As businesses grow, they often find that procedures that worked for them in the past no longer serve them, and this is particularly evident when handling federal benefits regulations. As revenue and headcount rise, the compliance outlook can change significantly, triggering new regulatory obligations.
ACA, COBRA, and DOL are particular pain points for many businesses. Savvy HR directors need to recognize the specific compliance checkpoints associated with this growth and understand their requirements early in the process to avoid potentially costly corrections in the future.
Why Compliance Requirements Multiply as Organizations Scale
Federal benefits regulations are primarily based on employee count thresholds that can catch some businesses off guard. For example, the Affordable Care Act’s employer mandate applies to companies that have 50 or more full-time equivalent employees. It compels them to provide affordable, minimum-value health coverage and imposes fines on those who fail to comply.
However, businesses with 20 or more employees are responsible for COBRA continuation coverage requirements. These organizations, per the U.S. Department of Labor (DOL), must offer temporary health coverage extensions when their employees experience qualifying events. Understanding the relevant notice periods and documentation standards is the best way to avoid financial penalties for non-compliance.
Familiarity with the rules is not enough to keep a business compliant; procedures need to be implemented to ensure complete adherence. Many turn to systems that track changing employee counts accurately and monitor multiple compliance deadlines.
What You Need to Know About ACA Reporting and Coverage Standards
ACA compliance is not just about offering employees health insurance. The law stipulates that specific affordability calculations and coverage standards must be followed, along with annual reporting requirements for employees and the IRS.
Large employers are required to file Forms 1094-C and 1095-C each year to document the coverage offers they make and the enrollment status of their workforce. This reporting is related to potential employer shared responsibility payments, making accuracy indispensable. Missing deadlines or submitting incomplete information is enough to trigger IRS inquiries and penalty assessments.
The affordability calculation must be adjusted yearly in line with the latest federal poverty levels. This means that coverage that qualified as affordable last year might not be enough to meet the current year’s threshold. These changes need to be tracked carefully, and contributions must be adjusted accordingly.
Many HR professionals underestimate the administrative burden involved in these efforts. This isn’t a once-a-year task; it requires regular monitoring of employee hours, coverage offers, and documentation throughout the year. Unfortunately, all of this tends to get pushed aside as HR departments work on multiple tasks.
Understanding COBRA’s Strict Notice Requirements and Timing Rules
COBRA imposes specific obligations on employers, plan administrators, and employees. One central area of concern is notices: a general notice is required within 90 days of coverage, a qualifying event notice is required any time a triggering event occurs, and an election notice is generally required within 14 days of receiving a qualifying event notification.
Timing is also essential. For example, employers are required to inform the plan administrator within 30 days of qualifying events such as terminations or reductions in hours. Employees must also notify the plan of any divorce, legal separation, or change in dependent status within 60 days.
It becomes even more complex with qualified beneficiaries because each family member affected by a qualifying event has independent election rights.
DOL Investigations Focus on Documentation and Processes
Investigations carried out by the Department of Labor into employee benefits compliance can be lengthy and complicated. Auditors will take a close look at summary plan descriptions, Form 5500 filings, and plan documents, and will also review COBRA timelines and notification procedures.
Some of the most common violations they encounter include failing to respond to participant requests for plan documents on time, delayed COBRA notices, and summary plan descriptions that are incomplete or missing altogether. Plan administrators are required to supply the requested records within 30 days to avoid financial penalties.
The proper documentation can be influential in these investigations. Everything from systematic record retention and delivery confirmations to timestamped notices can demonstrate that the business has made compliance efforts in good faith.
Building Systems That Support Growth and Compliance
As an organization continues to grow, it can expect its new reporting obligations, notice requirements, and the volume of qualifying events to increase accordingly. Many find that spreadsheets and other manual methods of tracking fall short.
Employee benefits consulting services can be helpful in these situations, assessing current gaps and determining which processes need further development. Technological solutions can provide functional automation for tracking deadlines, maintaining documentation, and generating notices. However, this must be supplemented with trained personnel, clear policies, and regular audits.
Another good approach is to create a compliance calendar to track yearly obligations, quarterly reviews, and other requirements, giving HR teams the visibility they need to avoid last-minute panic.
Take the Next Step Toward Proactive Compliance
Compliance may seem overwhelming, and the penalties involved add significant weight and pressure to the process. However, by breaking complex regulations down into more manageable components and building systematic processes, rapid growth can still be sustainable.
Business Benefits Group has spent nearly three decades guiding organizations through these exact challenges. Our employee benefits consulting services combine our regulatory expertise with practical implementation support.
Contact our team to discuss how we can help you build confidence in your benefits administration while protecting your organization from unnecessary risk.