A large part of ACAcompliance is proving that affordable health insurance was offeredto full-time employees. (Photo: Shutterstock)

ACA reporting is not an easy task. Businesses that are Applicable Large Employers (ALEs) are requiredby law to prove each year that they offer affordablehealth insurance to all of their full-time employees as a part ofthe ACA's employer mandate (also known as the EmployerShared Responsibilities Payments). Additionally, the coverage mustmeet the IRS' standards for minimum value and affordability.

Ensuring Affordable Care Act (ACA) compliance with the IRS canbe even more of a challenge for small- and medium-sized businessesthat don't have entire departments dedicated to laws andregulations.

The IRS can't just trust that a business is complying with theACA without proof. Businesses can prove this through trackingcertain employee demographics and benefits information year-round.This information then has to be organized, input and generated into1094 B-C and 1095 B-C forms, which are legal documents employersare required to send to their employees and the IRS. If a businessfails to complete ACA reporting or incorrectly reports compliancedetails, they will receive a Letter 5699 outlining the fines andpenalties they are subject to.

Related: 9 ACA employer mandate FAQs

Completing ACA reporting without a technology solution can leavea business vulnerable to thousands of dollars in fines andpenalties from the IRS. Technology allows businesses to keep trackof details required for ACA reporting throughout the year, insteadof scrambling at the last minute to grab required information fromvarious sources. These details are then simply populated into 1094and 1095 reports. Additionally, several technology solutionsprovide resources like webinars, brochures, videos, and FAQs toupdate you on annual ACA changes that could impact reporting.

How does technology help ensure compliance?

Technology can help businesses perform the actions needed toprove ACA compliance to the IRS.

Only ALEs have to complete ACA reporting. An ALE is defined asany company that has an average of at least 50 full-time employees,or “full-time equivalents” (FTE). The IRS measures a full-timeemployee as someone who works at least 30 hours a week and alsoconsiders an FTE to be any collection of two or more employeeswhose hours, when taken together, add up to a full-time workload of30 hours a week.

Determining if a business is an ALE is based on a calculation,which is easier to do with a calculator versus manual math. SeveralACA compliance tools are available to ALEs which make it easier todetermine whether ACA reporting is required in the first place.

A large part of ACA compliance is proving that affordable healthinsurance was offered to employees who are considered FTEs. This isa two-step process:

1. Track current and historical employee demographic, payroll, andbenefits data
2. Measure affordability

Technology allows a business to complete these two steps byproviding templates to import the necessary information. If abusiness uses a technology system offered by their broker orpayroll provider, plenty of the required data will already beavailable from previous activity.

Employers are required to send the IRS 1094 B-C forms and tosend employees 1095 B-C forms in order to verify that theirbusiness obliged with the Employer Mandate. ACA technology allowsbusinesses to generate required legal documents for submission.

Last but not least, employers can use technology toelectronically send 1094 and 1095 forms to the IRS and theiremployees instead of going to the post office and manually mailingeach one.

Choosing a technology solution

When looking for ACA technology to use, businesses can start byreaching out to their insurance broker or payroll provider. Since thedata required to prove ACA compliance is a combination of bothbenefits and payroll, using one of those sources can help get ahead start on ACA reporting.

Read more:

• ACA and compliance: Act now, help yourself outlater
• What to expect from the ACA in2019
• 4 key steps for eliminating employees' ACA Form1095 confusion

David Reid is CEO of EaseCentral, a HR andbenefits administration tool for health insurance brokers.