4 employer challenges brought on by ACA compliance

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Complying with the Affordable Care Act has put employers “through hell,” and a look at the future “is scary,” Brad Mandacina, AVP and director, HR technology at Lockton, said Thursday at a conference in Park City, Utah.

Compliance has created four key areas of frustration for employers, he explained at the conference sponsored by PlanSource.

1) Employers played the waiting game

Employers created a handful of problems themselves, Mandacina said. These employers played the waiting game of thinking compliance requirements would be further delayed or eliminated.

He provided an example of a client with 300 employees who was struggling with aggregating data. The HR department went to the company’s CFO, who told HR, “’If it is difficult for us and we are 300 lives, the IRS is not going to let this process go through,’” Mandacina recalled.

“Employers waited, they wanted to see,” he explained. “The first extension by the IRS was a blessing, but also a curse because it gave [employers] false hope that [they] might not have to do this.”

2) Employers didn’t understand ACA requirements

Employers did not know what was required, what they had to do and where to get the data from, “creating a lot of problems,” Mandacina said.

Lockton has fielded multiple questions about compliance, including employer questions of what qualifies as a full-time employee and what goes in each box on IRS reporting forms. “A great deal of confusion caused problems and it was almost an intentionally confusing type of process,” Mandacina explained.

3) Employers lacked appropriate resources

HR departments thought they would just need to fill out a simple IRS form and had no idea of the scheme the IRS required, they now need the help of IT and payroll departments, Mandacina said.

“HR people were like, ‘I’ll just do this all on my own,’” he added. “And that was a difficult thing.”

4) Vendors couldn’t handle the basics

Many HR departments outsourced the help from vendors, but vendors failed, as well. When Mandacina evaluates vendors for clients, he said he looks at “who screwed up the least. Nobody was free from sin — everybody made mistakes.”

He said multiple vendors, whom he declined to name, shared incorrect information with clients. “There was so much bad advice, so much misinformation,” he explained.

Broker’s role

These challenges all present an opportunity for brokers whose most important role is to serve as a client and adviser and “look for solutions that solve problems, rather than just vendors,” said Les McPhearson, CEO of United Benefits Advisors, an organization of more than 140 independent employee benefits advisory firms, in a conversation after the conference session.

“Post ACA … the best brokers have embraced their role as a consultant and trusted adviser,” McPhearson explained. “Compliance plays a big role. For most employers … they have to turn somewhere and they turn to their brokers in many cases.”

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