ACA Compliance and Return to Work

In the weeks ahead, businesses will begin to re-open and employers will implement plans to bring back temporarily laid off or furloughed employees post-COVID-19. Employers should understand the effects of their ongoing ACA compliance obligations, as it is likely that many will see their full-time count fluctuate during 2020. Determining an accurate count will be a challenge for many employers, as it is even under normal circumstances.

Under the ACA’s Employer Mandate, employers with 50 or more full-time employees and full-time equivalent employees are required to offer Minimum Essential Coverage (MEC) to at least 95% of their full-time workforce (and their dependents) whereby such coverage meets Minimum Value (MV) and is affordable for the employee. Employers not offering this coverage will be subject to penalties.

It is important not to classify employees incorrectly, as this can lead to inaccurate information being submitted to the IRS for their annual information filings. Minor errors can result in miscalculations of full-time employees and can result in significant ACA penalties from the IRS.

While employers are determining whether employees are considered to be full-time under the ACA, they must use one of two measurement methods sanctioned by the IRS: the Look-Back Measurement Method or the Monthly Measurement Method.

Companies may need to rethink their current measurement method. For example, if an employer’s workforce is primarily comprised of variable-hour workers, the Look-Back Measurement will be the best measurement method to use for ACA compliance. However, employers who have typically used the Monthly Measurement Method may want to reconsider their approach if they have experienced large fluctuations in their workforce and their hours of service during the pandemic.

Whether an employer is running a restaurant, healthcare facility or other organization, complying with the ACA alone can be very difficult, especially if they are administering the Look-Back Method. To ensure employers are compliant, it is recommended they consider outsourcing a third-party expert who specializes in ACA compliance. It is important to get it right to avoid costly ACA penalties being issued by the IRS.

LeClair Group partners with HR Service, who provides businesses of all sizes with HR Solutions, Benefit Compliance, Benefit Administration to include ACA Reporting. If you would like to learn more about HR Service, please contact Katie Miller or Nick Forside.