November 8, 2021
For companies who are looking to protect their bottom line, one of the most common concerns is compliance. Adherence to ACA requirements is one of the most important responsibilities for companies in charge of employee benefits administration. Any errors, however small, often result in substantial penalty fees as well as inaccurate and incomplete records. Adding to this challenge is reliance on manual processes as a way to cut corners in lieu of investing in technology that would allow accuracy and automation of these processes.
To that end, many small and mid-size companies find that their biggest difficulty in remaining compliant stems from the use of manual administration techniques.
Lack of Legal Protection
Companies often use a general policy statement from their employee handbook to show that they have offered health benefits to their employees. This approach does not meet the ACA compliance requirements. If the employee handbook fails to provide specific ACA compliant information about when, to whom, and what kind of medical coverage is offered to at least 95% of their employees, the ACA requirement has not been met, leaving the company open to great financial risk. Companies need an automated system to prove that coverage was offered to a minimum of 95% of employees.
Staying on top of benefits legislation is a consistent endeavor that is time consuming and quite challenging. Administrative staff are required to follow all regulations and maintain perfect records. However, completing these tasks manually makes it difficult for companies to remain compliant, especially when navigating complex regulations that are constantly fluctuating. Given non-compliance fees can cost hundreds of thousands or even millions of dollars, having systems in place to ensure compliance should be a top priority.
The substantial risk of ACA noncompliance from manual processes greatly increases a company’s exposure, and therefore, the potential of steep penalties. These fees put a major strain on the company’s bottom line, are non-insurable or tax deductible, and can hinder the growth and success of a company.
To diminish the number of administrative tasks performed manually, companies should partner with a benefits administration firm that has automated systems and experts on staff who can consistently generate accurate data and ensure compliance. This helps to create a healthy bottom line and moves businesses toward their goal of long-term sustainability.