ACA Compliance 2016 - Changes and Penalties

ACA Compliance: Steering Clear of Trouble in 2016 and Beyond

The ACA has changed over 50 times since it was originally enacted in March 2010, and you can expect it will continue to evolve over the coming years. As changing regulations and requirements roll in, employers must keep up or face increasing risk. Higher eligibility thresholds, larger penalties and the impact of increasing premium costs on the affordability mandate are the major ACA-related changes you need to plan and prepare for in 2016 and beyond.

95% offer requirement expanded to more employers

Starting this year, more employers must offer health coverage to even more full-time employees and their dependents. The compliance threshold rose from 70 percent last year to 95 percent in 2016 for companies with 100+ employees. Plus, companies with 50 to 99 employees, who were previously given an additional year to comply, are now required to meet this 95 percent threshold, as well.

Determining and managing eligibility isn’t easy, and it’s even more difficult if your data is spread across disparate systems. It’s important that you manage and audit your workforce data monthly to ensure you’re meeting the offer-of-coverage requirement. Monthly data is also needed to generate the logic that populates lines 14 through 16 for IRS Form 1095-C, another major component of ACA compliance.

Larger penalties for both employers and employees

As higher thresholds have made compliance more difficult, the stakes have gotten even higher:


Ignoring errors won’t make them go away. Regular reconciliation and quality checks are key to avoiding costly surprises come reporting season. The time is now to take the action necessary to uncover and correct data integrity issues in your enrollment processes.We’re well into the second calendar quarter of the 2016 tax reporting year. If you’re not meeting the 95 percent threshold, it may already be too late to make good on coverage offers you’ve missed—exposing your organization to fines.

Rising costs and higher enrollment

Employers believe 2016 will be the costliest year yet for ACA compliance, according to a recent survey by the International Foundation of Employee Benefit Plans. Some 82 percent of large employers expect health benefit costs to increase due to the ACA, with 57 percent citing administrative issues as their biggest ACA challenge.

Many employers are shifting more of the cost to employees through higher premiums and by driving adoption of high-deductible plans (HDHPs). These strategies increase employee out-of-pocket costs, which could impact whether you’re meeting the affordability clause—and potentially affect employee satisfaction, recruitment and retention.

The rising cost of individual insurance may be driving more employees to opt in to less-expensive employer-offered plans that they had previously declined. As a result, many employers saw an upswing in enrollment for 2016. Higher enrollment places more burden on administrators, and more pressure on employers to offer competitive compensation and benefit packages that will attract and retain top talent.

Planning ahead is crucial

As you develop your benefit strategies for 2017 and beyond, you need to analyze your costs and risks based on your unique workforce and in the context of your larger HR goals. Tools that analyze your population and forecast future scenarios can provide the insights you need to quickly adapt your plans and fine-tune your compliance strategies so you can make the right decisions for your business.

Next steps

Watch the on-demand webinar from Benefitfocus and ACA software provider Health E(fx) on adapting to ACA change. You’ll learn strategies that can help you ease administrative burden, reduce costs and improve communication in 2016 and beyond!