When an employer has multiple entities within its controlled group, the ACA (as well as most other tax and employee benefits laws) will treat the entire controlled group as a single employer to determine whether the employer is an applicable large employer (ALE).
A control group or (aggregate group) is two or more businesses connected through common ownership. Any single entity or organization can be a member of a controlled group for employee benefit plan purposes, such as a corporation, partnership, sole proprietorship, or limited liability company (LLC), as long as they have common ownership with the other entities in that group.
If the combined total of full-time employees (FTEs) in a controlled group is at least 50, each individual employer is subject to the employer mandate, even if that employer itself doesn’t employ 50 or more full-time employees. This situation is referred to as the ACA shared responsibility rule.
This common error also includes incorrectly reporting employees who work in multiple locations.
If an employee is working for two separate employers that are part of an Aggregated ALE Group, then that employee’s hours must be aggregated to determine whether they were full-time. Also, one location has to take the brunt of the reporting requirement.
Accurately determining the ACA status of your employees relies on properly classifying them as full-time, part-time, seasonal, or variable hours. For instance, an employee who is hired with the expectation of working 30 or more hours each week should be designated as full-time for ACA compliance.
While you might have previously considered 40 or more hours per week as the threshold for full-time employment, the
ACA sets the standard at 30 hours. Confirming that you have properly tracked and calculated your employees' work hours to determine ACA employee status will minimize reporting mistakes.
There are different employment classifications:
Frequently, employer databases store outdated or inconsistent employee information. The consequences of misclassifying employees can lead to missed coverage opportunities for eligible individuals.
To address this concern, perform regular reviews of employee data across various systems, including payroll, timekeeping, and benefits databases. It is essential to maintain current information. This monthly practice will streamline ACA reporting for each annual period.
Please refer to our eBook, “Navigating ACA Compliance” for a complete overview of these classifications.
The 1095-C form, Part II (Lines 14-16), provides a month-by-month breakdown of critical information, including details about the coverage offered to an employee, the recipient of the offer, the cost to the employee for self-only coverage, and any applicable safe harbors or employer-provided relief.
This form can be confusing, and vital sections are frequently left blank when that is prohibited.
Other common errors include invalid code combinations and misidentification of self-insured and fully insured plans.
Presently, there are 90 possible combinations of indicator codes for Lines 14 and 16, with slightly over half of these combinations being valid. For instance, a combination like 1H and 2C is entirely invalid because 1H signifies that no offer of coverage was extended, while 2C indicates that an employee actively enrolled in coverage.
Failing to grasp the intricacies of these indicator codes and their interactions can result in the creation of flawed forms, inviting increased scrutiny and potential penalties from the IRS.
One of the most common mistakes is a mismatch between the employer identification number (EIN) and the legal name of the company. Review EINs and legal names before submitting to the IRS, checking for misspellings, improper characters, and ensuring the EIN and company name are identical.
As an employer, you will need to determine FTE hours using either the “monthly” or the “look-back” measurement method. Choosing the incorrect method can result in gaps in coverage and noncompliance that can result in a penalty.
The Monthly Measurement Method is better suited for organizations with predominantly stable, full-time employee workforces, offering a simpler framework.
The Look-Back Measurement Method is ideal for businesses with highly variable hour workforces, such as those in the restaurant, construction, hospitality, and education industries.
Also, make sure there is accurate reporting of employement periods that include new hires, rehires, termination dates, and breaks in service in payroll data.
Please consult our downloadable resource covering " Seven Common ACA Reporting Mistakes ".
SyncStream maintains a tenured, knowledgeable staff who continually monitors changes to the employer mandate regulations and updates solutions as laws evolve. SyncStream removes the burden of ACA compliance and provides penalty risk assessments and suggested corrections to reduce your company’s risk of high IRS penalties. Subject matter experts utilize SyncStream’s user-friendly compliance software to track employee hours, auto-populate forms, audit forms, and e-file for thousands of ALEs. SyncStream’s Full Service Total ACA solution can simplify your ACA compliance needs.
