The Affordable Care Act

Transcription

The Affordable Care Act:
Using HR Technology to Ensure Compliance
Spring 2013 • Lockton Companies
Preparing for Change
With 2014 on the horizon, employers are wrestling with decisions about
how they can best prepare for compliance with the Patient Protection
and Affordable Care Act (PPACA). Employers should ask themselves the
MATTHEW KAISER, SPHR, CEBS
Vice President
Director of Technology Solutions
(816) 960-9418
[email protected]
following questions:
Is my current human resources (HR) technology sufficient to
support our increased administration needs?
Would it make sense to outsource certain elements of our
compliance activities?
What new systems have been released that might help us more
effectively manage our responsibilities and our workforce?
When I first entered the workforce as a part-time retail employee
while in high school, I quickly learned a new set of rules. First,
my friends could not stop by to see me at work (which they did
anyway). Second, I had to wear a shirt and tie (I had two and
rotated them daily). And finally, under no circumstances was
I allowed to work any overtime. This final rule from the store
manager was the most frustrating to me. I needed as much
money as possible to repair my old Pontiac. But, as the weekend
approached, I’d often find the very dapper Rick (my manager)
with his crisp shirt sleeves rolled up, bent over his paper reports,
determining who still had hours they could work over the weekend
and who needed to be taken off the schedule.
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If Rick was around today, he quite possibly would have a new 30-hour threshold he would be managing to due to
health reform. The PPACA is affecting employers as new regulations are released and implementation deadlines are
looming. With the Act’s requirement that, beginning in January 2014, all large employers must offer their full-time
employees health insurance (or pay a penalty), employers have begun to look at how they can manage their workforces
to both comply with the law and to minimize any increased costs. In addition, employers want to know how their HR
technologies will help them in this workforce management. Will special software be required or will their existing time
and attendance or benefits administration solutions handle this responsibility?
Health Reform’s Impact on Workforce Management
As of January 2014, large employers must offer coverage to their “full-time employees” or risk penalties (we refer to
this as the “play or pay” obligation).

Generally speaking, large employers are those who employed in their controlled group an average of at least
50 full-time equivalent employees during the preceding calendar year. The 50-employee threshold is reached by
combining:
hh
Number of full-time employees. The health reform law defines a full-time employee for this purpose as one
who averages at least 30 hours per week.
hh
Number of full-time equivalents (defined as all other employee hours divided by 120). This is to be calculated
each month, then averaged for the look-back period of the prior calendar year

