Roseland-based ADP, a leading global provider of human resources and payroll services to employers, on Thursday released research that showed more than half of large employers — those with 1,000 or more workers — are not prepared to comply with all ACA regulatory requirements.“As we meet with large employers, it has become clear that many don’t have the systems or processes in place to meet ACA compliance requirements, highlighting a need for a cohesive internal effort and perhaps a third-party partner,” said Vic Saliterman, senior vice president, ADP. “With reporting requirements and subsequent penalties going into effect in 2016, the decision to go it alone on ACA compliance could prove risky based on current levels of preparedness.”
ADP published its research in a new paper, The Affordable Care Act and Employer Confidence: Navigating a Complex Compliance Challenge, that is available for free from ADP.
While the majority of large employers (70 percent) handle ACA compliance internally, the study found these employers do not feel fully prepared to manage several critical compliance requirements, including ACA penalties (60 percent); annual health care reporting to the IRS (49 percent); and notifying employees that they can buy coverage on HealthCare.gov insurance exchange (62 percent).
In response to ACA compliance requirements, the study found large employers plan to take a number of strategic workforce management and cost containment actions, including:
- Change employee benefits plans. As a result of the ACA Excise Tax on high-value health care plans that becomes effective in 2018, employers are continuing to employ benefits strategies that shift more costs to employees. Nearly two-thirds of large employers (63 percent) plan to increase employees’ share of costs through changes to employee deductibles, employee co-pays or employer contributions.
- Reduce costs by emphasizing consumerism through plan design. More than one-third of large employers have introduced a high deductible plan. Of these employers, more than half (57 percent) have decided to offer a “consumer driven health plan” to actively engage employees and their dependents in making smart health care decisions, which can ultimately help to reduce costs.
- Expand benefits coverage beyond the ACA’s full-time mandate. A majority of large organizations have or plan to extend benefits coverage beyond the mandated ACA full-time employee population (30 or more hours of service per week). The study found 61 percent have already extended such coverage or plan to do so. Of those who have already or plan to extend benefits coverage, the top reasons include: talent acquisition, talent retention and avoiding penalties.
- Modify employee hours. About two out of five large employers have limited or are planning to limit hours for some employees, but the majority of employers are not planning to change employee hours in response to ACA requirements. Most employers in the study offer coverage to all employees averaging at least 30 hours of service per week.
“The ACA has impacted many elements of workforce management, including HR, benefits, time, leaves of absence and payroll,” said David Marini, division vice president and managing director, strategic advisory services at ADP. “As employers continue to work toward ACA compliance, they should consider forming cross-functional teams equipped with the right tools and expertise to monitor and record employee hours, the affordability of coverage and rising health care costs.”
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