When an employer has multiple entities within its controlled group, the ACA (as well as most other tax and employee benefits laws) will treat the entire controlled group as a single employer to determine whether the employer is an applicable large employer (ALE).
A control group or (aggregate group) is two or more businesses connected through common ownership. Any single entity or organization can be a member of a controlled group for employee benefit plan purposes, such as a corporation, partnership, sole proprietorship, or limited liability company (LLC), as long as they have common ownership with the other entities in that group.
If the combined total of full-time employees (FTEs) in a controlled group is at least 50, each individual employer is subject to the employer mandate, even if that employer itself doesn’t employ 50 or more full-time employees. This situation is referred to as the ACA shared responsibility rule.
This common error also includes incorrectly reporting employees who work in multiple locations.
If an employee is working for two separate employers that are part of an Aggregated ALE Group, then that employee’s hours must be aggregated to determine whether they were full-time. Also, one location has to take the brunt of the reporting requirement.
Accurately determining the ACA status of your employees relies on properly classifying them as full-time, part-time, seasonal, or variable hours. For instance, an employee who is hired with the expectation of working 30 or more hours each week should be designated as full-time for ACA compliance.
While you might have previously considered 40 or more hours per week as the threshold for full-time employment, the
ACA sets the standard at 30 hours. Confirming that you have properly tracked and calculated your employees' work hours to determine ACA employee status will minimize reporting mistakes.
There are different employment classifications:
Frequently, employer databases store outdated or inconsistent employee information. The consequences of misclassifying employees can lead to missed coverage opportunities for eligible individuals.
To address this concern, perform regular reviews of employee data across various systems, including payroll, timekeeping, and benefits databases. It is essential to maintain current information. This monthly practice will streamline ACA reporting for each annual period.
Please refer to our eBook, “Navigating ACA Compliance” for a complete overview of these classifications.
The 1095-C form, Part II (Lines 14-16), provides a month-by-month breakdown of critical information, including details about the coverage offered to an employee, the recipient of the offer, the cost to the employee for self-only coverage, and any applicable safe harbors or employer-provided relief.
This form can be confusing, and vital sections are frequently left blank when that is prohibited.
Other common errors include invalid code combinations and misidentification of self-insured and fully insured plans.
Presently, there are 90 possible combinations of indicator codes for Lines 14 and 16, with slightly over half of these combinations being valid. For instance, a combination like 1H and 2C is entirely invalid because 1H signifies that no offer of coverage was extended, while 2C indicates that an employee actively enrolled in coverage.
Failing to grasp the intricacies of these indicator codes and their interactions can result in the creation of flawed forms, inviting increased scrutiny and potential penalties from the IRS.
One of the most common mistakes is a mismatch between the employer identification number (EIN) and the legal name of the company. Review EINs and legal names before submitting to the IRS, checking for misspellings, improper characters, and ensuring the EIN and company name are identical.
As an employer, you will need to determine FTE hours using either the “monthly” or the “look-back” measurement method. Choosing the incorrect method can result in gaps in coverage and noncompliance that can result in a penalty.
The Monthly Measurement Method is better suited for organizations with predominantly stable, full-time employee workforces, offering a simpler framework.
The Look-Back Measurement Method is ideal for businesses with highly variable hour workforces, such as those in the restaurant, construction, hospitality, and education industries.
Also, make sure there is accurate reporting of employement periods that include new hires, rehires, termination dates, and breaks in service in payroll data.
Please consult our downloadable resource covering " Seven Common ACA Reporting Mistakes ".
SyncStream maintains a tenured, knowledgeable staff who continually monitors changes to the employer mandate regulations and updates solutions as laws evolve. SyncStream removes the burden of ACA compliance and provides penalty risk assessments and suggested corrections to reduce your company’s risk of high IRS penalties. Subject matter experts utilize SyncStream’s user-friendly compliance software to track employee hours, auto-populate forms, audit forms, and e-file for thousands of ALEs. SyncStream’s Full Service Total ACA solution can simplify your ACA compliance needs.
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