As more regulations continue to come into effect for employers under the Affordable Care Act, some with financial penalties, many employers report they are not prepared to deal with the slate of changes.
In a recent Ernst & Young webcast poll, 25% of employers said they were not ready to meet all the implementation requirements of the ACA. Of the 56% who reported that they were partially ready, they said they still have work to do.
Tax and finance departments, who historically relied on HR to handle compliance requirements, are facing the most pressure, says Juliette Meunier, partner in the Ernst & Young Human Capital Group in Los Angeles.
Finance managers have a lot on their plate and were forced to deal with the most pressing and highest priority items first, Meunier says. Due to all the various [ACA] delays and talk of repeal, many organizations wanted to make sure it was here to stay and waited [to] start working on it, she explains.
Further, the Internal Revenue Service had not issued much guidance about required compliance until about a year ago and final regulations for reporting did not come out until March 2014, making it difficult for finance/tax departments to comply, Meunier says.
The fact that employers are not ready is not surprising, says Steve Wojcik, vice president of public policy at the National Business Group on Health. Employers are feeling bewildered partially because forms and instructions for employer reporting just came out and require coordination across different functions and systems, he says.
Its important for companies to [understand] employer penalties, and important for employees with respect to their own liabilities, he adds. Its easy to imagine that some employers or somebody within a company is feeing this is a lot of work for them because it is.
Wojcik says many companies were not taking a wait-and-see approach but were already acting and trying to gather the information they could. Despite that, there are still no rules on the looming Cadillac tax. You can only get ready so much until the rules are finalized, he adds.
Not too late
Despite employers not feeling ready, Meunier says it is not too late to prepare as the major penalties will be assessed month-to-month. To get ready, Meunier says employers should:
- Understand their contingent workforce and their non-employees, and if those are common law employees that coverage must be offered too
- Make sure all information systems and data are ready to fill out IRS forms
- Be prepared to receive and respond to questions employees have about state exchange notices
Wojcik says employers have some time before the first reporting requirements which are for the calendar year 2015, although actual reporting isnt necessary until 2016.
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