Complying with changing regulations and endless HR tasks can be overwhelming — and costly.
Due to government regulations and the rising cost of health and workers’ compensation insurance, the “ins and outs” of running a business can quickly chew into your bottom line.
That is why in recent years, so many small to mid-sized businesses owners have partnered with Professional Employer Organizations (PEOs). Interest in working with PEOs continues to rise because of several compliance issues, including the requirements put forth in the Affordable Care Act (ACA). Many businesses also seek better benefits for their employees and end up paying less based on the relationships that PEOs have with private insurance company networks.
Although there are many perks associated with a PEO partnership, help with ACA reporting requirements is one major benefit business owners are drawn to. Here’s what you need to know to remain compliant and to make the most of your PEO partnership.
Learn more about how a PEO works.
As an employer, if you have 50 or more employees, you will need to file Forms 1094-C and 1095-C for the full-time employees that worked for you each calendar month.
These forms include:
These ACA forms are filed annually, ensuring employers offer minimum essential coverage to at least 95% of employees.
If you don’t file, non-compliance penalties apply.
Please note: If you employ fewer than 50 employees, but work with a PEO that employs over 50 people, you will still be subject to the reporting requirements large employers face. However, as long as you work with a credible PEO, they will make this process as seamless as possible.
Following the introduction of the ACA, many small and medium-sized employers wondered, what now?
Thanks to the passage of the Small Business Efficiency Act (SBEA), which became effective in January 2016, PEOs can secure certification by the IRS as “employers” when handling employment taxes and wages on behalf of employers like yourself. This act also helped small to medium-sized companies more easily comply with HR and benefits regulations.
In response to this act, many business owners also saw PEOs as a “remedy for ACA reporting requirements.”
As an employer, when you have a contract with a PEO, the PEO can add a fee, transferring the liability from you to the PEO. This is especially beneficial in terms of ACA reporting requirements. Based on these responsibilities, it’s critical that you work with a certified PEO.
To qualify for certification, PEOs must meet several requirements, including a history of financial responsibility and tax compliance.
Bottom line: When the PEO you partner with offers coverage to your employees on behalf of your company, you satisfy the federal mandate of providing insurance. This requires an additional fee — which for many, offers enhanced productivity and peace of mind. The key is working with the right PEO. PEOs that have received certification have gone above and beyond. Certification shows that a PEO is committed to client satisfaction, ethical behavior, and excellent service. Certified PEOs can also provide additional regulatory certainty, which goes a long way.
Take the PEO test to learn more about how America’s Back Office, an IRS-certified PEO, can help your organization.
Many believe that ACA reporting is a year-end thing, which it isn’t.
Staying on top of ACA data monthly can make all the difference. Again, this is something that a PEO can help you with.
When outsourcing this responsibility to a PEO, they will file for you. However, that doesn’t mean you should take a backseat approach. Communicate with your PEO representative regularly to better understand what information you need to provide and how to best track that data. The closer your relationship is with the PEO you partner with, the more confident you will be stepping back. After all, that’s the goal — outsource ACA reporting and associated tasks so that you can remain as productive and cost-efficient as possible.
Americas Back Office is a CPEO, which only 3% of PEO companies are.
Our ultimate goal is to help you remain compliant at a lower cost than if you were to internalize HR tasks. Based on economies of scale and our increased buying power, we provide flexible options your employees will appreciate, all while protecting your bottom line and overall growth.
In addition to our many features and turnkey solutions, ranging from open enrollment processing and life insurance to 401(k)retirement options to disability insurance, America’s Back Office is proud to offer ACA-compliance services and guidance.
Ready to get started? We’d love to hear from you — contact us today!