Dec 30, 2021 Admin

Employee Benefits

Top 20 Questions To Consider Before Hiring ACA Compliance Software Solutions Company

The Affordable Care Act (ACA) is a statute that aims to improve the healthcare system in the United States. It accomplishes this by making health insurance widely accessible to the general public in the United States. 

People that already have health insurance are likewise protected by the law. The Patient Protection and Affordable Care Act (PPACA) and the Health Care and Education Reconciliation Act (HCERA), both acts were signed into law by Barack Obama on March 23, 2010, and March 30, 2010, respectively, make up the Affordable Care Act. In contrast, regulations enacted after the ACA give useful assistance.

Read- EDI Software 101: Types, Benefits, and Use Cases

The Affordable Care Act (ACA) includes new mechanisms to hold insurance companies accountable as well as clear health care insurance opportunities for individuals, families, and corporations. These significant improvements went into effect on October 1, 2013, when the state and federal health insurance exchanges began for enrollment, allowing all Americans to receive increased, low-cost coverage. 

Individuals who do not have health insurance by the cutoff and are not declared exempt under the Affordable Care Act will face a penalty when filing their taxes in the benefits management solutions.

Patients who were previously uninsured owing to pre-existing diseases or a lack of financial resources can now obtain inexpensive health plans from their state's health insurance exchanges under the Affordable Care Act. The American Medical Association is devoted to educating physicians with information that will assist them in obtaining coverage for their patients, as well as negotiating amendments to strengthen the legislation in the future.

Before diving deeper let’s understand a bit more about the ACA Compliance Software. 

The Affordable Care Act is a complicated piece of legislation with severe consequences for non-compliance. HR Managers and Benefits Administrators are confronted every year with attaining ACA compliance for their firm while also managing their Human Resource or Benefits Administration obligations.

Businesses of different sizes and sectors utilize the ACA Compliance Software to keep up with their ACA reporting obligations while conserving effort and resources. Subscriptions with complete surveillance to establish eligibility and IRS reporting subscriptions are two options.

What Should You Do in Order to Prepare for ACA Filing?


Preparing for an ACA file involves a lot of moving components. To prevent rising penalties, we recommend that you continue to transmit ACA data to your vendor and assess ACA compliance throughout the year. You won't have a significant pile of work to perform in a short amount of time if you prepare for ACA every month.

Make Sure Your ACA Information Is Correct

Since ACA data is so complicated, your company should verify it on a regular basis throughout the year. This entails double-checking the data for accuracy and completeness. If you notice any inconsistencies, you or your vendor must look into them and make the necessary changes.

Know more: 12 Key Benefits of Using Enterprise Software in Your Organization

Examine your ACA compliance

You must also determine if your company has fulfilled the IRS's 95 percent standard for full-time employees who are offered Minimal Essential Coverage (MEC). Ensure that all affordability safe harbors have been assessed and properly implemented.

Keep an eye out for subsidized notices

Subsidy notices are frequently delivered during the summer and autumn. Keep an eye out for incentives, and if you do get them, you or your vendor will have to figure out which aspects can be challenged. To defend your request, you'll need supporting documentation, and you'll need to handle it quickly.

Employees should receive 1095-C forms

Make sure you stick to your ACA plan so you don't miss any deadlines, especially those that fall during the busy holiday season. The IRS has delayed the deadline for sending 1095-C forms to employees until March 2, 2021, despite the fact that the deadline is generally January 31. Even earlier is the deadline for sending final files and printing 1095-C forms. 

It has been seen that many people are struggling with their current ACA vendors with their services. Here are some reasons that indicate why going for the best ACA compliance software is necessary. 

It takes a lot of time and expense to print and mail our own paperwork

HR is supposed to create information related to benefit packages and organizational policies. But what about tax forms? Not only do printing and mailing forms take some time, but they can also be pricey in terms of paper and shipping. Switching to a robust and safe HCM solutions platform that is both sturdy and secure will help you reduce phone calls from employees who couldn't find their forms. You can also boost the convenience of accessibility with Single Sign-On.

You're concerned about penalties as more employees qualify for the Premium Tax Credit


An estimated 1.3 million more Americans will be entitled to significant financial aid ($34 billion) for participating in state or federal exchange plans during the next two years. Prior to the ACA exchanges, only those earning 100% of the Federal Poverty Level, which is present $12,880 for a single-person home and $26,500 for a four-person family, were eligible for Premium Tax Credits. The newly passed funding bill increased eligibility by 400%, implying that a two-person household earning $69,680 might be eligible for a Premium Tax Credit.

