ACA (Affordable Care Act) Compliance Checklist

Add the number of full-time employees (averaging 30 or more hours per week or 130 hours per month) to the FTE count of part-time employees for each month of the prior calendar year, then average across 12 months to determine if the employer meets the 50 FTE threshold for ALE status.

Identify all entities within the employer's controlled group, affiliated service group, or management company arrangement under IRC Sections 414(b), (c), (m), and (o), and aggregate their employees to determine ALE status, since all members of a controlled group are treated as a single employer.

Determine whether the employer can apply the seasonal worker exception, which allows exclusion of seasonal employees who work 120 or fewer days during the year, if the employer would not be an ALE but for the seasonal workforce.

Complete and retain the ALE determination calculation each year using prior-year data, including monthly headcounts, hours of service, and FTE calculations, to support the employer's filing position on Forms 1094-C and 1095-C.

Track full-time and FTE counts throughout the year to anticipate potential ALE status changes in the following year and prepare for employer shared responsibility obligations before they take effect.

Ensure the employer offers minimum essential coverage to at least 95 percent of full-time employees (and their dependents) each month to avoid the IRC Section 4980H(a) penalty, which applies when any full-time employee obtains a premium tax credit on the Marketplace.

Verify that the employer-sponsored health plan provides minimum value by covering at least 60 percent of the total allowed costs of benefits expected to be incurred under the plan, using the HHS MV calculator, actuarial certification, or safe harbor checklists.

Apply one of the three IRS affordability safe harbors (W-2 wages, rate of pay, or federal poverty level) to demonstrate that the employee's required contribution for self-only coverage does not exceed the applicable affordability percentage of the employee's household income.

Ensure the plan offers coverage to the dependent children of all full-time employees up to age 26, regardless of student status, marital status, or financial dependency, as required by ACA. Spousal coverage is not required but should be tracked for reporting.

For employees whose full-time status cannot be determined at the date of hire, use the look-back measurement method with a standard measurement period of 3 to 12 months, an administrative period of up to 90 days, and a stability period at least as long as the measurement period and no less than 6 months.

Confirm that eligible full-time employees are enrolled in coverage no later than the first day of the fourth full calendar month of employment, which is the maximum 90-day waiting period permitted under the ACA.

Complete IRS Form 1095-C (Employer-Provided Health Insurance Offer and Coverage) for every individual who was a full-time employee for any month of the calendar year, including Part I (employee and employer information), Part II (offer and coverage codes), and Part III (if the employer is self-insured).

Use the appropriate indicator codes on Lines 14 (offer of coverage), 15 (employee share of lowest-cost monthly premium for self-only MV coverage), and 16 (applicable safe harbor, Section 4980H relief, or other code) for each month of the calendar year.

Prepare the Form 1094-C transmittal form including employer identifying information, ALE member information, aggregated group indicator, the Section 4980H full-time employee count for each month, and certification of eligibility for relief provisions.

Distribute Form 1095-C to all full-time employees by the annual furnishing deadline (typically January 31 of the following year, unless extended by IRS notice) either in paper or through electronic delivery if consent is obtained.

Submit the 1094-C transmittal and all 1095-C forms to the IRS by the annual filing deadline (typically February 28 for paper filing or March 31 for electronic filing), using the ACA Information Returns (AIR) system for electronic submission.

Comply with the IRS requirement to file electronically through the AIR system if the employer is submitting 250 or more information returns, and register with the IRS AIR program well in advance of the filing deadline.

Track whether the employer offers minimum essential coverage to at least 95 percent of full-time employees each month, since failing to meet this threshold while any full-time employee receives a Marketplace premium tax credit triggers the 4980H(a) penalty (approximately $2,900 per full-time employee annually, minus the first 30).

Assess whether the coverage offered meets minimum value and affordability requirements, since offering coverage that is unaffordable or does not provide minimum value while a full-time employee receives a Marketplace premium tax credit triggers the 4980H(b) penalty (approximately $4,350 per affected employee annually).

Upon receiving an IRS Letter 226-J proposing employer shared responsibility payments, review the enclosed Form 14764 and employee-level detail (ESRP Summary Table) within the 30-day response window, and submit corrections or contest the assessment with supporting documentation.

Retain records supporting affordability safe harbor calculations, measurement period determinations, offers of coverage, and employee enrollment data for at least seven years to defend against potential ESRP assessments.

Ensure the health plan covers recommended preventive services (USPSTF A and B recommendations, ACIP immunizations, HRSA guidelines) without cost-sharing to participants when delivered by in-network providers.

Verify that the group health plan does not impose annual or lifetime dollar limits on essential health benefits, as prohibited by the ACA, and that any limits on non-essential benefits are clearly documented.

Provide the SBC in the DOL-prescribed format to plan participants and beneficiaries at enrollment, renewal, upon request, and when material modifications are made, within the required timeframes.

Include the aggregate cost of employer-sponsored health coverage in Box 12 (Code DD) of each employee's Form W-2 for informational purposes, as required for employers that filed 250 or more W-2s in the prior year.

Conduct a comprehensive annual review of ACA compliance including ALE status, affordability testing, plan minimum value, reporting accuracy, and preventive care mandates, incorporating any new IRS or HHS guidance issued during the year.