The healthcare reforms provided by the American Care Act (ACA) affect businesses of every size. Understanding what is required can be complex. However, failing to be in ACA compliance can result in penalties that can quickly add up to the millions of dollars. It is in your organization’s best interest to plan for and implement changes needed to be in ACA compliance.
The ACA compliance checklist below can help your organization become compliant:
Read the ACA
The first step of the ACA compliance checklist is to understand the mandates made by the ACA. After all, it is impossible for an organization to conform to regulations they don’t understand. Take time to understand what the ACA requires for organizations of your size. The ACA divides organizations into three groups:
- Organizations with less than 25 full-time equivalent employees.
- Organizations with less than 50 full-time equivalent employees.
- Organizations with 50 or more full-time equivalent employees.
Organizations with less than 50 full-time equivalent employees are exempt from the penalties accessed by the ACA for noncompliance. Additionally, organizations with less than 25 employees that provide employer-sponsored health insurance are eligible for tax credits.
There are two primary requirements for insurance coverage. Employers must offer:
- Minimum Essential Coverage (MEC) to at least 95 percent of eligible employees. Failing to do this can result in an annual penalty of $2,000 per employee for all employees.
- An affordable plan with a minimum value of at least 60 percent. Eligible individuals who are not offered an affordable option and receive a government subsidy can trigger a penalty of $3,000 annually.
There are a number of resources available, including the services of payroll companies, CPA firms and health care agents/brokers that can help your organization understand what is required by the ACA.
Identify the Implementation Team
Becoming ACA compliant will require coordination between several departments within the organization. The ACA affects the operations of several departments including:
- Information Technology
- Finance
- Benefits
- Human Resources
- Workforce Management
- Payroll
These departments must be able to share information and keep records for up to seven years. Ideally, the implementation team should include individuals from the affected departments who collaborate to determine the steps that are required to be ACA compliant.
Create a Process to Identify Eligible Employees
One of the most important steps of the ACA compliance checklist is to identify which employees are eligible for benefits. There are different requirements for organizations based on the number of full-time equivalent employees (FTEs).
For the purposes of the ACA, FTEs are defined as any employee that averages 30 or more hours of service per week. Hours of service include paid hours worked, paid time off and certain unpaid time, such as leave that is covered by FMLA. For many organizations, this designation will be different than how full-time employment is currently determined.
Identifying FTEs may require coordination from multiple departments to ensure that all hours are accounted for. Additionally, hours worked must be watched closely. The number of eligible employees an organization has determines if penalties will be levied for non-compliance.
Understand ACA Implementation Impact
Chances are, your organization will need to make a number of changes in order to adhere to ACA standards. Every affected department must be evaluated in order to have a grasp of the full impact of implementing ACA requirements. Your organization may need to upgrade or obtain software in order to gain the ability to run the necessary reporting.
In other instances, training may be necessary in order for employees in human resources and benefits to be able to explain insurance eligibility to employees. Organizations cannot adequately plan for ACA implementation until they understand what that means for the entire organization.
Create an Implementation Plan
Once the full impact of the ACA is understood, it is important to create an implementation plan. The full implementation plan must address the needs of every department as well as issues that affect the organization as a whole. The team must work together to create a solution to each of the issues identified during the implementation impact analysis.
Schedule Status Meetings
Status checks are an important aspect of every project, including ACA implementation. Regular status meetings provide a dedicated time to provide updates, collaborate on ways to overcome roadblocks and to share information. Minutes should be taken during these meetings and provided to management to communicate progress. Failing to schedule these necessary meetings may result in missing key implementation deadlines.
Develop a Timeline for Implementation
The plan must include a timeline for making changes to policies and procedures as well as for procuring additional assets, such as record keeping software. Timelines should be established for each affected department and should be aligned to avoid timing issues. It is important that the timeline be realistic and achievable. Additionally, the timeline should be reviewed and supported by senior management and shared with all stakeholders.
Create a Communication Plan
Clear communication is one of the foundations of the success of any project. Unfortunately, it is also one of the most often overlooked aspects of plan implementation. Communication is necessary for a number of key individuals:
A thorough communication plan needs to be put in place for notifying employees of their eligibility for health benefits. This communication must be tracked and recorded. Proof of employee notification is required in case of an audit.
Key departments must be made aware of the implementation plan’s progress.
Key stakeholders, including senior management, must be kept informed about the progress of ACA implementation as well as informed about how the ACA will affect the company’s bottom line.
Create an Internal Audit Process
The best way to prepare for an audit is to have a thorough internal audit process. By auditing its own records, organizations can identify issues before they become problems. The internal audit section of this ACA compliance checklist can also be performed by a consultant who is knowledgeable about ACA and its requirements. An independent audit provides another layer of assurance that all requirements are adhered to.
Establish Reporting Procedure
Regular reporting is required by the ACA to document compliance. Using an ACA compliance checklist for reporting provides a framework to ensure that all requirements are met. Large employers are required to provide documentation of insurance coverage to the IRS and employees. Reporting should be checked for accuracy and validated that it follows the mandated format.
Implementing ACA requirements can be complicated and time consuming. Working with a qualified CPA firm provides the knowledge and expertise necessary for a seamless implementation. From an ACA compliance checklist to an implementation plan, the team at Smolin can provide the support your organization needs.
