ACA Software Helps Make Compliance Easy
Hello again,
This post is for Applicable Large Employers (ALEs) required to comply with the Affordable Care Act. This post was sourced from SHRM. We hope you find it useful.
Tracking employee data is necessary throughout the year, and there are various ACA reporting obligations that are required for compliance:
– Appropriate offers of coverage to eligible employees/dependents
– Offers of coverage must be affordable
– Essential coverage and minimum value requirements
Passport Software’s ACA Software can help aggregate and streamline your ACA management data, and it provides employee status updates to help simplify compliance.
Employer Mandate
The employer mandate requires employers with 50+ full-time (or full-time equivalents) employees to offer full-time employees/dependents affordable, “minimum essential” health coverage.
According to SHRM, “Calculating whether an organization is subject to the employer mandate should be done monthly, and a record of such calculations should be maintained. Here are the steps:
– First, calculate the number of full-time employees—those who are regularly scheduled to work an average of 30 or more hours per week.
– Next, calculate the total number of hours worked during the month by employees who are not full-time, and divide the total by 120. The result (rounded down) is the number of FTE employees represented by the hours worked by the organization’s non-full-time employees.
– Last, add the number of full-time employees and the number of FTE employees represented by non-full-time employees. The result is the organization’s total FTE employees.”
To avoid penalties, the coverage offered should be considered affordable:
“Because employers often don’t know their employees’ household incomes, there are three affordability safe harbors ALEs can use to determine if the annual affordability threshold is being met,” explains SHRM, “The safe harbors are based on information the employer does have, and any of the three can be used:
The employee’s W-2 wages, as reported in Box 1, generally as of the first day of the plan year.
The employee’s rate of pay, which is the hourly wage rate multiplied by 130 hours per month as of the first day of the plan year or, for salaried employees, 9.83 percent (for 2021) of the monthly salary as of the first day of the coverage period.
The individual federal poverty level (FPL), as published by the U.S. Department of Health and Human Services (HHS) each January. Using the FPL safe harbor simplifies ACA reporting and coding of Form 1095-C, which plan sponsors file with the IRS for each employee who is offered ACA-compliant health coverage.”
Essential Health Coverage
Essential health coverage must be provided, and this includes things like hospitalization, maternity care, prescription drugs, lab services, and more.
There is also a list of actuarial value requirements that need to be met. Actuarial value is a term that refers to the percentage of expenses paid by the plan.
This percentage must be within the required specifications in order for a company to avoid penalties.
Health coverage must meet the requirements for annual deductibles and out-of-pocket maximums as well.
Coverage Offerings
Employers offering affordable essential health coverage must do so for full-time employees (and FTEs) and their dependents.
There are two methods of calculating an employee’s hours when they vary: The Monthly measurement method and the Look-back measurement method.
The look-back measurement method may not be used to determine full-time employee status for purposes of ALE status determination.
Many companies choose the 12-month measurement period for ongoing employees.
Passport Software
If you are tracking ACA management data manually, our ACA Software and Services can help simplify the process.
Or, if you are not happy with your current solution, Passport Software can help.
Our IRS-certified ACA Software is affordable, easy to use, and we are IRS-approved to optionally file on your behalf.
The ACA Full Service option is even easier – just provide a spreadsheet with employee-related data, and we do the rest.
Our ACA consultants are experienced, friendly, and can help guide you through the process.
We also provide penalty relief consultation services and have helped many companies drastically reduce or avoid penalties.
Call 800-969-7900 to learn more. Or, contact us – we are here to help.