HR, HR Technology

Aligning HR Software Platforms with PPACA Compliance Requirements

The Patient Protection and Affordable Care Act received a fresh breath of life following the decision of the Supreme Court to uphold it. As a result, some major health care reforms are expected, and companies are preparing themselves for the expected changes. One of the important considerations is aligning HR software systems with the requirements of the act.

New Compliance Requirements

• Automatic enrollment
• New employee counting guidelines
• Employee notice requirements
• Employer reporting requirements
• Nondiscrimination requirements
• Fees and “Cadillac” taxes

Importance of Realignment

Many organizations have fragmented human resource, benefit and payroll systems, which lead to a chaotic environment. Such an environment leads to problems like:

• Inefficient manual processes
• The use of multiple databases and platforms
• Difficulty in visualizing the total amount spent on human resources, payroll and benefits
• Communication breakdown between employers and their employees and between employers and vendors

A Price Waterhouse Coopers study determined enterprises could save between 18 and 32 percent when they optimized silo approach into continuum approach. The study considered what organizations paid per employee per year when handling workforce administration, payroll, health and welfare as well as time and attendance. The results showed that midsize companies spent 43 percent more than their larger counterparts.

Internal silos in companies can lead to inefficiencies and risks in qualifying and quantifying PPACA impacts, which may prove costly. Organizations cannot avoid some costs but many find that they spend their HR budget unnecessarily. According to a recent study that Towers Watson conducted, 63 percent of organizations are changing their major HRIS and payroll processes to streamline their respective business and human resource strategies. Such streamlining requires a number of steps.

EDI and EFT Systems

Organizations must consider the way they handle their electronic data interchange (EDI) and electronic funds transfer (EFT) systems. EDI refers to the systems through which two parties exchange data over computer networks while EFT systems are networks people use to either make or receive payments. The systems are used for automating and streamlining critical administrative processes in organizations.

Employers must establish bi-directional data interchange interfaces between their HRIS systems and enrollment solutions, which must securely provide seamless reconciliation and accounting services between providers, TPAs and carriers. Such systems must monitor, manage and transmit eligibility, enrollment and participation of benefits programs confidentially and electronically.

W2 Reporting

Organizations must determine the best way to manage W2 reporting systems. The PPACA requires large employers to report the respective values of:

• On-site medical clinic benefits
• Major medical benefits
• Certain Flexible Spending Account benefits
• Some vision or dental benefits
• Different employer-paid benefits, such as hospital and critical illness benefits

Standard-setting authority provisions for these systems were added to the PPACA to minimize overall administrative costs in healthcare systems. The Department of Health and Human Services issued an interim final rule for standardizing the transactions. The Council for Affordable Quality developed operating rules for EFT transactions in the healthcare industry, which the HHS has adopted.

Making necessary adjustments helps companies to increase employee satisfaction and broaden plan options while they put more money into their businesses. In addition, accessing accurate and consistent workforce data across silos helps in determining PPACA impacts on an organization.

Leave a Reply

Your email address will not be published. Required fields are marked *