While many employers are breathing a sigh of relief now that a major provision of the Affordable Care Act (ACA) – the Employer Shared Responsibility mandate (a.k.a. “Play or Pay”) – has been delayed one year until January 1, 2015, organizations should not sit back on their haunches. Much work remains to prepare for some of the most challenging compliance provisions of the ACA. 

ACA: Technology as the Key to Compliance

While many employers are breathing a sigh of relief now that a major provision of the Affordable Care Act (ACA) – the Employer Shared Responsibility mandate (a.k.a. “Play or Pay”) – has been delayed one year until January 1, 2015, organizations should not sit back on their haunches. Much work remains to prepare for some of the most challenging compliance provisions of the ACA.

For an organization with 10,000 employees, failure to comply with the ACA could cost up to $20 million in fines.

 

“Employers have unexpectedly received an additional year to prepare for these ACA requirements and need to take advantage of this opportunity. Employers should use this extra time to achieve their desired outcome. How an organization elects to offer health care coverage to its employees affects their employment value proposition and influences their ability to attract and retain top talent in a competitive marketplace,” said Eric Schuster, director of product management at Ceridian.

Under “Play or Pay,” employers with 50 or more full-time employees (or full-time equivalents, FTEs) must offer health coverage that is both “affordable” and of “minimum value,” or they may pay a penalty. Consequently, the mandate’s postponement is welcomed by many organizations. It gives them more time to acquire the means (i.e. technology) to determine which employees qualify for health care benefits under the new law.

The challenging part of complying with ”Play or Pay” is accurately identifying who qualifies as a benefit-eligible full-time employee, particularly for those employees who work variable hours. The fines for failing to offer benefits to qualified employees are thousands of dollars per employees, and for an organization with 10,000 employees, failure to comply could cost up to $20 million in fines. Consequently, technology that efficiently and accurately tracks and records employees’ hours will be critical. Without the right technology for making these calculations, employers will find themselves falling out of compliance with the ACA.

Compliance, technology and the ACA

In order to ensure compliance with “Play or Pay,” an employer must track and record an array of moving parts across human resources, time and attendance, payroll and benefits. Having capable technology in place can help with a variety of activities, including the following:

  • Accurately collecting and categorizing service hours
  • Identifying full-time employees
  • Offering benefits to employees
  • Managing eligibility periods
  • Evaluating affordability

“A single solution with one application and one source of data, such as Ceridian Dayforce HCM, can help alleviate compliance concerns associated with ACA because there are no interfaces to slow or skew the movement of data among HR, time and attendance, payroll and benefits systems. If data, including hours and pay codes, is real-time and synchronized, it can help accurately drive benefits calculations for employees,” said Eric Schuster, director of product management at Ceridian.

Identifying full-time employees under the ACA

For the purposes of eligibility under “Play or Pay,” the IRS defines a full-time employee as one who works an average of 30 or more hours of service per week, or 130 hours of service per month. When “Play or Pay” regulations go into effect, large employers will be defined as those employing on average at least 50 full-time employees (FTEs).

09-13 Dayforce Table Photo.JPGTo comply with the provision, organizations should begin determining now whether or not a variable hour employee is full-time by looking back at the employee’s service hours and evaluating those against the average 30 hours per week (or 130 hours per month) threshold during a standard measurement period. Measurement periods range from three to 12 consecutive, preceding calendar months.

Important to note is that any employee who becomes full-time at any time under this new definition is eligible for minimum essential health coverage. Employers that fail to provide this coverage may be subject to corresponding penalties.

Conclusion

Though implementation of “Play or Pay” has been postponed a year, employers are not in the clear. As a complex regulation, the provision comes with steep compliance penalties. Taking the time now to ensure that your organization has effective and accurate technology in place to help track employee hours and benefits eligibility will be vital in helping ensure full ACA compliance.

For more information:

  • Read the “Compliance with the Affordable Care Act” white paper 
  • Visit the Ceridian Compliance Center
  • Learn more about Ceridian Dayforce HCM