ACA Top Concern Handling the Administrative Burden
It’s no surprise that administrative burden overwhelmingly tops the list of ACA concerns expressed by employers in Mercer’s recent survey, Health Care Reform in 2014: Are We There Yet? About a third of them say that complying with the new requirements is a very significant concern; another 44% say it’s a significant concern. One reason for that is the constant stream of FAQ, draft regulations, final regulations, changes, and delays that employers must factor into efforts to comply with all the requirements of the ACA.
These numbers play out in a very tangible way in our day-to-day conversations with clients. It’s not at all unusual to learn that an employer has needed to add staff to help maintain ACA compliance — or that the costs associated with the development, printing, and distribution of the required communications have added significant expense to already stretched budgets.
Four issues in particular seem to be the source of much hand-wringing among employers.
1. All those fees!
The ACA now requires health plan sponsors and issuers to pay fees to fund two programs: the Patient Centered Outcomes Research Institute (PCORI) fee, designed to fund research on the use of comparative effectiveness in medical practice; and the Transitional Reinsurance Program (TRP) fee, designed to stabilize the individual insurance marketplace and provide revenue to the federal government.
Both PCORI and TRP fees apply to similar issuers and plans, and are calculated similarly based on the number of covered lives. However, they differ in which plans pay which type of fee, the amounts and due dates, who makes the payments, the methods used, and the permitted payment conduit (ERISA versus pass-through) — all of which add a high level of complexity to the process on top of the additional expense.
The majority of employers plan to share the cost of PCORI and TRP with employees, but smaller percentages will either add the full cost of fees to the employee contribution or simply pay the fees themselves.
2. Additional employee communications
2013 was the first year in which employers were required to develop and distribute the ACA’s new Summary of Benefits Coverage (SBC), designed to provide employees with standardized information they can use to compare plans and make decisions. This may be among the biggest communication challenges for employers. The SBC is an additional requirement (it does not replace any other communications), and it must meet very specific criteria for length, font size, required examples, etc. Employers also were required to provide all employees with an additional communication — the Exchange Notice — regarding the new public program.
3. Handling minimum loss ratio (MLR) rebates
Insurers must spend a minimum percentage of premiums collected on medical claims — 85% for the large-group market, 80% for small-group and individual markets. If they fall short of this minimum, insurers must provide a rebate to policyholders. Complicating the process for employers is their potential responsibility for allocating the pro rata amount of the rebate to each employee who is covered under the sponsored health plan that generated the rebate — a complicated and time-consuming task with a short timeframe.
According to the Center for Consumer Information and Oversight, MLR rebates in the US for all markets combined totaled slightly more than $504 million in 2012. The 2012 rebates were distributed in 2013.
4. More in 2015 — Tracking and reporting requirements
Tracking employee hours — both to determine eligibility for the 30-hour requirement and to support reporting requirements — is proving to be a large and time-consuming slice of the administration pie, particularly among companies with high populations of part-time, contract, and seasonal employees for whom variable “look-backs” can be complicated and tedious.
One of the most stifling issues for employers in meeting minimum essential coverage (MEC) and employer shared responsibility (ESR) reporting requirements is locating and aggregating the necessary HR, payroll, and health plan data, which are often in disparate locations. According to the recent ERIC Survey of Large Employers on ACA Reporting, 28% of employers say that integrating data from two or more different systems is their greatest first-year challenge in meeting the ACA’s tracking and reporting requirements.
With reporting guidance and tax forms for the 2015 plan year recently issued (and the first reports having deadlines in Q1 of 2016), employers need to be planning now to meet the ACA’s complicated requirements. We’ll go into more detail about reporting in my post next week.
While phasing in the ACA requirements over time was intended to make complying easier, it feels as if we’ll never be finished with it! As we move closer to yet another implementation date, employers should carefully consider whether they are tackling ACA’s added administrative responsibilities in the most efficient and cost-effective way possible — not only to maximize compliance, but also to minimize headaches.