TOP 10 ACA RESOURCES

Small Business Resources

ACA Tax Provisions For Large and Small Employers

[Guide] Managing Your ACA Strategy

[Guide] ACA Compliance Guide for HR

ACA’s Financial Implications

SHRM’s Complete ACA Resources

HR Perspective Report on ACA Compliance

Workforce Data Necessary for ACA Compliance

IRS Forms Updates & Instructions For Reporting

ACA and HR Tech Adoption

4

5

6

7

8

9

10

11

12

13

3

There's no denying the impact that the ACA has had on nearly every industry in this country. The focus on affordable, quality healthcare impacts anyone from a small business to a large corporation. While the ACA has impacted the healthcare industry most noticeably, it has also resulted in considerations outside of the realm of healthcare.

As an HR professional, you know the challenges that ACA has brought to your department. Depending on your size, you’re required to provide healthcare to your full-time employees. You need to figure out how many full-time equivalent employees you have, and whether or not the policies offered are considered affordable.

Coping with these challenges can be difficult without a little assistance.

To help you out, we’ve compiled a list of ten of the industry's top ACA compliance resources for your HR department.

Use these resources to help guide your ACA compliance strategies as you get ready to report in January.

4

Small Business ACA Resources

The ACA mandates will affect businesses of various sizes in different ways. If you’re the owner of a small business, or working for the HR department of one, you’ll likely have a ton of questions about how the ACA affects you specifically. Fortunately, the U.S. Small Business Administration has some great resources that will help you find the answers you need.

ACA Small Business Resources

Access the small business resources here:

sba.gov  

5

ACA Tax Provisions For Small and Large Employers

Whether you’re a small or a large business, you need to be aware of what requirements apply to your workforce. The ACA is going to have significant tax implications for some businesses. You’ll need to take the time to get familiar with these implications to make sure you take advantage of any tax credits and avoid inaccurate reporting. Where else would you go for information on the tax implications under the ACA? The IRS’ resource page for employers of course. ACA Tax Provisions

Access the IRS site to view a wealth of information on ACA compliance:  

irs.gov  

6

Managing Your ACA Strategy: Maintaining Compliance Through Automation and Integration

Managing ACA Strategy Guide

Read the full report here:  

Aberdeen  Group    

The Aberdeen Group’s recent report on ACA compliance details findings from surveyed companies on their ACA readiness, particularly when it comes to their current HR technology capabilities. Key insights show how automated systems for HR functions like payroll and time and attendance have enabled companies to better manage their ACA strategy for compliance.

7

ACA Compliance Guide For HR

The “ACA Compliance Guide for HR: 7 Areas To Get Your Company ACA Compliant” was created to simplify the most important information regarding the ACA and compliance. This guide includes: • Dates and deadlines• IRS forms overview• Calculation for determining # of FTE

employees• Penalties overview• Determine if you qualify for transition

relief ACA Compliance Guide

Access the ACA Compliance Guide:

BeyondPay  

8

ACA Financial Implications To Prepare For

Human Resources departments are beginning to feel the squeeze of the Affordable Care Act. Healthcare costs have started to slowly rise as a result of ACA, but it looks like even greater costs could be on the horizon. Here’s what a recent survey completed by the International Foundation of Employee Benefit Plans found: •  33% of companies believe that the most

significant increase in cost from ACA is going to occur in 2016.

•  27% of companies believe the largest cost increase will occur in 2018.

ACA Financial Implications Article

Access the full article here:  

BeyondPay  HR  Blog  

9

SHRM ACA Resources

If you don’t already belong to the Society for Human Resource Management, you likely know what it is. For HR professionals, SHRM is the leading association for all things HR. Since ACA is a hot topic for HR right now, they’ve worked hard to put together an incredible resource page for it. You’ll find all sorts of guides, compliance reminders, decision trees, and even webcasts. They update the page regularly with new articles so you’ll always have access to the latest information.

SHRM Resources

Visit SHRM’s site for everything ACA:  

shrm.org  

10

HR Perspective Report on ACA Compliance

The PwC report released earlier this year shows the findings of a survey of employers’ readiness for HR compliance. The results show that ACA reporting requirements are presenting challenges for many employers, indicating that many still have not created a strategy for compliance.