Important to read: 5 Key Questions That Employers Must Ask Potential Employee Benefits Brokers

You may easily discover if you're getting the most out of your existing ACA vendor or service by answering a few straightforward questions. It all boils down to reliability, information sources, services beyond computations, ease of implementation (or re-implementation as data systems evolve), credibility, and the ability to advance operations as the legislation evolves (such as state mandates).

However, if you believe that problems will become easier as time passes, researching different options is not only a good idea, but it could also spare you time and money.

1. What are the obligations for employers to report statistics about offers of health coverage under employer-sponsored plans?

Sections 4980H and 6056 of the Internal Revenue Code were added by the Affordable Care Act. Certain employers, known as relevant large employers, or ALEs, are obliged to issue qualifying healthcare claim status coverage to their comprehensive employees (and their dependents) or risk being liable for an assessable payment if at least one full-time employee collects the premium tax credit for coverage in the Marketplace under section 4980H, the employer shared liability regulations. 

Employers who are ALEs under the employer shared accountability provisions are required to file reporting returns with the IRS stating whether they provided health care to their full-time employees (and their dependents) and, if yes, details about the coverage offered. ALEs must also give the employee a copy of the documentation.

2. When did the information reporting obligations go into force for the first time?

In 2015, information reporting under section 6056 was needed for coverage offered (or not offered). See How and When to Report the Required Information and Extended Due Dates and Transition Relief for 2015 and 2016 Reporting for more information on transition relief.

3. What exactly is the ACA in terms of employer perception?


Some employers are affected by Section 4980H of the Internal Revenue Code, which was enacted as part of the Affordable Care Act (ACA). Under these provisions, certain employers known as applicable large employers (ALEs) must either provide "affordable" and "minimum value" health coverage to their comprehensive employees (and their dependents); or make a company shared liability payout to the IRS if at least one of their full-time employees obtains a premium tax credit for purchasing individual coverage on a Health Insurance Claims Marketplace. 

Important to know: Accelerate Your Business with EDI Healthcare Review and Response Service

4. What happens if my organization is not tracking the actual hours worked for part-time or variable-hour workers? 

If a part-time employee gets medical insurance from the Global market when the business should have provided it, the employer faces sanctions for failure to comply with the Affordable Care Act. Tracking and documenting the employee's real average hours is the only way to record or demonstrate the employee spent Only around 30 hours per week in general. When there is no evidence of hours worked, the employee has the upper hand, as it is the employer's job under the ACA and employment regulations to keep track of all employees' hours worked.

5. What exactly is a full-time employee? How is it related to ACA?

People employed full-time for at minimum 30 hours per week throughout the month or at least 130 hours during the month are considered full-time professionals. A business calculates the number of full-time equivalent employees for a month by adding all non-full-time employees' hours of service for the month but not more than 120 hours per employee, then multiplying the number by 120. For example, a company with 40 comprehensive employees and 20 full-time analogous employees has the equivalent of 50 full-time employees in a month 40 full-time employees + 10 full-time comparable employees [20 X 60 = 1200, and 1200/120 =10].

6. How to find out whether my company is eligible for an Applicable Large Employer?

The volume of an employer's staff determines whether this was an Applicable Large Employer and hence subject to the employer shared liability laws. Companies with 50 or more full-time employees, including full-time equivalent employees (part-time employees who count as one or more full-time employees), are classified as ALEs.

In most cases, whether or not an employer is an ALE in a given calendar year is determined by the number of the company's employees in the previous calendar year. For example, an employer will utilize information from the previous calendar year's workforce size to assess if it is an ALE for the current calendar year.

7. What is the upfront cost of the ACA software solution vendor?

Some third-party providers charge a fixed payment, while others demand an upfront setup fee followed by further, separate fees for data exchange, 1095 printing, and IRS 1094 transfer. Customer support is sometimes offered as a separate service, with a fee for the time spent on the phone. When choosing third-party services, employers should thoroughly analyze the costs and benefits.

