2016 is coming, which means that many small businesses are scrambling to make sense of the Affordable Care Act (ACA) and prepare to comply with its numerous complicated and complex stipulations. According to a survey completed by PricewaterhouseCooper on how employers are planning to comply with the new ACA requirements, following are some common concerns businesses are raising about ACA compliance for 2016:
- Ensuring Compliance. Only 10 percent of the companies surveyed have developed and implemented a solution. Solutions could range from in-house reporting with a dedicated staff or human resources capabilities, or more likely, an outsourced solution. Most small businesses don’t have the desire, staff, or financial resources for a fully in-house solution to the ACA compliance question, which means that HR outsourcing providers will have a big role to play in managing ACA compliance. Fee-based outsourcing, often through a PEO as an a-la-carte service or as part of a package of HR solutions, has a number of upsides every undecided business should consider. For example, PEOs can help clients manage labor-intensive interactions with regulatory agencies and negotiate deadlines while avoiding potentially costly penalties.
- ACA Reporting. With 2016 right around the corner, along with all the attendant deadlines, companies need to start acting quickly in order to guarantee compliance. That means they need to start pulling all the relevant data together that is required by the IRS. The first question every business should ask itself is: Who handles reporting? Is it the HR department? Is it your PEO? Is it a third-party compliance provider? Who is in charge of keeping track of the data? Who is keeping track of employee hours worked? Remember, although IRS Forms 1094 and 1095 aren’t due until early 2016, the data required must still be captured on a month-to-month basis for all of 2015. Once all the form data is accounted for, a company must still determine how the IRS 1095 forms will be delivered to employees, and how both the IRS 1094 and 1095 will be delivered to the IRS. Thirty percent of employers surveyed planned to use a vendor, 24 percent planned to do it in-house.
- Data Accuracy, Aggregation, and Security. Sixty-five percent of survey participants indicated that data accuracy was potentially a major concern. Many employers use multiple systems and have contracts with various service vendors and third parties making data aggregation a challenge. The ACA’s requirement for capturing employee data on a monthly basis can be particularly difficult for companies who employ a large number of seasonal, part-time, or transient labor.
- How to Respond to Exchange Notices. Nearly half of all participants in the PWC survey indicated they were concerned about responding to exchange notices. This could be a particularly acute problem for firms with many employees at many worksites in many states. Because each state’s exchange may have varying policies regarding exchange notices, it can quickly become burdensome for companies that operate across state borders.
- Determining Eligibility and Affordability. Employers included in the survey varied in how they intended to approach determining eligibility and affordability on a regular basis. Some plan to use their payroll vendor, while others planned to use an HRIS system. Twelve percent of all the companies surveyed didn’t know what method to employ.
All in all, the varied responses on almost every single critical concern indicated that the business sector is still very much confused about ACA compliance, particularly small businesses. The concerns expressed by the small business community are numerous and quite varied. However, there is a clear pattern of distribution by firm size. For smaller businesses, the most pressing concerns often had to do with understanding the different forms and reporting options. Meanwhile, for Applicable Large Employers (ALEs), the topics of worry tended to revolve around data accuracy, and minimizing risk exposure and penalties.