This article was updated on July 26, 2018.
Staying on track with ACA compliance is among the most complex issues facing HR leaders today. Studies by the Society for Human Resource Management (SHRM) indicate that the costliest year for ACA compliance is likely 2016, with 33 percent of employers anticipating expenses related to "reporting, disclosure and notification requirements." However, the risk of non-compliance can be an immense source of stress for HR teams at organizations of all sizes.
If your organization has had trouble meeting the IRS filing deadlines or has fallen behind in data-tracking, you may be feeling a sense of panic about future deadlines. As organizations work to meet requirements for notification and reporting, there's a number of internal and external deadlines that must be met in order to avoid non-compliance. If you're at risk of missing deadlines, identifying potential bottlenecks at your organization could be the key to risk mitigation.
Systemizing Your ACA Compliance Efforts
Organizations who were scrambling to properly complete reporting requirements for Forms 1094-C and 1095-C may have fallen prey to some of the most common pitfalls. The ADP Research Institute® has found that 51 percent of large employers and 46 percent of midsized businesses feel unprepared for annual reporting requirements. Common areas of concern may include:
- Administrative review of eligibility
- Implementing workforce-wide time tracking
- Correctly applying full-time definitions
If you were behind because of one of those reasons or another issue, a unified approach to meeting reporting deadlines could be necessary. While benefits administration has traditionally been primarily an HR-driven function, ACA requirements may mandate internal collaboration. Executive buy-in could be beneficial for encouraging employee compliance with internal deadlines, while collaboration with IT could be necessary for information security risk mitigation. Advice from trusted compliance or qualified legal counsel is another necessity for many. For organizations who have fallen behind on internal timelines, organization-wide efforts could provide the resources to catch up.
One of the smartest things HR teams can do is to continue to prepare for the year to come. Switching away from paper time sheets, implementing enterprise-wide time-tracking solutions and aligning processes with ACA requirements can ensure you're not already falling behind.
Evaluate Your Technology
Organizations that have been relying on simple payroll systems should evaluate whether their technology has simplified tracking and reporting requirements, particularly at organizations with a complex workforce. SHRM highlights that many payroll solutions aren't optimized for determining full-time status based on time-tracking or look-back, which can require extensive administrative effort to verify reporting requirements. At many large or midsized organizations, old or sparse technology can introduce unnecessary pain points into ACA reporting.
Consider Gathering Data Early
Filing ahead of the deadlines could present a challenge, but organizations should consider prioritizing data collection in future years. Early data collection can allow sufficient time for quality assurance, which can be particularly crucial if you're pulling data from multiple systems, vendors and sources. According to an ADP study, How Companies Did ACA Compliance, "employee benefits data not ready" was a top-cited reason for missing the original IRS filing deadline, among those who did not distribute Form 1095-C by March 31. In many instances, data suggests that due to the sheer complexity of assimilating data from multiple sources, organizations reached a point where their combined payroll, benefits and HR data simply was not ready. If your previous filing experience has revealed quality and consistency issues, consolidating your future data collection efforts with a single vendor may remove a significant amount of difficulties and risk from the process.
For many HR teams, recent years have represented something of a "test drive" for staying on track with ACA compliance as requirements continue to evolve. For teams who are concerned about looming deadlines or just starting to already feel behind in their time-tracking efforts, a comprehensive approach to collaboration could be necessary to mitigate non-compliance risk. To reduce trouble spots and bottlenecks heading into the coming year, organizations should invest in tools to make reporting and classification as simple as possible.
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