ACA Compliance Confidence Remains Low for Large Employers

ADP’s new white paper, “Affordable Care Act and Employer Confidence: Navigating a Complex Compliance Challenge,” examines how large companies are approaching compliance with the Patient Protection and Affordable Care Act (ACA).

Among the nearly three-quarters of large employers (70%) that handle their compliance efforts internally, many do not feel fully prepared to manage several critical compliance requirements, including exchange notices (62% unprepared), ACA penalties (60%) and annual health care reporting such as IRS Forms 1094/1095-C (49%).

“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,” says Vic Saliterman, senior vice president at ADP. “With reporting requirements based on 2015 data 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.”

To meet the new requirements, large employers are planning strategic work force management and cost containment actions. The ACA Excise Tax on high-value health care plans, which becomes effective in 2018, is leading many large employers to increase employees’ share of costs. Nearly two-thirds of large employers (63%) plan to shift more costs to their workers through changes to employee deductibles, employee co-pays or employer contributions. Roughly one-third of large employers have introduced a low actuarial value plan, and more than half of these (57%) have decided to offer a consumer-driven health plan (CDHP).

Rather than change employee hours in response to the ACA-mandated coverage for employees working more than 30 hours per week, 61% of large organizations have already or intend to extend benefits coverage to additional groups of employees beyond those working 40 hours per week. These companies cite talent acquisition, talent retention and avoiding penalties as their top reasons for doing so.

Most employers in the study offer coverage to all employees averaging at least 30 hours of service per week during the employer-defined measurement period. Only about two out of five large employers have limited or are planning to limit hours for some employees.

“The ACA has impacted many elements of work force management, including human resources, benefits, time, leaves of absence and payroll,” adds 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.”

The ADP Research Institute conducted its study in August and September 2014, and included input from 403 heads of HR, senior HR/benefits managers and executives who influence decisions regarding their company’s employee benefits policy, system and services in U.S. enterprises. The results were weighted to reflect the actual distribution of company size, region and industry within the U.S.

A full copy of the ADP white paper is available here.