{"id":930,"date":"2022-05-04T14:30:31","date_gmt":"2022-05-04T14:30:31","guid":{"rendered":"https:\/\/newsite.payrollmedics.com\/blog\/?p=930"},"modified":"2022-07-13T14:53:43","modified_gmt":"2022-07-13T14:53:43","slug":"10-costly-aca-mistakes-businesses-should-avoid","status":"publish","type":"post","link":"https:\/\/www.payrollmedics.com\/blog\/10-costly-aca-mistakes-businesses-should-avoid\/","title":{"rendered":"10 Costly ACA Mistakes Businesses Should Avoid"},"content":{"rendered":"

10 Costly ACA Mistakes Businesses Should Avoid<\/strong><\/p>\n

The Affordable Care Act (ACA)\u00a0has been the law of the land for more than a decade and has survived legal challenges from the Supreme Court as recently as last year<\/a>. The aim of this law was\u00a0to help lower the cost of quality healthcare for Americans through a shared responsibility between employers and the government.<\/p>\n

This law codified several important aspects of employer-sponsored health insurance, including what is considered affordable, a requirement to provide plans that cover 100% of certain preventative health services, and prohibiting the exclusion of individuals with pre-existing health conditions.<\/p>\n

Still,\u00a0a lot of businesses continue to make compliance mistakes when it comes to the ACA. The IRS has been busy issuing costly\u00a0penalties for several years.<\/p>\n

Is Your Business an Applicable Large Employer (ALE)?\u00a0<\/strong><\/p>\n

The ACA requires Applicable Large Employers (ALEs) to offer affordable, employee-sponsored healthcare coverage to full-time employees or face noncompliance fines.<\/p>\n

The IRS<\/a> states: \u201cTo be an ALE for a particular calendar year, an employer must have had an average of at least 50 full-time employees (including full-time-equivalent employees) during the preceding calendar year.\u201d<\/p>\n

If your business is an ALE, you must meet the requirements of Employer Shared Responsibility, or your business can be subjected to penalties.<\/p><\/blockquote>\n

This is often referred to as the \u201cEmployer Mandate.\u201d<\/p>\n

Smaller Businesses and the ACA\u00a0<\/strong><\/p>\n

If your business has fewer than 50 full-time or full-time equivalent (FTE) employees, you do not have to provide health insurance to your employees and you will not face ACA fines. However, your business could qualify for the Small Business Health Care Tax Credit if you do choose to provide health insurance.<\/p>\n

The ACA gives the option for many small business owners and employees to obtain affordable health coverage through Healthcare.gov and state-based marketplaces. According to analysis by The Commonwealth Fund, \u201cmore than half of all ACA marketplace enrollees are small-business owners, self-employed individuals, or small-business employees.\u201d Furthermore, the uninsured rate for small-business employees fell nearly 10% after the ACA became law.<\/p>\n

\"\"<\/p>\n

Top 10 ACA Compliance Mistakes\u00a0\u00a0<\/strong><\/p>\n

All businesses should understand their opportunities and responsibilities under the ACA. Compliance mistakes can be costly. Here are 10 common errors\u00a0to watch out for:<\/p>\n

Assuming Your Small Business is Not an ALE\u00a0<\/strong><\/p>\n

Although an ALE is a \u201clarge employer\u201d according to the ACA rules, many business owners are of the opinion that 50 employees would not\u00a0constitute a large business. It\u2019s important to get this right, because ALEs have different ACA reporting requirements and can be subject to hefty compliance penalties.<\/p>\n

Incorrectly Counting Full-Time and Full-Time Equivalent Employees\u00a0<\/strong><\/p>\n

Do you think a full-time employee means a traditional 40-hour work week? Think again. Under the ACA, an employee is considered full-time if they work\u00a030 hours per\u00a0week or 130 hours (about 5 and a half days) per\u00a0month.<\/p>\n

Calculate your full-time equivalent employees (FTEs). For each month, mark down all of your part-time employees. Add up all the hours, (up to a maximum of 120 hours per month per part-time employee) and divide the total hours by 120. Those are your FTEs for each month.<\/p>\n

Now add your full-time employees and FTEs for all 12 months and determine the monthly average. Companies with a monthly average of 50 or more are considered ALEs under the ACA guidelines.<\/p>\n

Misclassification of Workers\u00a0<\/strong><\/p>\n

It is imperative for businesses\u00a0to correctly classify\u00a0workers under the ACA. Make sure any independent contractors you hire are properly classified and not incorrectly labeled as employees. A mistake with independent contractors could mean that you thought your business was not an ALE when it really was.<\/p>\n

An employer is not an ALE if the workforce only exceeds 50 FTEs for 120 days or fewer, provided that the employees (above 50 FTEs) were seasonal workers.<\/p>\n

Inadequate Record-Keeping for Employment Periods\u00a0<\/strong><\/p>\n

Employment periods are significant, because full-time and full-time equivalent employees are considered on a monthly basis. It\u2019s essential that your business keeps careful records of employee hire dates, termination dates, and rehire dates.<\/p>\n

Missing a Filing Due Date\u00a0<\/strong><\/p>\n

Employers that do not file accurate ACA information returns by the filing deadlines can receive a failure to file penalty. The two forms that need to be filed are:<\/p>\n