The close of 2014 marked the first full year of Obamacare, but corporations are still struggling with how to implement its reporting and regulatory standards.
About half of both mid-sized and large employers say they are not fully prepared to accurately apply all of the Affordable Care Act compliance standards, according to a new study by ADP (ADP). Only 46% of mid-sized companies and 51% of large ones say they are equipped to meet the annual health care reporting requirements.
“The reporting that has to be done has to be accurate,” said David Marini, a vice president and managing director for ADP’s strategic advisory services. “Someone has to sign off that these documents are correct. There’s a whole new level of rigor.”
Along with the extension of insurance coverage, there are a host of regulatory and record-keeping standards that businesses are required to meet. The list includes accurately tracking employee hours, reporting health insurance enrollment and eligibility to federal authorities, and ensuring health plan offerings meet minimum standards of care and affordability.
As of this year, almost all of the ACA standards are in effect, and failure to comply could result in substantial, nondeductible tax penalties, ranging anywhere from thousands to millions of dollars annually.
The ACA is one of the most significant pieces of legislation since the start of Social Security in 1935: it affects every employer and legal resident. In 2015, it’s expected to impact almost 19% of the entire U.S. economy, according to the Bureau of Economic Analysis. Companies and patients, alike, are trying to keep up with the change, but progress has been slow.
To cope with this, companies are finding ways to work within their current structures. For instance, many organizations don’t have the ability to accurately track employee hours, especially those with few part-time workers, said Marini. These firms are finding it more efficient to extend healthcare coverage beyond mandated ACA full-time employees, which is currently defined as those working 30 hours or more.
This is particularly true for companies with 1,000 employees or more: three out of five large companies say they are extending coverage to all employees regardless of full-time status.
ADP found two reasons for this: employers with a small population of part-time workers found it less costly to cover all workers rather than set up administrative processes to accurately track hours, and about 75% of companies still view benefits as a key attraction tool.
If this is costing companies more, it’s hard to tell, said Marini. “We don’t have numbers yet,” he said.
At the end of the day, firms will likely require more workers. Nearly 64% of mid-size companies and 59% of large companies have multiple people in across functions making ACA decisions. Companies are responsible for the accuracy of data they provide to the Health Insurance Marketplaces and the Internal Revenue Service, and that requires expertise from finance, the executive level and human resources.
“Software alone isn’t going to solve this for organizations,” said Marini. The complexity of the task at hand is going to require a whole new set of structures within businesses to track and report their employee’s health care coverage. “It will get easier as years go by,” said Marini. “But, they have to figure out a way to get comfortable and get their arms around it this year.”