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Definition – Ideally, a single system that contains human resource, payroll and health benefits functionality. In the event this is not possible, systems that use a common employee identifier, such as a unique employee ID or social security number.

Rationale – Given 1) the complexity of ACA reporting, and 2) the materiality of potential non-compliance penalties employers should invest in integrated systems as they should be self-funding particularly if they help avoid a costly penalty situation.

While the idea of a fully integrated HR, PR and benefits system is self-explanatory, the concept and importance of linking disparate data vis-à-vis a unique identifier requires extra thinking as well as extra effort particularly for non-tech savvy people.

Case in point. An employer with several hundred employees relied upon its payroll system for providing ACA data to its 1095/1094 vendor. Unfortunately, neither the benefits election nor benefits enrollment data was maintained in this system. In fact, the requisite benefits information was only maintained by the health insurance carrier, a national multi-billion dollar TPA. While the TPA was cooperative, they were only able to provide a standard enrollment file which DID NOT have any fail proof way to link the employees using a common identifier. As a result, a custom program had to be written to help the employer meet its compliance requirements.

Since we are no longer a “best efforts” year, employers should embrace best practices or simply accept the dire likelihood of material penalties. In order to mitigate future risks employers should thoroughly review and improve their supporting processes and technologies. Employers have the opportunity to fortify their environments and avoid penalties. As they say, “there’s no time like the present – do it now!”


About The Author: Howard Gerver, of ACA Managed Services, is an authority on 1095 compliance. He and his team of ACA experts are the go-to specialists for companies who wish to avoid trouble with the IRS. They offer a range of ACA services, including ACA audits (also known as 1095 audits)