Indirect costs Associated with the Affordable Care Act
In addition to the direct costs associated with the health care reform, including the potential increase in premiums, employers should also be aware of the indirect costs which are associated with the Affordable Care Act. For example, employers may face penalties if they not meet certain responsibilities such as providing approved plans. Similarly, there may be costs associated with changing administrative process within the company to integrate the new benefit option. For companies who are not able to afford the cost of providing coverage, this may impact their ability to attract and retain staff, particularly when considering the penalties faced by individuals who do not purchase insurance under the individual mandate.
The increased level of administrative support required to effectively manage and monitor compliance with new regulations under the Affordable Care Act may also increase costs. This is particularly the case if employers need to hire new staff to undertake these tasks. There may be costs associated with new accounting process to manage the new tax compliance regulations. Alternatively, some companies may be required to update their existing infrastructure to ensure they are able to incorporate new regulation processes, such as W2 reporting requirements, and to ensure compatibility with carrier websites and health care exchanges. Employers may also choose to offer decision support tools to their employees to help them compare benefit plans by providing cost calculators, and find new ways to inform their employees of their health care options.
Fortunately, there are many highly effective software and application solutions which are increasingly being used by HR departments to help reduce the costs associated with benefit administration. These savings can then be reinvested and put towards the costs of purchasing group coverage. Integrated software solutions help to automate many tasks which were traditionally carried out by staff, such as payroll, benefit administration, updating employee data and premium collection. Benefit modules which are run over cloud computing, helps to streamline these processes, and reduce the costs associated with having staff manage these processes. They also prepare businesses for their new reporting responsibilities and help them to monitor their compliance with federal and state regulations. As not all changes under the Affordable Care Act will be implemented in 2014 but will be rolled out over the coming years, these integrated solutions are flexible enough to be customized and updated in accordance with the new changes taking place.
Many carriers, including private and public exchanges, are also providing administrative support to employers, such as providing their own decision support tools, providing customer support and user friendly accounting and invoicing services. They may also offer analytic tools to support market research, and help to analyze the types of health plans that employees are more likely to choose, their preferences and selection behavior. This can help guide companies in future decision making, choosing plans which are more suitable for their employee’s health care needs.