Affordable Care Act Update 2018: ACA Requirements for Employers

Affordable Care Act Update 2018: ACA Requirements for Employers

Over a year into the Trump presidency and the fate of the Affordable Care Act (ACA) is still as unclear as ever, at least for employers. The Internal Revenue Service has made no move to alter companies’ ACA compliance and reporting requirements – even as the Individual Mandate becomes obsolete in 2019. And after years of promising penalties, the IRS is now actively pursuing fines for ACA non-compliance, which could end up impacting companies in a very big way.

The proposed penalty notices – known as Letter 226J – signal an important development: The IRS has finalized its methods for processing and identifying errors and inconsistencies in ACA data, which likely means swifter delivery of penalty assessments going forward and the need for applicable large employers (ALEs) to stay vigilant.

With 2017 being the third year of ACA reporting, the potential for penalty assessments now spans three years. The IRS has promised to review 2016 reporting more quickly, meaning Employers may have to answer for ACA compliance confusion – and subpar vendor failures – possibly for multiple plan years at a time.

ACA penalties can reach up to $3 million per employer1 – a payout that no Employer is prepared to make. However, Obamacare penalties aren’t limited to simply failing to provide adequate coverage. The reporting process itself presented Employers and some third-party vendors with a slew of challenges that many were not prepared to handle. Much like how incorrectly filling out one’s personal tax forms might trigger an audit by the IRS, so too could mistakes made on ACA forms trigger an IRS penalty notice – with potentially massive financial consequences.

Employers must ensure their ACA solution, in-house processes, or partner’s technology follows and maintains alignment with best and required practices every year. A strong technology partner should configure and update their ACA solution each year to match the latest IRS 1095 form changes and coding logic. Otherwise, an outdated ACA solution could cause reporting errors.

For Employers that believe they have received a penalty notice in error (for example, if an employee who was offered MEC declined coverage, then applied for and received a premium tax credit through an exchange), data review and documentation will need to quickly occur.

And if your company has experienced a merger or acquisition in the last few years, this can increase the data challenges you may already be facing, as prior systems and processes may be completely different (or no longer available).

Depending on the data integrity and usability of your system, retrieving or verifying older data might be easier said than done – especially if utilizing a basic out-of-the-box or limited vendor for your ACA services.

As Employers begin appealing their 2015 ACA proposed penalty assessments, the processes involved continue to highlight the importance of having a thorough reporting partner and reliable and easy-to-access system of record, for all reporting elements required under the ACA Employer Mandate which can make the appeals process much simpler and less stressful to manage.

No company can afford to bet on if – or when – employers’ ACA responsibilities will be significantly altered or repealed. Managing compliance can be a stressful and daunting undertaking, but it doesn’t have to be. Empyrean’s newest At-A-Glance Guide examines the latest developments surrounding employers’ ACA requirements, to help you stay ahead of compliance challenges and prepare for potential changes as the ACA evolves.

Download this free guide to learn how a best-in-class ACA partner can help you alleviate significant burdens, boost your team’s productivity, and complete your requirements with confidence. As you read, we’d love to get your thoughts. Feel free to contact us with questions or comments at


  1. “Information Reporting by Applicable Large Employers.” Internal Revenue Service, Washington D.C.