ACA tracking and reporting requirements often go beyond what many systems provide
Keith Morrison knew that finding the right technology to help comply with the reporting requirements of the Affordable Care Act (ACA) was a big decision, and he had determined that building an internal company solution for those needs was unrealistic. As executive director of benefits and compensation for Whole Foods Market, Morrison oversees thousands of variable hour employees who often straddle the line between part-time and full-time status.
In January 2015, the ACA will require that employers with 100 or more full-time employees or equivalents have the ability to accurately track staff work hours to determine who qualifies as full time, then ensure qualifying employees are offered health care coverage that is considered “affordable” and provides “minimum value.” (In 2016, the mandate will apply to employers with 50 or more full-time employees/equivalents.)
While Morrison knew his existing human resource information system (HRIS) and payroll system could generate required data in the form of employee hours worked and pay levels, he also realized the ACA required new information and attributes not easily produced or tracked in those core systems.
For example, many payroll systems aren’t designed to track the measurement or “look back” periods required by the ACA to gauge someone’s full-time status—periods that can range from three to 12 months to determine if employees average 30 work hours per week. Assessing employee benefits eligibility also can be more challenging for organizations with many part-time or variable hour employees.
So Morrison turned to an integrated software platform from vendor Equifax Workforce Solutions that consolidates ACA-required data and automates key reports. Decision-support tools within the platform also help assess challenges such as how unpaid leave policies factor into benefits eligibility and how rehired employees should be classified under the law.
Whole Foods also reaps benefits from the system beyond complying with ACA mandates, Morrison said. The platform makes it easier to forecast future benefits eligibility and enrollment volumes in the workforce, giving the company’s leaders a better gauge of projected labor costs.
The system is equipped to address looming Internal Revenue Service (IRS) reporting requirements. Under sections 6055 and 6056 of the tax code, employers must begin preparing information in 2015 that will be required to report to the IRS starting in January 2016. That data will be used to ensure compliance with ACA mandates.
“The first stage in our ACA process was ensuring proper eligibility classification and benefits coverage for the workforce, and the second piece will be reporting accurately on our coverages to the IRS,” Morrison said.
Evaluating Technology Options
ACA tracking and reporting requirements often go beyond what a company’s core technology systems can provide, said Matthew Kaiser, director of HR technology for the Lockton Companies, a consulting firm in Kansas City, Mo. But he said major industry vendors have been working to add new functionality or “bolt-on” modules to their payroll, time and attendance, or human capital management systems to better address ACA needs.
“We’ve recently seen some vendors add query sets to their reporting tools to enable employers to do bare bones support for the ACA,” Kaiser said. “But the ACA isn’t fully supported yet as a within-application piece of functionality in things like ERP [Enterprise Resource Planning] systems.”
That gap has created an opportunity for ACA-specific technology start-ups. “We're seeing the emergence of new vendors addressing just the ACA compliance and control requirements,” Kaiser said. “These systems are designed to sit alongside and play well with data coming in and out of payroll or time and attendance systems.”
Average costs for these ACA-only, cloud-based systems have become more affordable, Kaiser said. “You can still pay $30 per employee per month for use, but we’re also seeing systems out there that are effective at 30 cents per employee,” Kaiser said. “It depends on the complexity of ACA support that you need.”
Stand-Alone ACA Technologies
Some HR leaders are finding value in the ACA-specific technologies. Wayne Overla, an HRIS administrator for the Blarney Castle Oil Company, which operates convenience stores in Michigan, uses such a tool from vendor Kronos to address one of his biggest challenges: tracking the ACA benefits eligibility of a large part-time and variable hour workforce with a high turnover rate.
“We have people coming and going, so we really have to keep an eye on their initial ACA measurement periods in particular to gauge where they are in terms of average hours worked,” Overla said.
Automated reports enable company managers to stay up-to-the-minute on hours worked by part-time staff across Blarney's many stores, as well as look at upcoming weekly schedules. “That allows us to stay ahead of the game if we start to see certain trends in work hours” related to ACA compliance and benefits eligibility, Overla said.
A dashboard tool alerts Overla when employees have completed an initial 12-month measurement period. If an employee is then classified as full-time equivalent (FTE), an automatic e-mail is sent to the company's benefits director.
“The director initiates the process to move them into the administrative period [a time between the ACA's measurement and stability periods] so they can sign up for benefits,” Overla said. “We have to track employees in 100 locations, so that alert system makes the process much more efficient.”
Handling Diverse Scenarios
Companies with more complex ACA compliance challenges, such as those having multiple employee groups with different look-back measurement periods, often require more flexible technologies or technologies with good decision-support tools.
One such scenario comes in addressing unpaid leave under the ACA for Family and Medical Leave Act leave, military service or jury duty—time off that has to be accounted for when calculating total hours worked in the determination of benefits eligibility status.
“Our technology forced us to examine our leave policies and how they interact with the ACA,” said Whole Foods’ Morrison. “We did make changes to some of them. Employees in the ACA’s stability period who are now benefits-eligible will likely receive those benefits, regardless of whether they are actively working or if they’re on one of the leaves that previously weren’t entitled to benefits.”
At Caesars Entertainment Corp., a decision was made to err in favor of employees when addressing leave policies under ACA mandates, said Ken Wendtland, corporate manager of HR analytics for the casino and resort company, which has 45,000 variable hour employees.
“We include all of our employee leave codes in our reporting system, rather than just those that the ACA has deemed mandatory,” said Wendtland. “We believe that only helps our employees meet the benefits-eligibility hurdle of averaging 30 hours per week.”
Dave Zielinski is a freelance business journalist in Minneapolis.
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