Money and hammer,Wooden gavel and dollar banknotes

Home healthcare is one of the most penalized industries for noncompliance with the Affordable Care Act, according to a new study from workplace equity technology firm Trusaic.

Across all industries, about 1 in 4 organizations have received penalty letters from the IRS. The number in home health is even higher, Trusaic said. For the report, Trusaic drew upon the following sources of information: focus groups with HR professionals handling ACA, a survey of 244 HR professionals in all industries, Trusaic’s dataset of penalty data and interviews with ACA compliance experts.

M&A’s impact

One challenge that may be affecting home health’s compliance is the impact of mergers and acquisitions, the report said.

“Every time there is a merger or acquisition it creates complexities in merging data and integrating systems,” the report said. “Not only is this time-consuming, but it also creates many opportunities for errors to creep in.”

ACA is not forgiving when it comes to errors, the Trusaic reported continued. “If the complications following a merger or acquisition causes the employer to fail to meet the 95% threshold for offering minimum essential coverage and one employee who is eligible for coverage is not offered it, then the penalty is nearly $3,000 multiplied by the total number of employees,” the report said.

Other home health vulnerabilities

Home health has other vulnerabilities. Among these are difficulty gathering accurate data. Because it is common for a worker to be working multiple roles, this adds a layer of complexity to aggregating payroll data for that worker each month.

Also, home healthcare has “uncommon and less predictable pay practices” including employees paid per diem and on-call, the report said. Because compliance with ACA rests mainly on one person in the organization, that person would need to have a comprehensive knowledge of ACA’s special rules around such employees.

Finally, home health firms typically have specialized software, which may not have the features to capture and report on the data needed for ACA compliance, according to the report.

Industries most likely to get ACA penalty letters are agriculture, foresting, fishing and hunting; accommodation and food services, educational services, and healthcare and social assistance. Employers with 500-plus employees are six times more likely to receive IRS letters than smaller firms, the report said.

Unfortunately, IRS’ “good faith transition relief” period, which allowed some lenience in compliance with ACA, ended in 2020, Trusaic said.

“The challenge of ACA compliance is only going to get worse,” the report said. “The IRS’s good faith period has ended. Not only that, in addition to the five states that have their own ACA regulations, several other states, including Connecticut, Hawaii, Maryland, Minnesota and Vermont, are considering adding state-level ACA regulations.”