The Affordable Care Act (ACA) created several important responsibilities for employers, particularly businesses that qualify as Applicable Large Employers (ALEs). Yet ACA compliance is about more than simply offering health insurance.

Employers also need to correctly determine their workforce size, track employee eligibility, meet affordability and coverage requirements, provide required notices, and complete annual reporting.

For businesses in Charleston, Greenville, and throughout South Carolina, these requirements can become especially challenging as workforces change and benefits programs evolve.

Here are some of the most common ACA compliance mistakes employers make—and how businesses can reduce the risk of overlooking an important requirement.

1. Miscalculating Applicable Large Employer Status

One of the first ACA compliance questions an employer should answer is whether it is an Applicable Large Employer.

Generally, an employer is considered an ALE if it averaged at least 50 full-time employees, including full-time equivalent employees, during the previous calendar year. Determining that number isn’t always as simple as counting the people on payroll today. Employers must account for full-time employees and the hours worked by certain part-time employees when calculating full-time equivalents.

A common mistake is assuming that a business with fewer than 50 employees today is automatically exempt. Workforce size can fluctuate throughout the year, and businesses with multiple related entities may also need to consider aggregation rules.

Best practice: Review employee counts and hours regularly rather than waiting until year-end to determine ACA status.

2. Misclassifying Full-Time Employees

Under the ACA, a full-time employee generally means someone who averages at least 30 hours of service per week or 130 hours of service per month. That definition may differ from how an employer categorizes employees for scheduling, payroll, or other HR purposes.

This can create problems for businesses that employ variable-hour, seasonal, part-time, or temporary workers.

For example, an employee who is generally considered part-time could accumulate enough hours to meet the ACA’s full-time definition. If the employer’s benefits administration system isn’t tracking hours appropriately, that employee could be incorrectly excluded from coverage or reporting.

Employers should establish a consistent method for monitoring hours and determining when employees become eligible for benefits.

3. Failing to Monitor Affordability

Offering health insurance isn’t necessarily enough for an ALE to satisfy the ACA’s employer shared responsibility requirements. Coverage must also meet applicable affordability and minimum value standards.

Affordability can be particularly easy to overlook because the calculation involves the employee’s required contribution for self-only coverage and an annually adjusted percentage. The IRS also provides affordability safe harbors that employers may use under certain circumstances.

A plan that was affordable under one year’s rules may need to be reviewed again when rates, employee contributions, wages, or federal thresholds change.

Best practice: Evaluate affordability during annual benefits planning and whenever plan contributions or compensation structures change.

4. Treating ACA Compliance as a Once-a-Year Task

Another common mistake is approaching ACA compliance as something HR handles only during open enrollment or tax reporting season.

In reality, employee hours, employment status, coverage elections, compensation, and eligibility can change throughout the year. Those changes can affect an employer’s ACA obligations.

Maintaining accurate records throughout the year makes year-end reporting significantly easier and gives employers a better opportunity to identify potential issues before they become larger problems.

5. Errors on Forms 1094-C and 1095-C

ACA reporting is another area where small administrative mistakes can create significant headaches.

ALEs generally use Form 1094-C to provide summary information to the IRS and Form 1095-C to report information about offers of health coverage for applicable full-time employees. The IRS uses this information when determining whether an employer may owe an employer shared responsibility payment.

Common reporting problems can include:

Incorrect employee or employer information
Missing or inaccurate monthly coverage information
Incorrect employee status codes
Failing to account for changes in employment status
Inconsistent information between payroll, benefits, and ACA reporting systems

Employers should review reporting data carefully before submission and make sure the systems responsible for producing that information are working from consistent employee records.

6. Overlooking Required Employee Notices

ACA compliance also includes employee communications. Depending on the employer’s circumstances and benefits arrangement, required notices and disclosures may need to be provided to employees at specific times.

Employers sometimes focus heavily on plan design and reporting while overlooking the communication side of compliance. A benefits program can be well-designed, but employees still need timely, accurate information about their coverage and rights.

Keeping a centralized compliance calendar can help HR teams track recurring notices, deadlines, and documentation requirements.

7. Assuming the Insurance Carrier Handles Everything

Employers may assume that because they work with an insurance carrier or benefits broker, every ACA responsibility is automatically being handled on their behalf.

That isn’t necessarily the case.

Responsibilities can be divided among the employer, insurance carrier, payroll provider, benefits administrator, and other vendors. Employers should understand exactly who is responsible for each aspect of ACA compliance and reporting.

This is especially important when a company changes benefits administration platforms, switches payroll providers, changes health plans, or introduces a different funding arrangement.

Make ACA Compliance Part of Your Benefits Strategy

ACA compliance doesn’t have to be an isolated HR task. It can be incorporated into the broader employee benefits and administration strategy your business uses throughout the year.

Beckham Ellis Insurance Group provides employers with ACA compliance resources, including customized compliance books, ACA seminars and webinars, notifications, and access to benefits counsel.

For businesses in Charleston and Greenville, SC, working with an experienced employee benefits partner can help simplify the administrative side of compliance while giving your HR team a clearer framework for managing changing requirements.

If you’re reviewing your employee benefits strategy, preparing for a new plan year, or simply want to better understand your ACA responsibilities, contact Beckham Ellis Insurance Group to discuss your business’s benefits and compliance needs.

This article is intended for general informational purposes and is not legal or tax advice. ACA requirements can vary based on an employer’s circumstances and may change over time.