Employers are not required to offer health insurance to employees who average less than 30 hours per week.
Some employers, such as those in retail, hospitality and food service
industries, have a sizable number of variable-hour employees in their
workforces. Special rules apply for determining when variable-hour and
seasonal employees average 30 hours and need to be offered coverage
(see Lockton’s Health Reform Advisory Practice Alert from January 21,
2013).
While some of these employers will decide to offer all employees fulltime health benefits, others may consider managing their workforce
under the 30-hour threshold to minimize the number of employees
eligible for benefits. While, like my old boss, they may have paper
schedules to manage, it is far more likely they will turn to their HR
technology to help them estimate and manage the population of their
workforce.
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The system, ideally, must also decipher the myriad of health reform rules
surrounding the full-time employee calculations, yet be flexible enough to
meet each employer’s specific plan design.
HR Technology Requirements: More Than a
Time Clock
Benefits Administration
In order to define who is a full-time employee and
census to determine who is eligible for various benefits.
therefore who is to be offered health insurance, HR
Of course, once an offer of benefits is triggered,
systems must be able to analyze each employee’s
employees will use this system to learn about and enroll
employment status, hours worked and time off. The
in their benefits.
This system looks at incoming data on an employer’s
system, ideally, must also decipher the myriad of health
reform rules surrounding the full-time employee
Business Intelligence (Workforce Analytics)
calculations, yet be flexible enough to meet each
These reporting engines help segment transactional data
employer’s specific plan design.
Any single employer may have multiple HR technologies
from multiple vendors in place at any time, including
payroll, time and attendance (also known as workforce
management), benefits administration or even standalone calculation engines designed for specific processes.
There are three systems most likely to manage this
determination and another that will support them.
Time and Attendance
This system houses the transactional details of
employees’ time on the job. This functionality may be
and provide predictive analysis. Analytics functionality
is often outside of HR, falling into the purview of a
company’s information technology staff.
Payroll
This core business system plays a supporting role to the
three systems noted above. Because one of the tenets of
health reform is that the offer of health insurance must
be “affordable,” employers will likely use their payroll
data to ensure compliance. A safe harbor could be
created by ensuring that each employee’s cost of health
insurance is less than 9.5 percent of his or her wages.
housed within a point-of-sale (POS) system at a retail
business. This category of applications is also known
as time and labor management (TLM) or workforce
management.
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The vast majority of vendors expect the benefit
administration system to be responsible for
identifying full-time employee status.
rules established by the employer. This dependence
Surveying Current Options
on the benefits administration vendors seems a short-
Lockton’s HR Technology & Outsourcing Practice
term solution. We expect changes as vendors make
recently interviewed multiple payroll, time and
adjustments to their systems based on new regulations.
attendance, reporting and benefits administration
vendors to find out how they will be supporting health
reform law. We expected to find that the systems closest
to the transactional details would be the ones performing
the calculation and then passing an “eligibility flag” to
At this point, a few key vendors have functionality
already deployed that can identify which employees
meet the full-time employee definition under health
reform. Most other vendors report that a solution
the benefits systems to trigger an offer of coverage.
is in “developmental stages.” Typically, the biggest
systems and vendors are the slowest to change, so it is
We were surprised to find that the vast majority of
not surprising that the first vendors to offer support
vendors expect – at least in the short term – the
in the review of historic data to determine full-time
benefits administration system to be responsible for
equivalency are the smaller, more nimble vendors. Many
identifying full-time employee status and calculating
of these are business intelligence vendors (also known
benefit eligibility. The anticipated process will require
that the payroll or time and attendance system produce
an electronic file containing employees’ reported
as workforce analytics), such as Equifax, Visier, and
Information Builders. Many of these platforms were
preexisting business intelligence systems that now can
hours, which the benefits system will analyze to
be pointed to labor data to help an employer manage its
determine enrollment eligibility based on workforce
exposure.
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Equifax’s eThoria is an example of a business
intelligence engine that can be pointed at financial,
organizational or HR data. However, since Equifax
is already providing HR services for employers
through their compliance, tax and other HR
solutions, this gives them a first-mover advantage
around health reform. With domain expertise, they
have quickly branded eThoria to help employers
model possible health insurance strategies.
Vendor Work in Progress
Employers should expect many HR technology
vendors to deploy new functionality or bring new
solutions to market by the third quarter of 2013,
as vendors are assembling product development
teams now. While most solutions available as of the
publication of this paper are one-off reporting tools
configured to look at the HR data, soon mainstream
systems will be updated to provide this functionality
in the core applications employers already use to run
their businesses.
Employers should devise a technology approach
Kronos’ Workforce Central appears to be the most
®
that is based on the intended strategy for handling
developed, which we predicted, given the size of
their variable-hour population.
their market share in the time and attendance space.
The key to their value proposition is their scheduling
capabilities, which will help employers proactively
manage their workforce under a particular hour threshold
on a go-forward basis. Another similar application with
scheduling capability is Ceridian’s Dayforce. They recently
launched new HR and payroll modules to accompany the
existing time and attendance functionality.
Ultimate Software’s UltiPro® is already delivering some
of the best HRIS business intelligence tools with
their included reporting engine, IBM’s Cognos. If an
employer has access to their time and attendance data and
understands the complexity of the tool, this engine can be
used now to provide workforce analysis. Already in 2013,
Ultimate Software has released prebuilt analytics or queries
for this toolset to simplify implementation by an employer.
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In the benefits administration space, several
vendors all report work under way to support
the eligibility determination by their third
quarter 2013 release. bswift has stated that
they will release, by August 2013, additional
accumulators that allow configuration based
on the employer’s rules and various look-back
periods. Other vendors reporting similar plans
include BusinesSolver, Empyrean and ADP.
Developing a Technology Approach
That Supports Your Compliance
Strategy
Employers should devise a technology
approach that is based on the intended strategy
for handling their variable-hour population.
If employers are planning an “acceptance”
An organization that is fully ready for the
approach, where they will provide health insurance
choices to whatever portion of their workforce worked
more than 30 hours on average during the previous year,
they can safely wait until fall, when updates are planned
for their existing benefits administration or time and
implementation of January 2014’s required offering of
health insurance to all full-time employees will have an
answer for the following issues:

attendance applications.
Transactional Accuracy – Monthly tracking of
hours worked by each employee.