Know more: Experience the Benefit of Outsourcing EDI Healthcare for Payroll Deducted and Other Group Premium Payment for Insurance Products

8. What are the other options for reporting?


To reduce the expense and regulatory constraints for enterprises, mainly two reporting procedures under section 6056 were devised. Alternative reporting techniques, which are provided in circumstances where streamlined reporting provides enough information to the employee and the IRS, may allow employers to supply less extensive information than is required under the general reporting method. Subsections A through D of Section X of the preamble to the section 6056 rules, as well as the Instructions for Forms 1094-C and 1095-C, detail the simplified alternative reporting methods and the circumstances for employing them.

9. Is it permissible for an ALE Member to hire a third-party administrator or other third-party service providers to file the return with the IRS and deliver the requisite employee statements under section 6056?

Absolutely. Issuers, other ALE members, or third parties may engage in agreements with ALE Members to get the other party to file the return with the IRS, provide the information to its workers, or both. However, having entered into a reporting arrangement does not transmit the ALE Member's liability under section 4980H, nor does it transfer the ALE Member's potential liability for failing to submit timely, accomplished, and precise returns and furnish timely, complete, and accurate statements under section 6056 (except in the case of a related entity properly designated by a governmental unit). If the person preparing the returns or statements required under section 6056 is also a tax return preparer, he or she will be subject to the same rules that apply to all tax return preparers.

10. How Can ACA Compliance Software Help Us?

After data transmission, some third-party suppliers provide almost no help, or just during particular hours of the day. Some third-party companies employ a full-time, committed employee purpose of providing real-time assistance to their clientele. You can also take advantage of EDI managed services in this case.

11. How ACA Compliance Software ensures the overall safety of our employees and ACA data?

Employers must ensure that data privacy rules are followed. Growing amounts of personal data are moved and shared inside and across businesses as more employers implement enterprise-level management information systems and outsource some human resources administration responsibilities. Employers should evaluate any legislative obligations that may affect their data privacy policies and procedures whether municipal, state, provincial, or national. 

Companies that want to reduce their risk of legal infringements and security breaches entailing employee Personal Data should probably adopt data privacy and protection best practices that strive to restrict the amount of Personal Data they collect, process, transfer, and store; secure Personal Data collected in all formats in which it is kept limit access to Personal Data to the extent practicable, and provide training to staff who handle Personal Data and ensure third-party access to Personal Data.

12. If your ACA Compliance Software Solution is not IRS Schemata rules for transmission?

If your company has 250 or more employees, you must submit your ACA reporting online, thus according to IRS standards. On the technical component of delivering ACA reporting data to the IRS (called AIR – Affordable Care Act Information Returns), the IRS publishes and offers substantial documentation and workshops. Before moving to the next questions are you aware of EDI 843?

13. Is it permissible for an ALE Member to retain a third-party administrator or other third-party service providers to submit the return with the IRS and deliver the requisite employee declarations under section 6056?

Yes. Issuers, other ALE members, or third parties may engage in agreements with ALE Members to have the other party lodge the return with the IRS, provide the statements to its workers, or both. However, having entered into a reporting arrangement does not distribute the ALE Member's potential liability under section 4980H, nor does it transfer the ALE Member's culpability for failing to submit timely, complete, and accurate returns and furnish timely, complete, and reasonable statements under section 6056 (except in the particular instance of a related entity properly assigned by a governmental unit).

Although ALE Members are required to file reports under section 6056, the Form 1094-C filed on their behalf must include the ALE Member's EIN. There must also be only one Form 1094-C Authoritative Transmittal reporting composite employee-level data for an ALE Member if more than the one-third party is enabling reporting for the ALE Member.

14. Is there any way to avoid penalties for filing incomplete or erroneous returns or providing employees with statements for insurance given (or not offered) in the calendar years 2015, 2016, 2017, and 2018?

Yes. Beginning in 2016, ALE Members were subject to new material reporting obligations for coverage offers made in 2015. For these additional information disclosure laws, an ALE Member that fails to file timely information returns fails to include all required information or contains erroneous information on the return may face a penalty under section 6721. Similarly, an ALE Member who fails to timely supply the statement fails to include all required information or includes erroneous information on the statement may face a penalty under section 6722. 

Short-term exemption from reporting fines is frequently offered while adopting new information reporting requirements. This reprieve gives people more time to build acceptable data gathering systems and comply with the increased reporting obligations. You can also take advantage of EDI outsourcing.

