ACA Compliance: Trends, Pain Points, and How HR Can Simplify the Process

For HR professionals in the U.S., managing ACA compliance can feel like juggling flaming torches while walking a tightrope. With evolving regulations, reporting deadlines, and workforce dynamics, staying compliant is more than a checkbox; it’s about protecting your employees and your organization.

Key Trends HR Teams Should Watch

Increasing automation and system integration. More employers are leveraging digital tools to track hours, benefits eligibility, and employee communications efficiently. Integrated payroll + HRIS + benefits platforms help avoid data silos, reducing manual work, minimizing errors, and enabling smoother year-round reporting.

Rigorous inclusion of all workforce types. It’s not just full-time salaried employees anymore. Part-time, seasonal, and variable-hour employees often need to be considered in determining FTE counts and eligibility under ACA rules, especially for employers that qualify as an Applicable Large Employer (ALE). That means hybrid, remote, hourly, or fluctuating workforce models require careful data tracking.

Affordability thresholds and penalties are rising in 2026. For plan years beginning in 2026, the affordability threshold increases to 9.96% , up from 9.02% in 2025. That affects how employers price their lowest-cost self-only health plan and impacts the employer “safe-harbor” calculations.

More pressure on timely, accurate reporting. With updated forms, strict deadlines, and potential financial penalties, employers face rising compliance demands. Many are shifting from ad-hoc, manual approaches to structured, repeatable processes.

Common Pain Points for HR Teams

Data fragmentation and complexity. When payroll, time-tracking, benefits enrollment, and HR records live in separate systems, or aren’t fully integrated, it becomes difficult to accurately track eligibility, hours worked, and coverage status. That leads to risks when calculating FTE counts, coverage offers, and affordability.

Risk of employee confusion. Employees may not understand what ACA compliance means, how coverage is offered, what “minimum value” or “affordable coverage” actually means, or why they are receiving forms (like Form 1095-C) even if they declined coverage. Confusion undermines trust and may prompt unnecessary questions or complaints.

Tight deadlines and high penalties. The administrative burden, collecting data, generating forms, filing with the IRS, and furnishing statements to employees, must be done correctly and on time. Failure can trigger steep fines.

Affordability & plan design challenges. As the affordability threshold shifts, HR must reevaluate premiums, plan design, and contribution amounts, while maintaining the lowest-cost plan within the required thresholds. Getting it wrong may lead to employer shared-responsibility penalties even if coverage is offered.

Why 2026 Is a Pivotal Year and What HR Teams Should Do About It

Here are some of the major regulatory updates for 2026, plus actions HR teams should take now to ensure smooth compliance.

What’s Changing

Affordability threshold for 2026: The percentage climbs to 9.96%. That means for employer-sponsored health plans beginning in 2026, self-only coverage is considered affordable if the employee’s premium contribution does not exceed 9.96% of their household income (or meets one of the IRS safe-harbor tests).

Penalty amounts under employer shared responsibility (ESR): For 2026, the penalty for failure to offer coverage (§4980H(a)) is $3,340 per employee (after the first 30 full-time employees). The penalty for failing to provide affordable, minimum-value coverage (§4980H(b)), when an employee receives subsidized coverage on an Exchange, rises to $5,010 per affected employee.

Reporting deadlines: For calendar-year employers:

Employee copies of 1095-C must be furnished by March 2, 2026 (the usual January 31 deadline got an automatic 30-day extension)

Filing of 1094-C and 1095-C with the IRS must be done by March 31, 2026 (if filing electronically), or March 2, 2026 if filing by paper and under the threshold for electronic filing.

Employers submitting 10 or more information returns are required to file electronically.

Note: The employer may request a 30-day extension for IRS filing by submitting Form 8809, but that does not extend the deadline for furnishing 1095-C to employees.

No more “good-faith relief.” In previous years, some employers could avoid penalties if they demonstrated good-faith efforts, even ifthe paperwork was imperfect. That relief is no longer available. Penalties can apply even for non-willful mistakes.

What HR Teams Should Do: A 2026 Readiness Action Plan

*Step*	*Action*	*Reason / Benefit*
*Early-year review & ALE determination*	Confirm whether your organization qualifies as an ALE (50+ full-time equivalents) using 2025 data. If yes, you must comply.	Avoid last-minute surprises and understand obligations upfront.
*Data systems audit & integration*	Ensure payroll, HR, time-tracking, benefits enrollment systems “talk” to each other. Consolidate or integrate where possible.	Eliminates data siloes; ensures accurate tracking of hours, status, eligibility.
*Review and update plan design & employee contributions*	Evaluate the cost of the lowest-cost self-only plan with minimum value. Compare with the new 9.96% affordability threshold. Use one of the IRS safe-harbor methods (W-2 wages, rate of pay, or federal poverty line).	Helps ensure coverage remains “affordable,” avoiding ESR penalties.
*Build a compliance calendar with milestones (quarterly or monthly checks)*	Don't leave everything for Q1 filing. Track hires, terminations, status changes, coverage elections, hours worked, throughout the year.	Reduces risk of errors and “year-end panic.” Supports a smooth, audit-ready process.
*Plan clear and empathetic communications to employees*	Ahead of enrollment and reporting, explain what ACA compliance means: what coverage is offered, what affordability and “minimum value” mean, why forms like 1095-C arrive, what employees must do (if anything).	Builds trust, reduces confusion, positions compliance as part of care for employee well-being.
*Leverage technology and external support if needed*	Use HCM/benefits software, or partner with vendors experienced in ACA reporting, especially if you manage many employees or a variable-hour workforce.	Minimizes manual work, reduces risk of errors, ensures timely, accurate filings.
*Post-filing review and continuous improvement*	After submitting 1094-C/1095-C and furnishing statements, review the process: what worked, where were bottlenecks, how can next year be smoother?	Builds institutional knowledge, compliance becomes streamlined over time.

Compliance doesn’t have to mean dry bureaucracy. With the right mindset and systems, ACA reporting becomes part of a broader commitment to employee well-being and organizational integrity.

Compliance as a people strategy, not a paperwork strategy: When you approach ACA as part of “taking care of people,” you show employees, in tangible ways, that you respect their well-being and financial security.

Prevention > Reaction: By front-loading effort, integrating systems, and tracking throughout the year, HR teams avoid the classic “February scramble.”

Risk reduction ≠ cost savings, but clarity often reveals smarter cost-management options. Understanding affordability safe harbors and using data-driven plan design means you can balance cost-effectiveness with compliance.

Trust, transparency, clarity: Employees appreciate when communication is clear, early, and human, not buried in jargon. This leads to better employee relations and fewer support ticket headaches.

Staying ahead of ACA requirements doesn’t have to be overwhelming. With the right tools, thoughtful planning, and clear communication, HR teams can turn compliance into a streamlined, repeatable process that strengthens the entire organization.

When you invest in systems that reduce manual work, surface insights automatically, and keep you audit-ready year-round, ACA stops being a seasonal scramble and becomes part of a proactive workforce strategy.

Ultimately, ACA compliance isn’t just about avoiding penalties; it’s about protecting your people, supporting smarter decision-making, and ensuring your organization is positioned to grow with confidence.

With thoughtful action and a people-first mindset, HR teams can lead compliance with care and turn regulatory burden into a workforce strength.