Preparing Now for ACA Reporting in Early 2025: Key Steps for Employers

As 2025 approaches, it’s time for businesses to get ahead of ACA (Affordable Care Act) reporting requirements. Proper preparation ensures compliance and avoids potential penalties from the IRS.?

Understanding the Difference Between Fully Insured vs. Self-funded Plans

When preparing for ACA reporting, it’s important to understand how your health plan’s funding model impacts reporting requirements. There are key differences between fully insured and self-funded plans that influence compliance and reporting obligations.

Fully Insured Plans: In a fully insured plan, the employer pays a premium to an insurance carrier, which assumes the risk and handles claims. For ACA reporting, the insurance carrier is generally responsible for providing the 1095-B forms to covered employees. However, the employer still needs to submit Form 1095-C to the IRS for ACA compliance.

Self-Funded Plans: In a self-funded plan, the employer assumes the financial risk of providing healthcare benefits and directly pays for claims. ACA reporting for self-funded plans requires more responsibility on the employer’s part. The employer must provide both the 1095-C and the 1095-B forms, detailing employee coverage, to ensure compliance.

Understanding your plan type ensures that you assign reporting responsibilities correctly between your internal team, broker, and carrier or TPA, allowing for smoother ACA compliance and reducing the risk of penalties.

To successfully manage ACA reporting, it’s critical to engage all key stakeholders—brokers, carriers, TPAs, CFOs, and HR teams. Below are essential action steps and a breakdown of roles to streamline the process.

Action Steps to Prepare for ACA Reporting

1. Review Applicable Coverage Periods

Start by reviewing the coverage periods for full-time employees and those who qualify under the ACA. Ensure that the data collected throughout 2024 is accurate and complete.

2. Audit Benefits Eligibility Data

Conduct an internal audit of employee hours and benefits eligibility. Ensure the accuracy of payroll data, employee status changes, and any leave of absence tracking, as this information is crucial for correct reporting.

3. Coordinate with Payroll Providers

Ensure that payroll providers have up-to-date information on employee status and benefits. Accurate payroll data directly impacts ACA filings, particularly with Form 1095-C submissions.

4. Understand the ACA Affordability Threshold for 2025

Confirm that the employer-sponsored plan remains affordable under the ACA’s updated thresholds for 2025. This is crucial for avoiding penalties related to ACA affordability standards.

5. Develop a Timeline for Filing

Set internal deadlines for submitting Forms 1094-C and 1095-C to ensure everything is prepared well before the IRS deadline. This avoids the last-minute rush and reduces the risk of errors.

The Role of the Broker

Brokers play a vital role in preparing for ACA reporting by:

Providing Guidance: Brokers should advise on affordability calculations and ensure that the employer’s health plan complies with ACA standards.

Monitoring Changes: They must stay updated on regulatory changes and communicate these to the employer, helping to adjust benefit offerings if needed.

Collaborating on Reporting: Work closely with carriers and TPAs to gather accurate data and ensure that all ACA forms are completed correctly.

The Role of Carriers and TPAs

Carriers and Third-Party Administrators (TPAs) are essential partners in the reporting process:

Providing Accurate Data: Carriers and TPAs should supply employers with reports that detail employee enrollments and terminations, which are essential for ACA filings.

Ensuring Compliance: They should ensure that the health plan design meets all ACA minimum essential coverage requirements.

Facilitating Communication: TPAs and carriers must maintain open communication with both the employer and broker to ensure accurate data transmission.

The Role of CFOs

The Chief Financial Officer has a key role in ensuring that ACA reporting is both accurate and financially compliant:

Budget Oversight: The CFO must ensure that the benefits program remains affordable under ACA rules, adjusting financial forecasts as needed.

Monitoring Penalty Risk: Assess and plan for any potential penalties that may arise from non-compliance or affordability issues, ensuring the organization is prepared.

The Role of HR

Human Resources teams are the frontline workers in ACA reporting, managing employee data, and ensuring compliance:

Tracking Eligibility: HR should continuously track employees’ hours to identify who qualifies for ACA-mandated coverage.

Communicating with Employees: HR is responsible for informing employees about their coverage and ensuring they receive the necessary ACA reporting documents, such as Form 1095-C.

Coordinating with Other Stakeholders: HR must work closely with payroll, finance, and brokers to ensure all reporting data is correct and filed on time.

Conclusion

By proactively preparing now for ACA reporting in early 2025, employers can ensure compliance, avoid penalties, and support their workforce with accurate benefit offerings. The combined efforts of brokers, carriers/TPAs, CFOs, and HR teams are essential to a seamless reporting process. Start early, communicate clearly, and keep compliance top of mind.