HR Perspective Report Access the full report here:  

PricewaterhouseCoopers  

11

Is a Lack of Workforce Data Causing ACA Unpreparedness?

How many full-time equivalent employees do you have? If you don’t know the answer to this question, you will soon. And if that number is over 50, then ACA reporting mandates will affect your company. The question will soon be: “What tools can I use to determine how many full-time equivalent employees I have?” The answer? Technology that provides insights into workforce data to streamline HR functions, and subsequently, ACA reporting.

Workforce Data For ACA Article

Access the full article here:  

BeyondPay  HR  Blog  

12

IRS Forms & Instructions For Reporting

More great resources from SHRM in this article that gives very in-depth information into the updates to the 1094 and 1095 IRS tax forms that you need to report beginning next year. These are long, tedious documentations that are a pain to read and even harder to understand. But straight from the horse’s mouth, the IRS says that “employers should have infrastructure in place to gather information”. Do you?

IRS Form Updates

Access the full article here:  

shrm.org  

13

ACA: Blessing in Disguise For HR Tech Adoption

For many businesses that have determined that the ACA will impact their workforce, they have also determined that they need to come up with better processes to manage compliance. Enter HR technology. This article looks at the positive impact the ACA has had on the adoption of HR technology systems at many companies. Long overdue in some cases, the ACA has propelled the push for more strategic HR roles. HR Tech Adoption

Access the full article here:  

beyondpay.com  

No matter where you are in the planning of your ACA compliance strategy, these resources will help ensure that you are prepared for every aspect of reporting.

If you are struggling with your current systems and processes, get in touch with us.

We would be happy to assess your current strategies and help you discover how an integrated HR technology system can vastly improve your road to ACA compliance.

GET  IN  TOUCH  

The Affordable Care Act and its enactment puts additional compliance pressures on organizations to properly track the time employees are working. However, it doesn’t have to be so hard; even as external forces continue to bring change to your organization, having the right fundamentals – strategy, data and the right technology – can help your organization stay ahead, no matter how the process evolves.

MANAGING YOUR ACA STRATEGY: MAINTAINING COMPLIANCE THROUGH AUTOMATION AND INTEGRATION April, 2015 Michael M. Moon, Research Director, Human Capital Management

Report Highlights

52% of organizations believe that the ACA will have a significant impact on their workforce management strategy in the coming year.

Roughly 69% of organizations indicate that they plan to continue their current staffing model and simply expand coverage.

35% of organizations plan to invest some or significant financial resources into workforce management technology to help them respond to the requirements of the ACA.

Best-in-Class organizations are 37% more likely than All Others to have a defined and consistent workforce management processes across the organization.

p2 p3 p5 p10

www.aberdeen.com

Managing your ACA Strategy: Maintaining Compliance through Automation and Integration

2

Introduction

The Affordable Care Act, or ACA, has raised considerable questions for organizations. As companies have begun to sort out the nuances of this new legislation, many are realizing the need for better data to help them understand the makeup of their workforce. Starting in January 2016, US organizations who had 50 or more full-time employees as of December 31, 2014 will be required to report on this data not only internally to their employees, but also to the federal government as well. While compliance and reporting are absolutely necessary for ACA compliance, they will not be sufficient to truly enable an organization’s business strategy. Taking this opportunity to think through the ways in which workforce management strategy supports overall business objectives can position management, finance, operations and HR leaders to greatly impact organizational performance, as well as costs. This report looks at how organizations are responding to the ACA, including the role that automated workforce management technology has on an organization's ability to maintain compliance and support their overall workforce management strategy.

It All Starts with Strategy

In the more than 10,000 pages that make up the Affordable Care Act bill, the government spells out the legal requirements for employers, but how organizations choose to respond to these requirements and other regulatory requirements beyond ACA is really a strategic choice. In recent data gathered by Aberdeen, 52% of organizations said that the ACA would have a significant impact on their workforce management strategy in the coming year. This number is only slightly lower than when we asked the very same question in 2013 (56%). Organizations have had to make many decisions as they have developed and implemented an organizational response to the ACA, including the decision to

52% of organizations believe that the ACA will have a significant impact on their workforce management strategy in the coming year.

www.aberdeen.com

Managing your ACA Strategy: Maintaining Compliance through Automation and Integration

3

“pay” — pay the government fines and penalties for not offering healthcare as required by the new legislation, or “play” — begin offering healthcare coverage, update healthcare plans to meet new requirements, and/or expand enrollment in existing plans to employees that are now eligible. Organizations are now challenged with figuring out how to track and manage employee data to understand who qualifies for benefits, and to enable reporting. For many organizations, these decisions are far beyond just a compliance conversation; they have caused them to rethink their overall workforce management strategy, policies, and technology.

