In our previous post, we talked about the challenges surrounding ACA Compliance, and how to navigate what you need to do when and if you receive a letter citing an ACA Compliance violation. One of the ways to mitigate the risk is to offer diversified benefits management packages and plans for your employees to ensure that you are minimizing costs and maximizing coverage. The other way is to implement a workforce management solution to gain visibility and control over compliance for the entire workforce. We look at both here.
Benefits Management to Ensure Coverage for your Employees
The biggest challenge in ACA compliance is the cost to the employer. One of the primary reasons many employers fall victim to the ACA compliance violation is the simply fact that coverage can be expensive, especially when a majority are waiving that coverage. As stated, employers over 50 FTE need to offer some level of coverage to their employees, but when 98% statistically waive this coverage, they are investing money in benefits programs for only 2% of their workforce. How can a company overcome the hurdle of these costs and continue to maintain margins?
This is where having a diverse benefits management program can help. There are many benefits programs in place that offer a wide portfolio of options for businesses that are smaller and need to have a benefits package that is both compliant and affordable.
- Major Medical Plans: These are the traditional plans you would see for most FTE. They are typical of any major medical benefit providers, and come with higher premiums, but more benefits.
- Minimum Essential Coverage (MEC): Becoming more popular in hourly workforce management operations is the MEC plan. These are much lower premiums and provide exactly what they state – minimum essential coverage – for employees. These are highly deductible plans that help to offset the premiums, with the expectation that they are not leveraging as much services.
- Commuter and FSA Benefits: Another added plan is the commuter benefits and FSA. These are plans that take money out of the employee’s paycheck pre-tax and deposit onto a card for use in commuting and flexible spending on medical needs. While not part of the ACA, these can offset some of the cost when combined with an MEC plan.
In the end, the key to offsetting cost is to diversify. In fact, many companies will have a number of different options for their employees, with varying levels of coverage. In 2018, the average number of plans per employer in the hourly workforce industry was 8, double from a few years back. This just illustrates that, with the right benefits provider working for you, you can “shop” the most cost effective plans for your business.
Tying it all Together: Single Workforce Management Solution for Operations, Benefits Management and ACA Compliance
No one operating a business today wants to have to face challenges and risks associated with ACA. As an owner or manager, you want to focus on running your business, keeping employees and clients happy, while reducing costs and increasing profit margins. This is why you want to take as much of the “legwork” out when managing benefits.
Look for a workforce management solution that provides you with the visibility and control you need to not only manage the time and hour collection connected to payroll, but also the eligibility of ACA and the ability to offer a portfolio of health plans that meet your needs. To really be effective, all this information needs to integrate together. Some key areas to consider:
- Connecting Employment Status to Benefits: You want to ensure that, when an employee is hired, you will be able to flag when that person becomes eligible for benefits. Failure to offer them a program can violate ACA rules
- Integrates Benefit Election to Payroll deductions: Once an employee is eligible, you want to ensure that the plan they select will automatically be tracked as a deduction when processing payroll. Look for a system that automatically connects benefits to payroll processing
- Keep Track of Waived coverage: As stated, the majority of employees may waive coverage, and you want to make sure you have a system that keeps a record of this waiver to remain compliant.
- Calculated versus Designated FTE: This one can be a challenge, and if you have a system that has the intelligent business rules to determine if an employee becomes a “calculated” FTE, and have that enroll them under ACA coverage, then you will remain in compliance.
- Expertise in ACA Compliance: Even with automation in place, you want to have consultants that will help you navigate the waters in the event the IRS send you a violation letter. With their help, and with a workforce management solution in place, you may be able to reduce or even eliminate these potential fines.
ASK THE EXPERT:
When asked about common misconceptions of ACA, Todd Bellistri, President and CEO of August Benefits says, “The most common misconception is that the organization must actually owe the proposed penalty stated in the IRS letter. As a matter of fact, the IRS has sent out thousands of letters – many of the letters are the result of inaccurate or poor submissions on the part of the employer (or 3rd party ACA provider).”
Todd also goes on to say that it’s important to have proper internal communication when filing with the IRS.
“Many filings include inaccurate information – which is typically the result of several individuals not communicating on the same page. It is critical that the employer, the HR team, the benefits admin, broker, payroll team and ACA team are all on the same page and understand the health programs. Additionally, there should be a designated person (or 2) at the employer who is ultimately the go-to point of contact for all things ACA.”
There’s plenty of talk these days about the impact of ACA compliance in today’s healthcare system. While this is a hotly debated topic in Washington, it is still something that is the law, and companies need to adhere to those laws. There are many ways to help mitigate the risks, which we’ve talked about in our previous post, but added to that is the need to have a benefits management program that encompasses many types of coverage, and provides a cost-effective means of meeting the law. Additionally, as companies grow and scale, the need to automate much of the operations in a workforce management solution becomes more and more a reality. With a single source of the truth, you can implement automated workforce management processes, gain visibility and control over the employees’ benefits management, and keep on top of ACA Compliance to avoid any unnecessary long-term violations.