As a result, ALE Members who can demonstrate that they made a reasonable faith obligation to meet with the relevant disclosure laws for reporting in multiple periods will not face penalties under sections 6721 and 6722 of the Internal Revenue Code.

For returns and statements filed and furnished in 2016 to report offers of coverage in 2015, in 2017 to report offers of coverage in 2016, in 2018 to report offers of coverage in 2017, and in 2019 to report offers of coverage in 2018, relief is provided from penalties under sections 6721 and 6722 for incorrect or incomplete information reported on the return or statement. If an ALE 

Members cannot demonstrate a good faith effort to comply with the information reporting obligations or fail to timely file an information return or furnish a statement, no relief is available. However, you can always rely on edi service providers

15. What are your costs?


Some third-party providers charge a fixed payment, while others demand an upfront setup fee followed by further, separate fees for data exchange, 1095 printing, and IRS 1094 transfer. Customer service is sometimes offered as a separate service, with a fee for the time spent on the phone. When choosing third-party services, employers should thoroughly analyze the costs and benefits.

16. Under section 6056, who is obligated to file a report?

Employers who are subject to the employer shared responsibility provisions, often known as applicable large employers or ALEs, must report under section 6056. An ALE is defined as a company that employed at least 50 full-time employees (including full-time equivalent employees) on business days in the previous calendar year.

An ALE can be a single employer or a collection of linked employers (such as parent and subsidiary entities or other related/affiliated entities), which is referred to as an Aggregated ALE Group. A group of employers regarded as a single employer under section 414(b), (c), (m), or (n) is referred to as an Aggregated ALE Group (o). An ALE Member is an employer who is an ALE or a member of an Aggregated ALE Group.

17. How do two or more connected employers comply with the announcement reporting requirements if they constitute an Aggregated ALE Group under section 4980H (each associated employer is an ALE Member)?

Each ALE Member must use its own EIN to file Forms 1094-C and 1095-C with the IRS and provide Form 1095-C to its full-time employees for information reporting purposes. This is true even if an ALE Member does not have enough full-time employees to meet the 50-employee criterion. For additional information on estimating the number of full-time employees, see Employers Subject to the Employer Shared Responsibility Provisions and Identification of Full-Time Employees in the Employer Shared Responsibility FAQs (including full-time equivalent employees). Section 4980H has requirements for admissibility.

18. Are there multiple ways for ALE Members to provide required information to the IRS and provide statements to their employees?

Yes. Section 6056 regulations establish a broad mechanism for reporting to the IRS and providing statements to full-time employees that all ALE Members may use, as well as different reporting methods for eligible ALE Members. If an ALE Member cannot use one of the alternative reporting methods for some or all of its employees, the ALE Member must use the general approach. Alternative reporting methods are optional in any event, and an ALE Member may choose to use the general approach for all of its full-time employees even if an alternative reporting method is available.

19. Under the Qualifying Offer approach, how does an ALE Member report?

The Qualifying Offer technique allows an employer to complete Form 1095-C using simplified requirements and provide a document different than Form 1095-C to certain full-time employees. To be eligible to use the Qualifying Offer method, an ALE Member must certify that it made a Qualifying Offer to one or more of its full-time employees for all calendar months during the calendar year in which the employee was a full-time employee eligible for an employer shared responsibility payment.

20. Is it necessary for an ALE Member to file their returns online with the IRS?

Except for an ALE Member filing fewer than 250 Forms 1095-C during the calendar year, the regulations require electronic submission of Forms 1094-C (transmittal) and Form 1095-C (employee statement) with the IRS. Each Form 1095-C is considered a distinct return, and only Forms 1095-C are taken into account when calculating the 250-return threshold for section 6056 reporting. See the Instructions for Forms 1094-C and 1095-C and the Affordable Care Act Information Returns (AIR) Program for further information, including how this regulation applies to corrected returns.

Learn more about: How to Secure Healthcare Data using Enterprise Mobility Management Services?

Final Words


People with pre-existing diseases were frequently denied health insurance, withdrawn from coverage, or given a higher monthly rate before the Patient Protection and Affordable Care Act (ACA). Many plans also lacked coverage for critical items they required to manage their illnesses. The Affordable Care Act (ACA) was signed into law in March 2010, and while it is not without flaws, it provides essential protections for those with chronic diseases and disabilities. Millions of Americans with pre-existing conditions would lose coverage if the ACA or comparable alternative legislation were not passed.

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