As illustrated in Figure 1, the majority (68.6%) of organizations (80% of Leaders) surveyed indicated that they plan to continue their current staffing model and simply expand coverage. This is based on data collected in January and February 2015, and is consistent with Aberdeen's findings from both 2013 and 2014.

Figure 1: Staffing Strategies in Response to the ACA

In Aberdeen's 2015 Human Capital Management study, the following key performance indicators (KPIs)

were used to distinguish the Leaders (top 50% of aggregate

performers) from the Followers (bottom 50%), with mean-

performance among the Leaders as follows:

– 6.6% decrease in voluntary

(unwanted) employee turnover (Followers: 1.5% increase)

– 82.9% of employees rated as “highly” engaged

(Followers: 46.1%) – 21.4% increase in customer

satisfaction rates (Followers: 2.3% increase)

www.aberdeen.com

Managing your ACA Strategy: Maintaining Compliance through Automation and Integration

4

Leaders were 25% more likely than Followers to indicate that they would reduce the overall number of employees in their organizations but increase hours to get the most productivity out of covered individuals; this strategy includes moving part-time employees into full-time positions.

With companies now required to provide healthcare coverage for all full-time employees, a flexible workforce is one option to help organizations avoid additional costs and improve efficiency. Followers were actually 25% more likely than Leaders to state that they plan to increase the use of contingent / temporary staff to mitigate risk associated with costs of full-time employees.

Other options Followers are using to address the requirements of the ACA include:

Elimination of group benefits and pushing all employees to the individual market via the public exchange

Continuation of current staffing model and pay the fees / penalties as required

Moving to an outsourced benefits administration model

Interestingly, in 2014, 6.2% of organizations Aberdeen surveyed indicated that as part of their strategy to deal with ACA, they would continue with their current staffing model and pay the fees/penalties as required. This number dropped to less than 3% in 2015. We noted a similar decline in those who stated in 2014 that they would likely move to a largely part-time staffing model to reduce the number of employees eligible for coverage (only 2.9% of organizations). This shift in strategies is a strong indicator that organizations are recognizing the importance of providing essential healthcare coverage to their full-time employees and are beginning to be more proactive and less reactive in response to the new ACA requirements.

www.aberdeen.com

Managing your ACA Strategy: Maintaining Compliance through Automation and Integration

5

Regardless of the chosen strategy, organizations should look carefully at not only the cost of each option, but the return as well. This decision is not one-size-fits-all, and organizations may have different strategies for different roles. For many organizations, the quality of their workforce is their competitive differentiator, and having the right staff that delivers an amazing customer experience with the highest quality products is critically important. Decisions around whether or not to offer benefits to employees may impact an organization’s ability to attract and retain talent, in addition to any impact on healthcare costs. Organizations should carefully consider the overall business impact of their ACA strategy beyond cost and compliance. Part of this strategy means being able to validate and quantify the choices you make by measuring, monitoring and reevaluating their approach on a regular basis.

Laying a Proper Foundation

Once the organization’s strategy for responding to the ACA is established, organizations need to ensure they have the right technology in place in order to properly report eligibility, manage compliance, and make the process of executing that strategy as efficient as possible. The ACA certainly has created more administrative work for human resources departments and payroll departments, and it has an impact on managers and supervisors as they try to coordinate the hours worked by individual employees. To address the additional administrative burden this law is putting on organizations, many are increasing their investments in technology. In fact, 35% of organizations indicated that in order to be compliant with ACA calculations/eligibility and the new reporting requirements, they will need to invest some or significant financial resources into workforce management technology to help them respond to the requirements of the ACA (Figure 2).

