The new era of PPACA is upon us. So where do we go from here? Whether or not your organization decides to “play or pay,” imminent new compliance standards require us all to stay informed and have a plan of action for monitoring and reporting. It’s time to set out on the road to PPACA compliance.
New PPACA Requirements in 2015 and Beyond
Below is a sampling of prevalent new requirements for organizations in the coming months. This list is not exhaustive. Organizations under 100 full-time employees may encounter slightly different requirements.
- Employer reporting requirements
- Determining large employer status
- Plan affordability
- Major medical benefits, certain FSA, and some vision or dental benefits, and other employer-paid benefits
- Monitoring full-time status for variable-hour employees
- Certification of plan offered to employees
- Full time employees enrolled each month
- Amount of months coverage is available to each employee in calendar year
- Full time employees share of contribution
- Employee counting guidelines
- Automatic enrollment
- Employee notice requirements
- Nondiscrimination requirements
How to Maintain Compliance
While some of the most recently released requirements are voluntary for the remainder 2014, they will be mandatory in 2015. If you don’t have a plan for compliance yet, you are already falling behind. All organizations must ask, “how can we strategically manage this change and ensure we are still achieving our business objectives?”
In order to ensure compliance organizations must embrace automation and harness the power of robust, real-time reporting. Those using different solutions for HR, Benefits, Payroll, and Analytics can find themselves with fragmented, incomplete data that greatly complicates PPACA compliance. Beyond that, it can cause communication issues between employers and employees and between employers and vendors.
A Price Waterhouse Coopers study refers to these different solutions as internal silos as opposed to a “continuum approach,” which utilize a holistic solution for human capital management. Silos can cause inefficiencies and human error in redundant data entry or transfer that may lead to costly impacts on PPACA compliance. The penalties for non-compliance are steep. Organizations can be penalized $3,000 per full-time employee who purchases health care coverage through a government exchange and receives a subsidy, or $2,000 per the total number of full-time employees, minus the first thirty. Whichever amount is less is the amount that the organization will be penalized.
Organizations at Risk for PPACA Challenges
Due to the far-reaching impacts of the health care reform, all organizations will have to make changes. However, a recent study by Towers Watson lists some characteristics of organizations that are likely to face the most challenges adhering to PPACA guidelines. These organizational characteristics include:
- Diverse range of seasonal/temporary and part-time workers
- Large population of low-wage workers
- Nonprofit or low-margin businesses
- High labor costs in relation to overall costs
- In an industry such as health care, hospitality, customer service, and low-margin or low-skill manufacturing
If your organization fits any of these characteristics it is no cause for panic, it is simply cause for preemptive action. The most significant factor in PPACA compliance is an organization’s approach to the reform. Small tweaks and Band-Aids on an existing system will prove insufficient. The road to PPACA compliance is long and a mandate of this magnitude requires a holistic, strategic solution.
Stay tuned to the DATIS blog for more PPACA updates and information.