Navigating ACA compliance can feel like walking through a legal minefield. If you take one wrong step, your company could face hefty fines. What if you had an automated system that tracked employee eligibility, generated reports, and sent alerts before compliance issues arose? That’s exactly what modern HR automation tools offer.
The Affordable Care Act (ACA) continues to evolve, making it more challenging for HR leaders to keep up. Between eligibility tracking, affordability testing, and IRS reporting, manually managing compliance is time-consuming. It can also be an error-prone process.
Fortunately, automated tools can simplify the entire process, saving time and reducing risks. Let’s explore how technology is reshaping ACA compliance. Find out what HR leaders need to know to stay ahead in 2025.
Why ACA Compliance Is More Challenging Than Ever
Evolving Regulations
The ACA undergoes updates every year. These could include changes in affordability percentages, reporting requirements, or enforcement policies. HR teams must stay informed and adapt quickly, or they risk non-compliance.
Increased Scrutiny and Penalties
The IRS is cracking down on compliance violations. One example could be failing to offer affordable coverage to full-time employees. Employers who fail to meet ACA standards can face penalties that add up fast.
For instance, consider a mid-sized company that received an unexpected penalty notice in 2023 due to incorrect 1095-C forms. The issue? A simple data entry mistake. The error would have been flagged before submission if they had used automated compliance software.
Manual Processes Are No Longer Sustainable
Many HR teams still rely on spreadsheets and manual calculations. This increases the risk of errors. The more employees a company has, the harder it becomes. The company must track eligibility, calculate affordability, and ensure accurate reporting for each.
Automation eliminates these risks by handling compliance tasks with precision and efficiency.
How Automated Tools Simplify ACA Compliance
Real-Time Eligibility Tracking
Determining which employees qualify for ACA-mandated benefits is a constant challenge. Automated systems track full-time equivalent (FTE) status in real-time. This ensures HR knows exactly who qualifies for coverage.
- Benefit: No more manual calculations—automated tracking ensures compliance with ACA’s 30-hour rule.
Automated Reporting and IRS Filing
One of the biggest compliance headaches is preparing and submitting 1094-C and 1095-C forms to the IRS. Automated platforms generate these forms with built-in error checks. That ensures the data is accurate before submission.
- Benefit: Reduces IRS penalty risks and streamlines annual reporting.
Benefits Administration and Affordability Testing
Employers must ensure that their health plans meet certain requirements. This includes ACA’s minimum essential coverage (MEC) and affordability requirements. Automated tools monitor premium contributions. They compare them against IRS affordability thresholds, ensuring compliance without constant manual adjustments.
- Benefit: Prevents costly affordability violations and helps HR leaders make informed decisions.
AI-Powered ACA Compliance Alerts
What if you could get an alert before a compliance issue arises? AI-powered compliance tools send real-time notifications when they detect potential risks, such as:
- Employees approaching full-time status who need coverage
- Incorrect or missing ACA codes in IRS filings
- Outdated affordability calculations
- Benefit: HR leaders can fix issues proactively, avoiding last-minute corrections and fines.
Seamless Integration with Payroll and HR Systems
Disconnected systems often lead to compliance gaps. Modern ACA compliance software integrates with payroll, benefits administration, and HR platforms. This ensures seamless data transfer.
- Benefit: Reduces errors caused by manual data entry and ensures consistency across systems.
Choosing the Right ACA Compliance Software for Your Business
Not all compliance tools are created equal. When evaluating solutions, consider the following:
Key Features to Look For
- Automated reporting and filing to simplify ACA documentation
- AI-driven alerts to flag potential compliance risks
- Real-time employee tracking to ensure benefits eligibility accuracy
Scalability and Customization
A compliance tool should be flexible enough to grow with your business. It should be capable of adapting to your workforce’s unique needs. Look for solutions that allow you to customize reports, alerts, and benefits tracking. You should base them on your company’s size and the industry.
User-Friendliness
Even the most advanced compliance software is useless if it’s too complicated for HR teams. A good system should have an intuitive dashboard and clear reporting features. It should offer seamless automation that doesn’t require extensive training.
ACA Compliance Key Points
- Navigating ACA compliance in 2025 is more complex. This is due to evolving regulations and stricter enforcement.
- Automated tools help HR leaders manage eligibility, affordability, and reporting more efficiently.
- AI-powered alerts notify HR of potential compliance issues before they become costly penalties.
- Integrated systems ensure seamless data flow between payroll, HR, and benefits platforms.
- Choosing the right ACA compliance software can save time. It prevents errors and keeps businesses penalty-free.
Using automation, HR teams can focus on big-picture goals instead of drowning in compliance paperwork. If your company still relies on spreadsheets and manual tracking, now is the time to switch. Automated tools make ACA compliance easier and lower the risk of mistakes.
Would you like to discuss how FBC can help? Contact us today to learn more!