PPACA Compliance: What You Need to Know

In July’s Health Insurance Underwriters Magazine Jamie Hawkins, Alltrust’s exclusive HR technologist and owner of Benefit Technology Resources, is featured in the publication with her review of what a payroll/HRIS platform needs to track to make your organization PPACA compliant. With over 18 years of expertise and knowledge specializing in Employee Benefits technology solutions for large employer groups, Jamie provides invaluable insight on all subject matter related to keeping your technology solutions PPACA compliant. Read about what Jamie has to say below.

Of all the challenges facing HR today, and there are many, compliance with PPACA and employee benefit administration is chief among them. Increasingly, employers are looking to their benefit advisors for guidance in the areas of HR technology services and automation.

The HR technology marketplace is complex and changing on a daily basis. It’s a real challenge for even the most progressive employer to stay current. Weave in healthcare reform requirements and the compliance burden and complexities become even greater.


Why Now?

The divide in technology capabilities is greater because of PPACA. Most payroll/HRIS/benefits-administration platforms that are built on newer SaaS technology, or what most now call “The Cloud”, can be updated easily when requirements are released or changed. The same, unfortunately, cannot be said for older platforms.

Providers of older technologies must push an “update” to the software and then push it down to their customers to install. This creates a compliance roadblock, so to speak, as some employers will install these updates and some will not, due either to lack of resources or, more commonly, unbudgeted and unexpected expense. This has made the move to SaaS for many employers much more attractive.


With PPACA Compliance, what needs to be tracked?

  • Dependent coverage to age 26
  • Flexible Spending Account annual limit
  • Detailed dependent information that is needed for quoting
  • Employee acknowledgement of SBCs
  • Employee acknowledgement on Notice of Exchange
  • Form W-2 reporting
  • Patient-Centered Outcomes Research Institute (PCORI) Fees (2013)
  • Waiting period limited to 90 days
  • Wellness incentives
  • Full-time/part-time status and hours worked, measuring stability and lookback periods
  • 6055 & 6056 Reporting (Extended to 2015)
  • Automatic Enrollment Rule (pending guidance)

For employers that do not have a system that can support these requirements, the current penalties can be significantly costly. The average ERISA fine (PPACA falls under ERISA) is $1,000 per day per offense. That means for each item found non-compliant, a penalty of $1,000 per day can be assessed until the offense is resolved. When it comes to offenses pertaining to employees, the penalty could be as high as $1,000 per member per day.

With over 300 different providers in the market today, there are many choices for HR technology. That said, if you are shopping the market today for a compliant platform, the qualification and selection process can be daunting and truly requires expertise in the field of payroll and HR information systems. This is expertise that many broker/advisors may not have.

Without a structured approach, the evaluation process can be time-consuming, costly and confusing. The right structured approach should involve these distinct steps:

  • Discovery—Identify your client’s current processes and document them. This will help identify the gaps in HR automation so they can be remedied with the right solution. Surprisingly, this step is often the most overlooked and yet the most critical. Without a thorough discovery, the selected vendor may not fully understand your client’s needs and requirements until implementation begins. This sometimes causes providers to find out that they are not able to deliver what has been asked of them.
  • Develop Requirements—Once you’ve clearly outlined the current processes, use that same list of transactions to map how an “ideal” process would work. Then categorize the transactions into sections that define each component of your client’s HR process. These components should include payroll, time and attendance, HR, benefits administration and any other modules of interest, such as performance and talent management. Be sure to prioritize these transactions based on which functions are mission critical to your client and save the most time and expense. Be sure you include all current and future PPACA requirements.
  • Create an RFP—Develop an RFP and collaborate with a select group of providers that are most likely to meet your client’s needs. After careful evaluation of their responses, recommend providers for your client to consider. Identify the strengths and limitations of each recommended provider.
  • ROI Analysis—Identifying estimated savings that the new system will create is often helpful in getting support and approval from executive management. You can assist your clients by creating a breakout of hard and soft dollars through measurement of the administrative time it takes to complete each manual task vs. those same tasks being automated and exposure to penalties for non-compliance.
  • Project Plan Development and Implementation— Once the project has been approved and the provider has been selected, you need to develop an internal plan for working with them during their implementation. Manage expectations by submitting implementation requirements to the provider at the onset of the project. This might include any date-driven deadlines, interfaces that are required, parallel payroll processing or any other expectations that might disrupt your client in a negative way.


In Conclusion

According to the CedarCrestone HR Systems Survey, in the next year most companies will be engaged in evaluating their HR automation process. Excluding the actual cost of labor, HR technology may represent the largest capital expenditure and resource investment for these firms. It is critical that organizations choose and implement the right system. With PPACA, it is now part of your job to help. If you don’t, rest assured they will find someone else who will.

Alltrust strives to stay up-to-date on all of the latest PPACA compliance requirements and updates in order to ensure that each of our clients always remains compliant. Please click here to contact one of our specialists if you have any questions regarding PPACA compliance or would like information on Alltrust’s employee benefits services.


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