How to Talk to Your C-Suite About ACA Compliance Risk 

For many HR and benefits teams, ACA reporting feels like a once-a-year scramble. But for the IRS, it’s a year-round audit trigger — and the consequences of getting it wrong can be costly. 

That’s why it’s time to shift the conversation — especially with your leadership team. ACA compliance isn’t just an HR problem. It’s a financial, operational, and reputational risk that deserves serious C-suite attention. 

This post breaks down how to frame ACA compliance as a business issue, what the real penalty exposure looks like, and how to start a more strategic conversation with your CFO or executive team. 

Why the Penalty Risk Is Bigger Than Many Leaders Realize 

It’s easy for leadership to assume ACA compliance is “under control” — especially if forms are filed and deadlines are met. But filing forms is only part of the equation. Tracking eligibility correctly, offering affordable coverage, and maintaining accurate records throughout the year is where the real risk lies. 

Here’s what’s at stake: 

IRS Reporting Penalties (Sections 6721 & 6722) 

Failing to file accurate, on-time ACA forms can result in: 

Important: These penalties apply separately for failure to file with the IRS and to furnish forms to employees — meaning one error can lead to double penalties. 

Employer Mandate Penalties (Section 4980H) 

If your organization is an Applicable Large Employer (ALE) and fails to offer qualifying, affordable coverage to eligible employees, the penalties add up fast: 

• 4980H(a): If coverage isn’t offered to at least 95% of full-time employees 
  → Penalty: $2,970 per full-time employee (minus first 30) 

• 4980H(b): If coverage is offered, but it’s unaffordable or doesn’t meet minimum value 
  → Penalty: $4,460 per affected employee 

These penalties are triggered when just one employee receives a premium tax credit through the Marketplace. 

How to Frame the Risk for the C-Suite 

Your executive team may not be interested in the technical IRS codes — but they care deeply about risk, reputation, and financial exposure. 

Here’s how to elevate the conversation: 

1. Start With the Numbers 

Lead with a simple calculation: 

• “If we missed just 10 full-time employees this year, we could be facing over $44,000 in ACA penalties — and that’s assuming no additional filing errors.” 

2. Highlight Trends and Enforcement Activity 

Let them know the IRS has increased ACA enforcement, including: 

• Letter 226J penalty assessments 

• Cross-checking ACA data with W-2s and health exchange enrollment 

• Fines issued years after the original filing 

3. Emphasize the Operational Cost of Errors 

ACA mistakes take time and resources to resolve: 

• Corrected filings 

• Employee inquiries 

• IRS responses and documentation 

Even small issues can snowball into audits and extended compliance reviews. 

4. Connect Compliance to Reputation and Employee Trust 

ACA reporting errors can confuse or frustrate employees — especially if they receive incorrect tax forms or see discrepancies with their Marketplace coverage. 

What the C-Suite Needs to Know (and Ask) 

Encourage your leadership team to ask these questions: 

• Are we tracking employee eligibility year-round — especially for variable-hour, seasonal, and part-time workers? 

• Are we aligned on the current 2025 threshold and ready for the release of the 2026 affordability rate? 

• Are we using the right IRS safe harbors for affordability? 

• Is our ACA vendor providing proactive insights and regular audits? 

• Do we have a system in place to track offers, declinations, and status changes? 

If they don’t know the answers, now is the time to align. 

Proactive Steps to Protect Your Organization 

Here’s what your HR or compliance team can do now to reduce exposure: 

• Download and complete a mid-year ACA compliance checklist 

• Schedule a vendor review to ask about audit readiness and upcoming changes 

• Run affordability projections for 2026 now, not in Q4 

• Create a reporting risk dashboard that summarizes penalty exposure and tracking gaps for leadership review 

Need a head start? Download our free ACA Compliance Checklist: Mid-Year Review Edition to assess your risk and get ahead of the next reporting cycle. 

Final Thoughts: Compliance Is a Strategic Issue 

The ACA isn’t going away — and IRS enforcement is only becoming more sophisticated. Treating compliance like a once-a-year task creates blind spots that can lead to costly, avoidable penalties. 

The C-suite doesn’t need every reporting detail — they need clarity on risk and confidence that the organization is protected. 

By reframing the ACA conversation around exposure, accountability, and long-term strategy, HR leaders can elevate their impact — and help the business stay both compliant and penalty-free. 

Looking to better manage ACA compliance risk? Let’s talk. 

From full-time tracking to year-end filing support, Selerix helps HR teams simplify ACA compliance and reduce exposure — all year long. Chat with one of our ACA experts.