If consumers are struggling with Obamacare-related health insurance changes for 2016, small to midsize businesses are facing equally daunting new filing and reporting requirements that are making the management of employee healthcare a significant challenge.
One of the most noteworthy changes coming into play is the revised classification of business size, as it relates to the Affordable Care Act (ACA) structure. Whereas in 2015, companies with 100 or more full-time employees were considered “large businesses” that were required to offer affordable health insurance (or face penalties for failing to do so), organizations with just 50 staffers and over will now fall under the same requirements.
What seems like a relatively straightforward requirement is not so clear-cut when you get into the details, however. The law specifies that the Employer Shared Responsibility provisions apply to companies with not just 50+ full-time employees, but “full-time equivalent” employees, meaning that if some employees work overtime, hours incurred by part-timers may inadvertently push a company over the limit.
The law also counts anyone working full-time for a company for 30 days or more during a calendar year as a full-fledged employee, so organizations with high turnover, variable-hour employees or those hiring seasonal help must be vigilant with regard to the accuracy of their records. All it takes is ONE full-time employee to receive a premium tax credit for purchasing coverage in the new individual Marketplace to place a company at risk for substantial financial penalties.
2016 also brings new reporting requirements. For the first time, employers will have to provide health insurance reports with both the IRS and to their employees regarding the details on their offers of coverage. These reports are due to employees by end of January 2016, and to the IRS by March 31 for electronic transmittals, or February 29 for paper filings.
For many SMBs, the amount of data aggregation necessary to be compliant with the new ACA regulations can be overwhelming. The employee information is often spread across separate technology platforms – including payroll, HR information systems (HRIS), benefits administration systems and leave of absence systems – and some of the data may be held by third parties.
In a recent study by Pricewaterhouse Coopers (PwC) on ACA reporting, 65% of respondents indicated data quality was a concern, and there is good reason for that. According to HR experts, the current industry average “look-back” measurement period for identifying a company’s full-time employee population is seven weeks. If smaller businesses have been using paper systems or separate software packages for tracking employee enrollments and hours-worked, it’s that much harder to assess the information needed for the new reports and it will be much more difficult going forward.
One of the keys to successfully navigating the maze of ACA-related reporting and filing requirements is technology integration and support. The first step is to establish a baseline of data capture and reporting capabilities that already exists within the company, and then determining the best approach to mitigating gaps. This can be accomplished by performing an IT systems audit, which answers questions such as:
- What software is being used to capture necessary employee data?
- Is software updated and ACA compliant, not only in relation to what it captures but also in its formatting and reporting capabilities?
- If separate software systems are in place, can they be integrated for consolidated reporting?
- Is there a process in place for automating the updates on multiple systems as new compliance regulations come into play?
- What protections are in place in order to ensure data integrity, auditability and security?
- How is backup and recovery handled?
- What back-end support is necessary to ensure consistent operational efficiency?
As many as two-thirds of companies have admitted to being unprepared for the new changes related to the ACA and many are relying on outside experts to provide guidance and assistance. For more information on how Percento can help you lay a technology foundation for ACA compliance, contact us today.