Without much stretch of the imagination, it’s easy to picture Affordable Care Act (ACA) compliance as a jigsaw puzzle. Like a puzzle, the pieces of this regulation are complex, filled with minute details, and fit together in a very specific way. As organizations delve into the mandates of health care reform, they are quickly realizing that payroll is a critical piece for compliance. 

Fitting 4 payroll pieces into the ACA compliance puzzle

Without much stretch of the imagination, it’s easy to picture Affordable Care Act (ACA) compliance as a jigsaw puzzle. Like a puzzle, the pieces of this regulation are complex, filled with minute details, and fit together in a very specific way. As organizations delve into the mandates of health care reform, they are quickly realizing that payroll is a critical piece for compliance.

Hackett Survey ResultsThe far reaching requirements of the ACA have made compliance a top issue for payroll as well as HR. According to Felicia Cheek from The Hackett Group, “The Affordable Care Act will have an impact on payroll and will require payroll to work across functional lines to ensure corporate compliance. Payroll leaders need to be engaged in the planning process as early as possible.”

A recent survey commissioned by Ceridian and conducted by The Hackett Group found that 68 percent of respondents indicated the ACA is the most challenging compliance issue facing senior payroll professionals. However, 70 percent of respondents stated their payroll leaders have limited involvement or are not involved at all in the ACA compliance decision making process.

“In order to efficiently and accurately comply with the employer requirements of health care reform, the HR and benefits departments must collaborate with payroll. Organizations should not only involve payroll in the ACA planning and implementation process, but also must defer to the department’s expertise,” said Web Hill, senior vice president for Ceridian.

4 payroll pieces of the ACA compliance puzzle

Puzzle Piece #1: Determining ACA full-time employees

Under the ACA, organizations must carefully track who is considered a full-time employee – i.e., those who work an average of 30 or more hours per week. Organizations should partner with payroll to establish a look back measurement period for determining if employees meet the full-time threshold. However, 69 percent of survey respondents answered "no" when asked if their current system was able to accommodate part-time employees who work more than 30 hours a week by sending immediate and electronic notification to the appropriate parties. Effective synchronization with payroll will ensure that appropriate action is taken once employees meet ACA full-time status.

Puzzle Piece #2: Evaluating when coverage must be offered

Once organizations establish a process for determining employees’ full-time status, they must offer health care coverage for each month an employee works 30 hours or more. Payroll plays a key role in this process by calculating employee hours worked and reporting to HR if individuals reach the 30 hour threshold. Unfortunately, only 2 out of 5 survey respondents reported their time and attendance technology is integrated with payroll. This lack of coordination between systems makes it difficult for payroll to accurately track employee hours.

Compliance worries of HR and payroll professionalsPuzzle Piece #3: Providing data for affordability calculations

Under the ACA, the health care coverage organizations offer to employees must be affordable. This means that employee’s share of the health insurance premium, for self-only coverage, cannot exceed 9.5 percent of the employee’s W-2 wages. A strong partnership between HR and payroll will help organizations streamline the process of comparing employee wages to their insurance premium.

Puzzle Piece #4: Reporting to the IRS

Beginning in 2016, the health care law will require employers to annually report details of employer-sponsored health coverage to the IRS and to their full-time employees. HR professionals will need to begin collecting data in 2015 in order to accurately complete forms 1094-B, 1094-C, 1095-B and 1095-C. Much of the reporting information HR will need is housed with payroll, which will require the two departments to develop a systematic way of sharing information.

“It is impossible for the HR department to meet the plethora of ACA compliance regulations on its own. Compliance success requires collaboration not only between HR and payroll, but also between technology systems. HCM technology, like Ceridian Dayforce HCM, simplify compliance by performing hour calculations in real time, calculating employee benefit eligibility and accurately collecting and categorizing service hours.”

For more information:

  • View the SlideShare presentation Compliance Issues Here, There & Everywhere
  • Read the CeridianVoice article Don’t Rest on Your Laurels - More ACA Compliance in 2015
  • Learn more about Dayforce HCM