In the 6 years since it was passed, the Affordable Care Act has had profound and far-reaching implications. For the more than 16 million Americans who, according to a report by the RAND Corporation, now have health insurance, the Act has provided an invaluable measure of security and peace of mind. But as the rollout of key provisions continues to be delayed, small business owners and human resources specialists continue to face uncertainty about the effect it will have on their bottom line.
What will the true costs of the Affordable Care Act be, and how can smart managers and directors position themselves to stay profitable and compliant under the new rules? Keep reading to find out.
The Affordable Care Act was enacted in March 2010 with a set of ambitious goals:
- To expand healthcare coverage to uninsured and low-income Americans
- To introduce more accountability for insurance companies
- To lower the cost of insurance premiums
- To provide more choices in healthcare
- To improve the overall quality of healthcare in the U.S.
Meeting these goals doesn’t happen overnight, and major portions of the legislation are still coming into effect as of January 2016.
Three Key Issues for HR
As with any large piece of legislation, the ACA is filled with opaque language that muddies the debate around some of its key issues. While a full discussion of the ins and outs of the ACA is beyond the scope of this article, here’s a quick overview of 3 of the more important concepts for HR professionals and business owners:
- Employer mandate: The employer mandate—also known as the Employer Shared Responsibility Provision— requires that businesses employing 50 full-time staff, or the equivalent in a combination of full- and part-time positions, must offer healthcare coverage for their employees. This coverage must be affordable and deliver “minimum value,” or the employer is required to pay a monthly shared responsibility fee. The employer mandate went into full effect in 2015, though certain businesses were able to apply for and receive an extension into 2016. As per the US Small Business Association, the mandate does not affect most businesses with fewer than 50 FTE staff.
- “Cadillac tax”: The Cadillac tax is a 40% levy imposed on high-cost healthcare plans under the ACA. It applies to any individual plan worth more than $10,200, or any family plan worth more than $27,500. The tax is applied only to the amount in excess of this threshold—in other words, for an individual plan valued at $12,000, an employer would have to pay an additional $720 in taxes, or 40% of $1,800. The Cadillac tax is one of the most contentious issues of the ACA. In 2015, its rollout was pushed back further, to 2018 at the earliest. Many sources, such as the Wall Street Journal, remain skeptical that the Cadillac tax will ever see the light of day. However, forward-thinking businesses may wish to start planning now in the event that it does come into effect.
- Reporting and disclosure: With the ACA come a number of additional reporting and disclosure requirements that must be met by HR staff and businesses in general. These include confirming compliance with shared responsibility provisions, completion of 1095-C forms for all full-time employees, and distribution both online and in physical form of Summary of Benefits and Coverage (SBC) forms. Completion of additional paperwork represents one of the largest burdens on HR staff imposed by the ACA. Fortunately, with the use of advanced document management tools, it is possible to simplify the process while ensuring your compliance requirements are met.
Going Forward: Costs and Concerns for 2016
The International Foundation of Employee Benefit Plans, a non-profit organization dedicated to providing objective, solution-oriented education, research, and information for HR professionals, produces an annual survey of employer attitudes towards the ACA. The most recent version of the report, released in May 2015, included several important findings:
- 57% of employers ranked administrative issues as the biggest challenge they face when it comes to implementing the ACA. This was followed by cost issues at 21%, plan design issues at 11% and communication issues at 10%.
- More than 80% of employers expected their costs to rise as a result of the ACA. A majority—56%—of respondents expected costs to rise between 1 to 2% or 3 to 4%, whereas only 8% expected costs to rise more than 10%. 18% of respondents anticipated that costs would stay the same or decrease.
- One third of respondents believed that the introduction of new reporting disclosure rules in 2016 would lead to the largest ACA-related jump in costs yet. 27% believed that, should the Cadillac tax be levied in 2018, that year would see the largest increase in their costs.
- Despite this, an overwhelming majority of employers, 96%, definitely will or are likely to continue to offer coverage for their employees. The most commonly cited reasons for doing so were to attract talent, retain current employees, and maintain employee satisfaction and loyalty. Only 14% of respondents offered coverage to avoid penalties or gain a tax advantage.
What can we take away from these findings? While it’s clear that the ACA poses challenges to businesses and human resource professionals, for most employers, the long-term benefits clearly outweigh the drawbacks. The question then is not, “Is the Affordable Care Act worth it?” but rather, “How can we cut down on hassles and frustrations while implementing it?”
When more than half of survey respondents cite administrative problems as the biggest challenge posed by the ACA, there is a clear need for systems and software that can make reporting easier. In fact, the right software can not only simplify the ACA, but it can also assist with a wide range of compliance issues, whether they involve HIPAA, FINRA, SEC, ISO, or other standards. The remainder of this article will look at how effective document management can help your organization surmount some of the challenges posed by an increasingly complex regulatory landscape.
What Is Document Management?
Document management refers to the set of systems, policies, and procedures by which an organization handles and maintains its official records and other important information. Document management occurs at all stages of a document’s lifecycle, from creation to distribution, retention, and archiving. As a result, it touches on almost all aspects of an organization—from HR and accounting to C-suite executives, all team members have a stake in improving document management.
It is perhaps surprising, then, that many organizations continue to use outdated, cumbersome document management software (DMS). Whatever your feelings about the ACA, one thing it has made evident is the need for more effective systems and software for organizational recordkeeping and document management.
Why Is a DMS Important?
What makes DMS so important, and, more importantly, how can they help your organization meet your compliance requirements with the ACA? Here’s how good DMS can help solve the 4 most commonly reported challenges associated with ACA implementation:
- Administration: It’s clear the ACA poses a number of administrative difficulties for both large and small businesses. DMS systems can help by providing a centralized location for document storage and allowing for granular control over security and access settings. The best DMS integrates seamlessly with your existing management and payroll software, promoting improved file version control and less duplication of effort while working across multiple platforms. Ultimately, these benefits lead to more streamlined processes and a reduced risk of noncompliance—important advantages when implementing a complex piece of legislation such as the ACA.
- Plan design: Healthcare plan design was a headache for HR and accounting before the ACA, and it will continue to be so after every provision of the Act has been implemented. Document management systems put vital personnel information at your fingertips, letting you easily determine what level of coverage each employee is entitled to, simplifying the dissemination of SBC forms and related paperwork.
- Communication: When documents are easily accessible and appropriate permissions controls can be set, it facilitates better communication and collaboration between departments. This means less offloading of budget-cutting tasks to HR, and more engagement with executive management on the important issues that affect both your job and the overall success of your organization.
- Cost: How DMS impacts costs under the ACA may not seem obvious at first, but the cumulative effect of the above benefits is one that translates to improved productivity across the board. When your staff have the tools they need to do their job better, any labor or capital expenses can be easily offset. Reducing minor administrative hassles also improves job satisfaction, helping you retain key staff much in the way an affordable healthcare plan or good benefits package does.
Ultimately, better document management means less work for HR and accounting professionals. As the final provisions of the Affordable Care Act roll out, and as new regulations in other areas—such as privacy, finance, and environmental management—are introduced, an effective DMS can be the key to keeping your business profitable and positioning it for long-term growth.
How Can eFileCabinet Help?
eFileCabinet is a leading developer of human resources DMS software. Our products are available as both online solutions and on-premise solutions. We provide businesses of all sizes with the tools their HR and related staff need to simplify ACA compliance and manage important personnel records in a more effective manner. For more information, or to arrange a demonstration of any of our products, contact our office today!