If instead an employer prefers to take a more
Adaptive Scheduling – Modeling tools that layer
available workforce members over needed openings
“intentional” approach, then a more immediate
at the lowest overall cost to the organization
investment in business intelligence may provide that
(overtime vs. benefits eligible, etc.).
ability right away. With the right tools, employers can
manage their health insurance responsibility by adjusting
schedules of existing employees or work groups to

Look Back Calculators – Analytical ability to
newly eligible variable-hour employees, based on
maximize the amount of their controllable labor that
variable lookback and stability periods for service
will come in under the 30-hour-per-week average.
hours.
Implementing a new technology approach earlier in
the year will be most beneficial, because the more time
over which they have to spread the changes, the less

HRIS Status Monitoring – Provides full awareness
of changes in eligibility, such as part-time to fulltime or full-time to part-time movements.
disruptive those changes will be.
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What Lies Ahead?
Employers need a solution that can

Eligibility and Enrollment – Once employees trigger eligibility or for
required enrollments of new full-time employees, benefits administration
tools are necessary to process each enrollment and offer other benefit
options outside of medical.

during their defined look-back, initial
measurement and stability periods. The
solutions can vary from paper reports
to automated benefit enrollment or
Employee Communication – Self-service and other tools to
communicate required notices, such as the existence of public exchanges.

calculate employee hours occurring
Business Intelligence/Reporting – Ability to provide dashboards to
scheduling systems.
For those that hire mainly full-time
employees, the various measurement
management regarding workforce planning, as well as to meet required
periods are not as critical. However,
reporting to the government over coverage offered and population
employers with a high seasonal and
metrics.
variable-hour workforce are especially in
need of a trusted, effective solution.
Plan Today for January 2014
Employers should plan for January 2014 to identify and implement a strategy,
as information about the workforce during the 2013 plan year will determine
A Year to Prepare
their health insurance eligibility beginning January 1, 2014. Some employers
may be able to take proactive steps in 2013 to prevent certain employee
Q1
Define full-time employees, define
groups from averaging 30 hours a week by reducing their hours later in
solution needs and evaluate current
the year, if that’s a strategy they choose to implement. This strategy might
systems.
require the employer to start recruiting additional part-time help to ensure an
adequate labor supply is available.
Q2
and new-to-market solutions, define
look-back/administrative/stability
Lockton’s HR Technology & Outsourcing Practice will continue to monitor
periods. Begin configuring systems to
developments and publish updates, highlighting the vendors and systems
conform to the policies and procedures
that are providing solutions for these health reform-related issues. In the
that will be put in place in 2014.
meantime, please contact your Lockton Account Team for immediate
support.
Q3
Maureen Ditto, PHR

Project Manager

Brad Mandacina,CEBS, QPFC
Project Manager

Cynthia Olavarria Kaufman
Solutions Consultant
measurement and begin adjustments
to scheduling or workforce labor
Pat Cuejilo
supply.
Project Manager

Complete system configuration
and implementation. Begin initial
Lockton HR Technology Research Team:

Evaluate existing vendor partnerships
Courtney Lawrence
Q4
Finalize any outstanding workforce
Project Coordinator
rules. Be ready for health reform-
Eric Hollenbach
January 1, 2014.
Project Coordinator
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related changes that take effect
Our Mission
To be the worldwide value and service leader in
insurance brokerage, employee benefits, and risk management
Our Goal
To be the best place to do business and to work
www.lockton.com
© 2013 Lockton, Inc. All rights reserved.
Images © 2013 Thinkstock. All rights reserved.
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