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ACA Vitals results
"Based on your responses, your organization is at low ACA penalty risk. However, without more information we cannot assess with certainty your ACA compliance status. Contact us or click the link below to learn about our ACA compliance solutions."
Your organization has substantial ACA penalty risk. We recommend
contacting Trusaic to help with ACA reporting.
Call us at (213) 335-5022
You told us you have variable or part-time employees.
High variable hour workforces are difficult to track due to the inconsistent hours of service worked by employees and employee attrition. This can be challenging for employers determining if they're an Applicable Large Employer (ALE). Variable hour employees will be considered ACA full-time, so long as they provide 130 hours of service a month or 30 hours a week for a given month.
Workforces with employees like this are at high risk of IRS penalty assessments because offers of coverage aren't always extended and may be done so incorrectly. This scenario leads to employees receiving subsidized coverage from state and federal health exchanges, the trigger for IRS Letter 226J.
You told us you do not use Look Back Measurement method to determine ACA full -time status.
The Look-Back Measurement Method is designed for organizations with high-variable workforces. Because you identified that your organization's workforce is made up primarily of variable hour employees, the Look-Back Measurement Method should be utilized to identify ACA full-time status. The Look-Back Measurement Method is complex and involves established measurement periods. Measuring these on your own can be difficult and it requires monthly review. Failure to correctly apply the necessary measurement periods to your workforce can result in incorrect full-time counts and classifications, which in turn can result in IRS penalty assessments.
You told us you use "Rate of Pay/W-2 Safe Harbor" to determine ACA Affordability.
Based on your response, your organization is at ACA penalty risk for affordability. The W-2 Safe Harbor, while effective, can be one of the most difficult to administer successfully because it relies on W-2 information, which are issued after the end of the year. If your health plan year does not coincide with the issuance of the W-2s, this can create challenges for determining ACA affordability due to timing constraints for completing the IRS ACA information returns.
The Rate of Pay Safe Harbor too can pose IRS risk because of the complexities in the affordability calculation formulas. Specifically, determining individual contributions for employees is time-consuming, manual, and changing on a monthly basis. This process creates ACA penalty risk exposure. A very common issue that arises with ROP affordability calculation occurs when employees change compensation during the year, as there is special reconciling logic that must be correctly applied.
Affordability is an important part of ACA compliance. Failing to adequately offer affordable healthcare coverage to your ACA full-time employees can result in IRS penalties under IRC 4980H(b). For the 2021 tax year, the annualized penalty per employee is $4,060.
You told us your payroll provider administers your ACA compliance software.
Based on your workforce makeup, your organization is at ACA penalty risk due to a potentially inadequate ACA compliance process. This is because ACA software inside payroll systems and other HCM systems do not have triggers for flagging ACA non-compliance, nor do they possess the tools for mitigating ACA compliance risk.
ACA compliance software built within payroll platforms, while convenient, poses significant IRS penalty risk because the data input is entirely manual. Populating the data into the ACA software requires regulatory expertise, clean data, and ACA mastery. Without these three items, the ACA software will complete your filing and furnishing requirements but at the cost of IRS penalty exposure.
You told us you were in the industry, which means your organization has substantial ACA risk.
While not limited to these sectors alone, the home healthcare, construction, quick-service restaurants, security, staffing, hospitality, educational, and government industries are at the greatest risk of ACA penalty exposure. That's because they possess large numbers of part-time and variable-hour employees and elevated levels of employee turnover. This makes tracking ACA offers of coverage difficult. These industries also often administer the Look-Back Measurement Method, which requires sophisticated measurement systems to accurately measure employee hours of service to determine ACA full-time status and timing of offers of coverage for newly full-time status employees.
You told us you were not sure about your business acquiring any new entities since 2015, or if you plan to acquire new entities soon.
Acquiring new business entities poses ACA risk as you may unknowingly be inheriting ACA penalty risk. We've heard from clients who received penalties simply because they acquired a company where the previous owner didn't take their ACA compliance responsibilities seriously. In addition, your new entity may need to be grouped into your ALE group for ACA reporting purposes.
To accurately calculate ALE status, employers must determine all entities for which make up an aggregate employer group under IRC rules, including controlled groups of corporations, trades or businesses under common control and/or affiliated service groups. Members of the groups must combine their full-time and full-time equivalent employees' hours to accurately determine their workforce size. Because this process requires a working knowledge of the IRS' employer aggregation rules, organizations could be at risk for IRS penalty exposure.
You told us you use many different Payroll Platforms.
ACA compliance requires vast amounts of data. Time and attendance, payroll, benefits administration, and general HCM platforms all store different types of employee information. The more spread out your data is, the more room there is for error. Data needs to be cross-referenced for consistency and accuracy. Failing to do this could result in filing incorrect information with the IRS annually, putting you at significant risk for receiving an IRS penalty assessment.
You told us you have employees residing in Massachusetts, New Jersey, California, Rhode Island, and/or the District of Columbia, which means your organization has substantial ACA risk.
Organizations with business operations in these states have additional ACA reporting requirements. Each state has its own set of requirements for employers and as such, states have the authority to impose penalties for failing to comply. These penalties are in addition to those imposed by the IRS for failing to comply with the ACA's Employer Mandate reporting requirements. For more information on the individual state reporting requirements, please visit The ACA Times.