A large part of ACA compliance is proving that affordable health insurance was offered to full-time employees. (Photo: Shutterstock)

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

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

The IRS can't just trust that a business is complying with the ACA without proof. Businesses can prove this through tracking certain employee demographics and benefits information year-round. This information then has to be organized, input and generated into 1094 B-C and 1095 B-C forms, which are legal documents employers are required to send to their employees and the IRS. If a business fails to complete ACA reporting or incorrectly reports compliance details, they will receive a Letter 5699 outlining the fines and penalties they are subject to.