Business owners large and small are turning to PEOs to ensure compliance with the ACA come 2016.
Due to a series of landmark decisions by the Supreme Court in recent years, the Affordable Care Act (ACA) appears to be here to stay. While companies find the rules and regulations of the ACA complex and confusing, the question of compliance is a consistent and legitimate concern amongst business owners. The concern over compliance is so pervasive that many companies are turning to outsourcing their regulatory compliance to a viable, cost-effective solution that minimizes risk and ensures legal conformity.
Is Your Business Ready For ACA Compliance?
In 2015 companies with 100 or more employees (or the equivalent in employee hours) were required to start complying with the ACA’s “shared responsibility” mandate. This meant companies had to begin offering their employees a minimum standard of health coverage at an agreed-upon “affordable” price or face penalties. However, there is a two-year period for companies to scale their coverage to include 95 percent of their employees. The very first reportings are due to the IRS on January 1, 2016, and must include data about employees for every month of the year in 2015.
Companies with 50 to 99 full-time employees have until January 1, 2016 to get in accordance with the ACA requirements, after which those companies who do not meet the mandate required by law will be accessed penalties.
Businesses employing fewer than 50 workers, which encompasses the vast majority of small businesses in the marketplace, are not considered Applicable Large Employers (ALEs) and thus the mandate does not apply to them. Also, many of the employer mandates and penalties won’t apply to them either. According to the Small Business Administration (SBA), 80 percent of employers have less than 10 workers.
Still, even if coverage mandates and associated penalties don’t necessarily apply, other compliance issues are a concern. And since most small businesses don’t necessarily have the manpower or resources to manage all the compliance paperwork and legal necessities dictated by the ACA, outsourcing remains a very attractive option. According to a survey by PricewaterhouseCoopers (PwC), nearly half of all employers with less than 1,000 workers were planning on outsourcing their payroll functions. One in ten indicated a desire to outsource their entire benefits infrastructure, while thirteen percent hoped to retain the services of an ACA compliance vendor. Perhaps tellingly, the larger the company in question, the more critical the need for a dedicated compliance vendor. Nearly a quarter of firms employing 1,000 to 5,000 employees surveyed intended to outsource their ACA compliance information to a dedicated compliance vendor. Over a third of large companies (employing over 5,000 people) intended to do the same.
Need help with looming ACA compliance deadlines? Looking to outsource compliance to a specialized vendor?