By - August 3, 2021

6 Reasons Why It is Time to Look for a New ACA Vendor

aca compliance

After four years of uncertainty, in June 2021 the Supreme Court upheld the employer mandate regulations of the Affordable Care Act (ACA). Most companies have stuck it out by handling the requirements in-house or with an existing vendor. Make 2021 the year you eliminate the heavy lifting by your HR team, further reduce the chance of increases in penalty risks, and finally move to a best-in-class vendor. Switching vendors doesn’t have to be a months-long process and there’s plenty of time to do it before this January’s printing season.

Not sure how to get started? Let’s start by finding out why you should entertain a switch.

ACA takes too much time away from our HR priorities.

Complying properly with the ACA takes hours of effort every month plus an extra sprint at the beginning of the year to review 1095-C forms prior to distribution and filing with the IRS. It’s exhausting just thinking about it, right?! In the meantime, the employer workplace is changing whether due to COVID-19 or the ongoing shift to a remote or hybrid workforce. While most companies reported little change to their benefits offering for the 2021 plan year, most are planning to introduce new programs for the 2022 plan year.

The only solution is to outsource and recoup the time spent pulling reports, reading the law, and managing deadlines.

Our current vendor is okay, but we know it could be better and easier.

Through a short series of questions, you can determine quickly if you’re getting the best out of your current ACA vendor or solution. It comes down to accuracy, data sources, services beyond calculations, ease to implement (or re-implement as data systems change), their reputation, and expanding services as the law changes (such as state mandates).

But, if you have a feeling that things should be easier as the filing years pass by, then looking into other options is not only a smart idea, but it could also save you time and money.

With more employees qualifying for a Premium Tax Credit, we’re worried about penalties.

Over the next two years, an estimated 1.3 million more Americans will be eligible to receive substantial financial assistance ($34 billion, to be exact) for enrolling in state or federal marketplace plans. Previously, only those earning 100% of the Federal Poverty Level, currently $12,880 for a single person household and $26,500 for a four person household, were eligible for Premium Tax Credits on the ACA exchanges. The recently-passed stimulus bill increases eligibility up to 400%, meaning that a two-person household making as much as $69,680 could qualify for a Premium Tax Credit.

That’s good news for the exchanges but bad news for employers who do not offer affordable coverage to all full time employees. If you miss offering affordable coverage to a full time employee who receives a Premium Tax Credit, the IRS will assess a $4,060 penalty. It is even more important to get the calculations correct and only report truly full time employees to the IRS.

Unsure if we’re paying too much or too little for what we’re getting.

Since 2015, HRIS and payroll systems have increasingly included ACA tracking as a part of their standard offering. If all the data is in the same place, this certainly might make sense. But, with ACA here to stay for the next four years, what are you getting exactly with a free solution?

  • Most HRIS/Payroll ACA solutions include measurement reports, tracking of enrollment and waives, and affordability calculations. However, they leave it up to you to review for data inaccuracies, correct 1095-C code combinations, distribution and filing of forms, and state mandate filings.
  • HRIS/Payroll systems were built for paying employees and enrolling them in benefits – not ACA compliance. While the data gets the job done for running your business, they create critical areas of risk from misreported Hours of Service, inappropriate employment statuses, inaccurate SSN rigor, missing Leave of Absence data, and incomplete data. For example, if your COBRA is handled by a third-party and not tracked within your HRIS/Payroll system, it’s impossible to guarantee your 1095-Cs will be accurate to the letter of the law.
  • Your HR team has to be the ACA expert instead of the other way around. While your HRIS/Payroll provider may assign you a competent Account Manager, they typically are HR generalists that have little experience or practical knowledge around the ACA. This requires you to keep up with the law, know what to look for to stay compliant, and keep track of the myriad of deadlines each year.

Sound familiar? Learn more about the Top 3 Things Missing from HRIS Payroll

State mandate isn’t supported, and we’re tired of doing it manually.

To date, California, the District of Columbia, Massachusetts, New Jersey, Rhode Island, and Vermont have passed state individual mandates. With each state passing its own individual mandate, the difficulty level for total compliance has increased and not all ACA vendors or HRIS/Payroll systems are helping their clients comply. Even if you have one employee filing taxes in one of these states, your company must comply with that state’s individual mandate. This means companies will not only have to be ACA complaint at the federal level, but also at the individual state levels.

Every state also has its own reporting format, system, and timeline. Monitoring all these moving parts takes time away from other critical tasks.

Printing and mailing our own forms takes too much time and money.

It’s expected that HR produces materials around benefit offerings and corporate policies. But tax forms as well? Not only does it take time to print and mail forms, but it can also be costly with paper costs and postage. Moving to a robust and secure electronic secure online platform can eliminate phone calls from employees who can’t find their form. And with Single Sign On you can also increase the ease of access.

We can help

We recommend following our guide to build a business case for outsourcing ACA compliance to a trusted vendor. Not only will this save time and allow you to focus on other benefits priorities, but your organization will also achieve peace of mind by allowing an ACA vendor to ensure you are fully compliant with minimal effort.

Please contact us if you’ve been managing ACA filing on your own and need help or are not happy with the results you’ve had with your vendor.  We offer a complete ACA reporting solution focused on accuracy—we even help our clients respond to IRS penalties and comply with state individual healthcare mandates.

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