Key ACA Compliance Failures: Are they happening to you or your clients?
by JT Kim, Guest Columnist
ACA Compliance Expert
First Capitol Consulting
Back over a year ago when we rolled out with our ACA compliance service, our full-service approach stood in stark contrast from that of the software-driven solutions offered by payroll, benadmin, and other ACA compliance vendors.
Their fixed platforms required clients to self-navigate and we knew that without expertise, clients would be left vulnerable to the flood of penalties that are yet to come. Back then, our concerns were purely theoretical. Now, however, our concerns have actualized and in many cases, have proven to be understated.
Below is a list of 7 types of failures of ACA compliance vendors. The following situations that illustrate these traits have been reported by many of our clients who switched over to us or have been shared with us by our channel partners who were horrified for their clients:
1. Unreliable
- Some vendors have dropped their ACA clients at the last minute, just weeks before the 1095-C distribution deadline, leaving them to fend for themselves to prepare the 1094/1095 reporting.
- Many vendors do not offer professional/informed live support to answer ACA questions. At best, these vendors require clients to suffer through long wait times, only to find the “customer representative” ill-equipped to answer ACA questions, and instead only able to answer technical questions about the software system.
2. Deceptive
- Some vendors have used bait and switch tactics by promising a robust platform but never revealing that the solution that they’re signing up for won’t be ready until a later time. Once signed on, clients receive an interim solution which is in essence a spreadsheet.
3. Incomplete
- Many vendors are not properly tracking leaves of absence (“LOAs”). Even if their system has the option to account for LOAs, these vendors leave it up to the clients to proactively input the necessary LOA data without any guidance.
- Some vendors do not offer COBRA tracking, which is necessary for self-funded plans. One large provider simply informed the client weeks before the 1095 distribution deadline that the client was on its own to perform COBRA tracking.
4. Burdensome
- Vendors require clients to be extensively trained to get up to speed on their platforms. This leaves the client vulnerable to making data input mistakes and ultimately responsible for the ensuing reporting errors.
- Many ACA vendors leave it to the clients to pick their measurement method and measurement period lengths for the IRS Look-Back Measurement Method, without explaining its complicated rules. These vendors try to pass this function off as a beneficial feature given the clients’ “choices,” but in reality, this “choice” without guidance actually sets up the clients for failure.
- Some ACA vendors require their clients to pick the codes for line 14 and 16 of the 1095-C forms from a drop-down menu, expecting the clients to understand which codes are applicable.
5. Inconsistent
- Many payroll and software solutions vendors do not address data systems irregularities. For example, a client for a large payroll provider showed different hours worked in the time and attendance module as compared to that in the payroll module for the same employee during the same time period.
6. Inflexible
- Some vendors do not allow clients to account for their unique healthcare premium rate structure(s). For example, a client may have a tiered composite rate schedule with employer contributions based on hours worked. However, some software solutions vendors take the “one size fits all approach” and cannot accommodate such variations.
- Many payroll and software solutions vendors use programs that do not address unique measurements, such as that associated with adjunct professors. The hours that are logged into payroll do not comply with the hours reporting under the ACA rules.
7. Unprepared
- Most ACA vendors will not maintain the documentation necessary to defend against an IRS audit. At audit time, the client is on its own, and they will not have maintained or even be aware of the necessary documentation, let alone be given prior notice to ensure that it maintain such documentation at the time of reporting.
- In addition, many vendors also charge exorbitant fees if a client wants retro data. This could be especially costly for clients that are not current clients at the time of audit, which could be years away.
ACA compliance doesn’t have to be this way. First Capitol Consulting combines technology with experts to provide you with relief from the administrative burden imposed by the new ACA requirements along with true protection from IRS inquiries and audits. Our unique service model has allowed us to avoid the aforementioned deadly traits as we go well beyond filling out forms and provide a comprehensive compliance solution providing significant protection from the hefty IRS penalties.