ACA Compliance Still Tops Fiduciary Duties as the Biggest Risk for Employers

Right now, fiduciary responsibilities are dominating conversations in the benefits world — and for good reason. Lawsuits, new regulations, and heightened employer obligations are reshaping the landscape.

But while fiduciary duties deserve attention, there's another issue that continues to trip up employers year after year: Affordable Care Act (ACA) compliance.

Despite being in effect for over a decade, ACA compliance remains one of the most common — and costly — pitfalls for employer-sponsored group health plans.

In this post, we'll walk through the most frequent ACA mistakes we see and how your agency can help employers fix them before they turn into expensive penalties.

Why ACA Compliance Still Matters in 2025

Every benefits professional today has heard about the growing importance of fiduciary obligations.

But our experience supporting hundreds of employers shows a different reality: ACA noncompliance is still the top compliance risk many employers face.

Ignoring ACA fundamentals like employee counting, proper reporting, and accurate filing can quickly snowball into IRS penalties, missed deadlines, and plan disqualification risks.

✅ Key takeaway: Before agencies tackle advanced fiduciary practices, they must help their clients master ACA basics first.

Top ACA Compliance Mistakes (And How to Fix Them)

There's a lot more to the ACA than affordability

1. Miscalculating Applicable Large Employer (ALE) Status

One of the first — and most frequent — ACA mistakes is incorrectly determining whether an employer qualifies as an Applicable Large Employer (ALE).

Common missteps include:

• Misclassifying employees: Misunderstanding the differences between full-time, part-time, and seasonal workers leads to incorrect counts.
  

• Timing errors: ALE status is based on the prior calendar year's average, not just the current workforce size.
  

• Controlled group oversight: Companies with shared ownership must aggregate employees under IRS rules.
  

How to fix it: Implement robust employee tracking tools and review workforce classifications quarterly. Work with a compliance expert or legal counsel to determine if controlled group rules apply.

2. Confusion Over ACA Reporting Requirements

ACA reporting rules aren't one-size-fits-all — and that's where many employers get tripped up.

Common mistakes:

• Fully insured ALEs still must file Forms 1094-C and 1095-C. The insurer handles employee coverage reporting, but employer filings are separate.
  

• Self-funded plans (including level-funded and ICHRAs) require employers themselves to file either 1095-B or 1095-C forms, depending on ALE status.
  

How to fix it: Create an annual ACA compliance calendar that outlines responsibilities. Provide targeted ACA training benefits teams each fall before reporting season.

3. Paper vs. Electronic Filing Confusion

Recent IRS rule updates have made electronic filing the new norm. Employers filing 10 or more returns across all IRS forms (W-2s, 1095s, etc.) must file electronically.

How to fix it:If your clients are still filing by paper, help them transition to an e-filing solution.

Pro Tip: Outsourcing ACA reporting to a trusted vendor ensures smoother electronic submissions and fewer rejections.

4. Poor Vendor Oversight and Responsibility Gaps

Delegating tasks is critical — but blind delegation creates compliance risks.

Common pitfalls:

• Unclear accountability: Agencies, HR departments, payroll vendors, and benefits consultants all assume "someone else" is handling critical steps.
  

• Poor contract clarity: Without a detailed Service Agreement, key ACA responsibilities fall through the cracks.
  

How to fix it: Assign a clear "compliance captain" to each client. Use detailed vendor contracts and quarterly ACA check-ins to prevent missed deadlines.

Fiduciary Duties Matter — But ACA Compliance Comes First

Make sure you put first things first when it comes to compliance

Fiduciary regulations are evolving fast, and employers must prepare to meet these higher standards. However, ACA compliance still represents the greatest immediate risk for most employer-sponsored plans.

Without ACA fundamentals in place, it’s difficult — if not impossible — to build a strong fiduciary compliance framework.

Your agency’s role:

• Educate employers on ACA basics

• Provide proactive compliance tools

• Partner with vendors who can streamline ACA reporting and monitoring
  

Once ACA compliance is secured, employers will be better positioned to tackle advanced fiduciary governance requirements, such as forming fiduciary committees and conducting plan governance reviews.

Final Thoughts: Make ACA Compliance a Priority in 2025

Helping employers master ACA compliance isn’t just good service — it’s risk management.

By focusing first on getting ACA right, you give your clients the best defense against penalties today, and prepare them for the more complex fiduciary obligations of tomorrow.

👉 Need help supporting your clients with ACA compliance this year? Contact our team to learn more about how we help agencies get their processes - and priorities right with ACA compliance and more.