This article was updated on August 13, 2018.
Tracking, compliance and reporting requirements under the Affordable Care Act (ACA) caused headaches for employers in the early years of implementation. But as with any regulatory change, organizations have become accustomed to the process as time goes by. The tricky part has been figuring out how to handle compliance and ACA reporting, and then implementing the processes to get it done. While there may be changes to health care public policy and ACA compliance, employers still need to comply with the law.
While some organizations have internal ACA compliance expertise, many do not. ADP indicates that more than a third of organizations feel they do not have enough expertise to handle ACA compliance internally, and a quarter say they simply didn't have the resources to internally handle ACA compliance.
That means well over half of organizations are in need of external assistance with their ACA compliance and reporting. The good news is that there's plenty of external ACA compliance expertise available for your organization to use. This might be an ideal solution going forward, even if you complete the reporting process internally.
Organizations are increasingly opting to outsource some or all of their ACA compliance tasks, either adding to an existing outsourcing arrangement they have or creating a new one.
A Vendor Who Focuses on All Aspects of ACA Compliance
Vendors that focus solely on ACA compliance are a popular option selected by organizations of all sizes. Keeping ACA compliance expertise with one outsourced entity keeps things simple for the employer and also provides a go-to solution if your organization's ACA compliance and reporting is ever audited by the IRS. It also frees up the HR department to focus on HCM initiatives and other pressing needs throughout the organization.
Benefits Administrators and Payroll Vendors
Benefits administrators and payroll vendors are increasingly taking on the task of handling ACA compliance for their clients. These might be firms with which you already have a long-standing relationship, so they're already handling the details of your health insurance plan and/or employee benefits and payroll. They'll already have a lot of the data necessary for accurate and timely ACA reporting.
It's important to remember that not all payroll vendors are created equally. Some are overall HCM providers. Depending on the level of integration your benefits administrator or payroll vendor has with the rest of your organization, you may have to provide them with additional data in order to complete the reporting process, as ACA compliance requires data from as many as 6 different systems.
For example, if your payroll vendor is handling your ACA reporting but doesn't have access to the specifics of your health plan, you may be expected to provide codes for Lines 14 and 16 on Form 1095-C. This might fit well with what you have in mind, but it's the sort of thing you'll want to know about ahead of time; if you're outsourcing ACA compliance expertise for your organization, be sure you understand exactly what services will — and won't — be provided by the third party.
ACA Compliance Consultants
Consulting with an accounting firm that specializes in health care and ACA compliance, or a law firm that specializes in labor, employment and the tax code, could be all you need to maintain compliance and may be helpful to avoid risk. This option may appeal to HR leaders with internal staff who can handle the ongoing work involved with ACA compliance and reporting, but who are lacking ACA compliance expertise and need to ensure that the organization is up-to-date on all of the HHS and IRS regulations pertaining to the ACA. If you clearly understand roles and responsibilities when it comes to ACA ongoing compliance, you can avoid any confusion when deadlines or compliance issues arise.
An Ongoing Process
When you choose to outsource your ACA compliance and reporting, keep in mind that it's important to understand what's in and out of scope when you outsource. For example, how will they respond to marketplace notices from employees who went to an exchange? These are the notifications that the exchanges send to employers when one of their employees receives a subsidy in the exchange and indicated during the enrollment process that they did not have access to affordable, minimum value employer-sponsored health insurance. Employers have the right to appeal these notices, and possibly head off a penalty assessment from the IRS. Outsourcing the process of dealing with marketplace notices can be a wise choice as it helps to eliminate conflicts of interest and protects the organization from accusations that employees faced retaliation in response to marketplace notices.
If you've struggled with ACA compliance and reporting in the past, or if you feel that your organization doesn't have the expertise or resources to continue handling ACA compliance internally, now's the time to implement an outsourced solution so that you're well-prepared by the time reporting for next year is due. Remaining in compliance with the ACA requires preparation and monthly testing — and consolidating the information needed for ACA reporting —making it an ongoing task throughout the year, so having additional resources on your side might just be the solution that your organization has been looking for to get the job done right.