35% of organizations indicated that in order to be compliant with the

ACA calculations/eligibility and the new reporting requirements, they

will need to invest some or significant financial resources into

workforce management technology to help them respond to the

requirements of the ACA.

www.aberdeen.com

Managing your ACA Strategy: Maintaining Compliance through Automation and Integration

6

It is also important to note that maintaining compliance is only one piece of the puzzle. Having a strong workforce strategy that maximizes productivity and reduces labor costs along with compliance is ultimately where enterprises need to go.

Figure 2: Technology Investments to Support ACA

According to the 2013 Aberdeen Report, The Affordable Care Act: Compliance is Just the Beginning, only 33% of organizations felt that their current workforce management systems (e.g. automated time and attendance, payroll solutions) were sufficient for their ability to comply with the then "new" legislation. In 2015, this number jumped to 60%. Clearly, as time has passed and the reality of living under this legislation hit, organizations have recognized the importance of having the right technology infrastructure in place.

While 60% of all organizations feel they have the right systems in place to comply with ACA, when Aberdeen looked at the size of the respondent organizations, a much more important story emerged. Seventy-three percent (73%) of small-medium sized businesses (SMBs) with between 50 and 1,000 employees felt

www.aberdeen.com

Managing your ACA Strategy: Maintaining Compliance through Automation and Integration

7

that their current technology would suffice, while only 44% of organizations with more than 1,000 employees did. The sheer size of these large organizations almost makes automated workforce management technologies an imperative. The administrative costs of determining eligibility and producing accurate reporting for both employees and the federal government, along with the penalty costs for not complying with the ACA, are much more pressing for large organizations as the fees and penalties assessed for non-compliance are calculated per FTE (full-time equivalent).

However, this does not mean that all is rosy in SMB land nor do these findings lead to the conclusion that an SMB's current technology will suffice. Rather it is more likely that SMBs may feel that because they are smaller they may be able to get by on what they have. This is a dangerous assumption for SMBs to make as they will likely not be appropriately positioned to scale as they grow.

Consider the Full Spectrum of Workforce Management Solutions

Regardless of size, all organizations should consider the full workforce management spectrum when thinking about technology to support ACA compliance.

Time and attendance solutions are most commonly associated with the ACA, as these solutions are designed to track and report on how many hours individuals work — a critical component to complying with the ACA. Time and attendance solutions can only track what has already happened, while scheduling and absence management can help plan ahead to avoid problems. These systems can help ensure that individuals who are not intended to work more than 29 hours in a week are flagged when scheduled hours exceed those limits, or to help recommend shift coverage from appropriate employees according to the business

Organizations that have implemented

automated time and attendance experienced

2x fewer costs associated with

unplanned/unbudgeted overtime.

www.aberdeen.com

Managing your ACA Strategy: Maintaining Compliance through Automation and Integration

8

rules organizations set. But organizations should also consider other components of workforce management, such as scheduling and absence management, as essential components to managing and executing their staffing strategy. Additionally, outside of workforce management solutions, organizations’ ACA strategies may influence things like recruiting — hiring more part-time workers, for example — or even learning and development, such as developing the skills of full-time workers to make them as productive as possible.

Benefits of Automation

Automation of workforce management has many benefits for organizations, and the ACA may present a compelling platform for organizations looking to automate for the first time. As shown in Figure 3, automation of time and attendance alone has significant organizational benefits, including improving the error rate (per payroll period) when it comes to processing payroll and tracking actual time worked as well as reducing the amount of unplanned or unbudgeted overtime.

Figure 3: Impact of Automated Time and Attendance

www.aberdeen.com

Managing your ACA Strategy: Maintaining Compliance through Automation and Integration

9

It is critical to harmonize a workforce management technology strategy with company goals in responding to the ACA. The decisions set forth in your ACA strategy must be integrated into how staff is scheduled, managed, and tracked. Technology solutions do not solve the challenges of the ACA, but they make implementing your strategy and reporting the results both internally and externally significantly easier.

