What Businesses Need to Know About Benefits Compliance

Employee benefits are a big deal when running a business—but let’s be honest, keeping up with compliance rules can feel like a full-time job. Laws like ACA, COBRA, and ERISA have strict rules, and slipping up can mean hefty fines, legal trouble, and a damaged reputation.

At AdvantEdge HR, we cut through the red tape so you can focus on running your business, not drowning in regulations. Whether you’re offering health benefits for the first time or staying ahead of ever-changing laws, we’ve got your back. Because compliance doesn’t have to be complicated—and we make sure it isn’t.

ACA Compliance

The Affordable Care Act (ACA) requires businesses of specific sizes to offer health insurance to employees and follow specific reporting guidelines.

Who Must Comply with ACA?

1. Businesses with 50+ full-time employees (or full-time equivalents) are considered Applicable Large Employers (ALEs) and must provide employees affordable and minimum essential health coverage.
2. If you are an employer with fewer than 50 employees and you offer health coverage through the Small Business Health Options Program (SHOP) marketplace, you may still be subject to some aspects of the ACA.

ACA Reporting Requirements

1. Employers must file IRS Forms 1094-C and 1095-C to report health coverage offered to employees.
2. Companies that fail to offer compliant health coverage may face Employer Shared Responsibility penalties from the IRS.

Common ACA Compliance Mistakes

1. Misclassifying employees and failing to provide benefits packages to those who qualify.
2. Missing reporting deadlines or filing incorrect forms.
3. Offering plans that do not meet the affordability or minimum coverage requirements.

COBRA: Employee Coverage After Separation

The Consolidated Omnibus Budget Reconciliation Act (COBRA) requires employers to allow eligible employees and their dependents to continue health coverage after leaving a job under certain circumstances.

Who Must Comply with COBRA?

1. Businesses with 20+ employees that offer a group health plan.
2. COBRA applies to employees who quit, are terminated (except for gross misconduct), or experience reduced hours, making them ineligible for benefits.

COBRA Compliance Responsibilities

1. Employers must provide a COBRA notice to employees within 14 days of a qualifying event.
2. Employers aren’t required to pay for continued coverage, but they must allow the employee to remain on the plan for a limited period (typically 18-36 months).
3. Failing to provide proper notice can result in penalties of $110 per day per employee—and possible lawsuits.

Common COBRA Compliance Mistakes

1. Not informing employees of their COBRA rights in time.
2. Failing to track and notify employees of coverage deadlines.
3. Incorrectly calculating COBRA premium payments.

ERISA: Protecting Employee Benefits

The Employee Retirement Income Security Act (ERISA) is a federal law that regulates employer-sponsored health and retirement plans to protect employees.

Who Must Comply with ERISA?

1. All private-sector employers who offer health insurance, 401(k) plans, or other benefits.
2. Exemptions include government employers and churches.

ERISA Compliance Responsibilities

1. Employers must provide employees with a Summary Plan Description (SPD) that outlines the organization’s benefits program, eligibility, and how the plan works.
2. Businesses must follow fiduciary rules, ensuring that funds in retirement plans are handled responsibly.
3. Employers must file Form 5500 annually if they offer a 401(k) or pension plan.

Common ERISA Compliance Mistakes

1. Not distributing required plan documents to employees.
2. Mishandling 401(k) funds and failing to act in employees’ best interests.
3. Not keeping proper records or failing to file Form 5500 on time.

Need Help with Employee Benefits Compliance? Reach Out to AdvantEdge HR.

ACA, COBRA, and ERISA have strict rules—ignoring them isn’t just risky; it’s a financial disaster waiting to happen. Noncompliance can mean steep penalties, and let’s face it—your employees deserve a benefits program handled correctly. Luckily, at AdvantEdge HR, we make employee benefits administration seamless and stress-free.

Need help with ACA reporting, COBRA notices, or ERISA documentation? We’ve got it covered. From group health insurance to retirement benefits and beyond, our team keeps you compliant, on track, and out of trouble. Reach out to learn more.