When President Obama signed the health care reform bill, or Affordable Care Act (ACA), into law in March of 2010, an initial swell of concern swept over the business community. Employers were left asking themselves what this meant for the bottom line and which offerings and processes would need a complete overhaul.
Now, three years later, the timeline to make the appropriate preparations is wearing thin, with more requirements of the bill taking effect later this year. Beginning January 1, 2014, a penalty will be implemented: $2,000 per full-time employee excluding the first 30 employees, for employers with more than 50 employees that do not offer coverage and have at least one full-time employee who receives a premium tax credit. There will also be fines for companies that provide coverage, but charge too much relative to employee wages.
Well before October’s open enrollment, you’ll be figuring out whether to play along with the changes (providing insurance at a reasonable cost), or pay the penalties for non-compliance.
If you have less than 50 employees, a decision to “play” could pay off – the small business tax credit being offered could potentially offset the costs of insurance plans with a 25-50 percent credit for qualifying companies. And, if you’re considering moving employees to part-time or contract status, you may save money, but the IRS will require thorough reports on variable hour employees.
No matter what decision a company makes, reporting will be the foundation of a successful strategy.
This added accountability to demonstrate compliance, in turn, increases administrative costs as it relates to managing information on employees’ health coverage. Now, the onus is on employers to provide proof of compliance and reporting on:
And that doesn’t take into account the unique state-by-state reporting requirements to supplement federal mandates, made more difficult with multiple office locations and remote workers. These financial impacts will hold especially true for small companies that may not have tools that easily run reports on which employees are enrolled with what benefits plans, or summary reports that demonstrate that the set of benefits offered to employees is not too expensive.
Tracking this information, both for the government and internally to ensure that one’s company doesn’t run the risk of paying for non-compliance will be time-intensive. Is your company ready?
Key to Compliance: Accessible Information
In many organizations, the processes for managing employee information is siloed – with redundancies in reporting and tracking, spanning benefits administration, payroll, human resources (HR) and other functions. As additional pieces of the bill go into effect, companies will quickly uncover these inefficiencies and the need to replace archaic methods. Manual tracking within countless Excel spreadsheets will leave too much room for error and drain resources, while systems that don’t integrate will prevent the necessary communications between employers, employees and health providers, making the level of visibility required for ACA compliance unattainable.
Many employers are likely asking themselves how they’ll manage this process based on the sheer amount of data capture soon-to-be required of them.
Some are even considering paying the fines, rather than playing along with new requirements – an unsound approach that lacks long-term, strategic thinking.
Approaching the Reform with Technology
HR will be the department responsible for the majority of reporting associated with these new compliance measures. The ongoing administration – monitoring employee hours, health insurance enrollment, etc. – will be a burden on time and resources, unless you can automate reporting. If you haven’t already, now’s the time to enter the age of HR automation.
A Human Resource Management System, (HRMS), for example, can be set up to provide on-demand reporting broken out by employee type (full-time, variable hour) and is configurable to specific policies and procedures. It can integrate with payroll and benefits, breaking down the silos that prevent access to the information needed for ACA compliance. It can also accommodate employee self-service, hosting state and employer-sponsored health care options and giving employees access to their benefits and HR information.
There’s no way around it: healthcare reform will bring with it the need for more in-depth record-keeping. Without automation, this could be a daunting and lengthy process. With the ACA timetable progressing quickly, do you and your HR team have the right technologies and processes in place to tackle compliance while keeping an efficient, happy workplace your top priority?
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