Just offering health coverage doesn’t make your business ACA compliant. Another ACA complexity is on the horizon: required employer reporting. Starting in January 2016, all Applicable Large Employers (ALEs) who had 50+ full-time employees as of the end of 2014 will be required to file special IRS tax forms. Due to the information required in the reporting, businesses may need to analyze their HR technology capabilities. Gathering the required information for tax reporting may require pulling information together from a variety of different systems. Now is the time to review how that may be accomplished. Automation of time and attendance, scheduling and payroll is integral to this process, but even more vital is the integration of these systems to enable accurate and timely extraction of data.

A Culture of Compliance

While compliance is not the only goal of an organization’s ACA response, it is an essential one. Beyond the sheer cost of healthcare, ensuring plan compliance through continual monitoring of the ongoing changes to ACA and managing the administration and reporting required by the ACA were cited as the most significant challenges. In fact, the importance of these challenges has only increased since Aberdeen first started tracking data on the ACA (see Figure 4).

www.aberdeen.com

Managing your ACA Strategy: Maintaining Compliance through Automation and Integration

10

Figure 4: ACA Challenges 2013-2015

One important thing to keep in mind is that compliance is more than just writing policy and putting it into employee handbooks. It is about ensuring that managers and employees understand the intent behind policy, and that the intent lives within the organization’s culture. As your organization implements and refines its ACA response strategy, is important for managers to understand why these decisions were made, and ensure that when they schedule, track, and manage the workforce they understand and adhere to these decisions. It is also essential that these policies be defined and that organizations have consistent workforce management (time and labor management) processes across the organization. Best-in-Class organizations are 37% more likely to do this than All Others (50.0% vs. 36.4%)

When action is taken against a company for noncompliance, it is typically both the written policy, as well as the accepted norms of behavior that are taken into consideration. Without the

www.aberdeen.com

Managing your ACA Strategy: Maintaining Compliance through Automation and Integration

11

support of managers, organizations may find that their plan for response to the ACA is not fully implemented, and that both the anticipated cost, and organizational benefits are no longer in line.

Key Insights

The Affordable Care Act is a significant piece of legislation, and we can anticipate that the precise details of how it is implemented and the type of reporting required will continue to evolve as time goes on even after the January 2015 deadline. But all organizations with US employees should be thoughtful in considering their strategy to respond to the ACA, beyond just ensuring compliance. Organizations need to consider the technology they should put in place or use in new ways in order to manage ACA effectively and use reporting to build stakeholder buy-in. Compliance with the ACA and other employment laws requires organizations to take a strategic approach to their decisions around workforce management processes and technology and by doing so may find themselves at a competitive advantage. Top performers won’t stop at compliance, but will think through how their workforce management decisions impact their ability to attract and retain talent, as well. Whether maintaining position as a low-cost provider, or focusing on a high touch customer experience, organizations need to ensure that their workforce strategy, including ACA compliance, supports their brand and their position in the marketplace.

www.aberdeen.com

Managing your ACA Strategy: Maintaining Compliance through Automation and Integration

12

For more information on this or other research topics, please visit www.aberdeen.com.

Related Research Bottom Line Reasons for a Total Workforce Management Strategy; December 2014 Contingent Workforce Compliance: It's a Full-Time Job; September 2013

Will the Affordable Care Act Impact Your Contingent Workforce?; March 2014 The Affordable Care Act: Compliance is Just the Beginning; November 2013

Author: Ms. Michael M. Moon, Research Director, Human Capital (michael.moon@aberdeen.com)

About Aberdeen Group

Since 1988, Aberdeen Group has published research that helps businesses worldwide improve performance. We identify Best-in-Class organizations by conducting primary research with industry practitioners. Our team of analysts derives fact-based, vendor-agnostic insights from a proprietary analytical framework independent of outside influence. The resulting research content is used by hundreds of thousands of business professionals to drive smarter decision making and improve business strategy.

Aberdeen's content marketing solutions help B2B organizations take control of the Hidden Sales Cycle through content licensing, speaking engagements, custom research, and content creation services. Located in Boston, MA, Aberdeen Group is a Harte Hanks Company.

This document is the result of primary research performed by Aberdeen Group. Aberdeen Group's methodologies provide for objective fact-based research and represent the best analysis available at the time of publication. Unless otherwise noted, the entire contents of this publication are copyrighted by Aberdeen Group, Inc. and may not be reproduced, distributed, archived, or transmitted in any form or by any means without prior written consent by Aberdeen Group, Inc.