence, and health coverage information for employees, retirees/non-employees, and employees under a multi-employer arrangement, like a union. Discrepancies or inconsistencies can lead to compliance errors, potentially resulting in penalties for the employer.
Are your determining full-time and ACA hours requirements for employees accurately?
Determining an employee's full-time status is another aspect of ACA compliance. Employers must determine the number of full-time employees to understand their obligation under the employer mandate. This determination involves hours worked including monitoring seasonal and variable hour employees, and special employment arrangements. Without consistent business practices and proper data management, accurately assessing full-time status becomes an overwhelming obstacle.
Consider:
- How often do you review the status of an employee?
- Does the employee's status match within the different systems?
- How do you handle rehired and Leave of Absence (LOA) employees' hours?
- What is the best way for employers to gain awareness of the regulatory nuances around which hours should be used to determine an employee's eligibility for health insurance under the ACA and which should not?
- Who are your trusted experts to answer your ACA questions?
The importance of Affordable Care Act compliance and data
Once employee data is collected and full or part-time status is determined, ongoing tracking and reporting are essential to maintain compliance. Changes in employee status, shifts in healthcare coverage, and evolving regulatory requirements need continuous monitoring.
Consider the following:
- How do you know your data is input and tracked correctly to drive ACA compliance?
- Who within your organization is responsible for ensuring all 6 sources of data collection are accounted for? Is it your HR, Payroll, Benefits team, your IT department, or a mixture of responsibilities?
- What role does IT play in supporting data collection and integration?
With over 170 different data elements, can you manage data effectively to drive compliant determinations? It is important for Employers to invest in creating healthy data management practices and assigning dedicated resources to support timely and accurate reporting, mitigating the risk of potential ACA penalties in the future.
Navigating the complexities of managing ACA compliance, and employee data management specifically poses significant challenges for employers. Taking a proactive approach to data hygiene combined with a strong Affordable Care Act compliance strategy is essential to helping employers proactively avoid ACA-related penalties. Consider working with a partner to help you take a proactive approach to ACA penalty avoidance.
Our ACA penalty calculator can help you learn how to proactively avoid penalties.
Frequently asked questions (FAQ)
What is Affordable Care Act compliance?
ACA compliance refers to the adherence to the various requirements and regulations set forth by the Affordable Care Act. This involves ensuring that health insurance plans meet the standards of coverage and affordability as defined by the ACA. For employers, compliance also includes offering health insurance to full-time employees, reporting health coverage information to the IRS and adhering to specific employee classification guidelines.
What is Affordable Care Act employer mandate?
Large employers (with 50 or more full-time employees) must offer health insurance that meets ACA standards.
Is the employer mandate still in effect?
The abolition of the federal individual mandate penalty does not affect the employer mandate under the ACA. Employers with 50 or more full-time or equivalent employees must continue to provide affordable health insurance coverage.
This requirement persists despite the removal of the individual mandate penalty and failure to comply can result in significant penalties. Accurate tracking and reporting of employee work hours, health coverage offers, and plan details are crucial for maintaining compliance.
