In a perfect world, by now employers would have all their Affordable Care Act compliance systems up and running smoothly following the January 1 effective date of the law’s employer responsibility provision for employers with at least 100 employees.

In reality, a poll of more than 800 senior HR and benefits executives found that a majority both mid-sized and larger organizations are struggling with at least three key ACA compliance requirements: exchange notice management, annual health care reporting and penalty management. The study on the challenges in ACA deployment was conducted by the ADP Research Institute.

At the root of the problem at many organizations, according to Dave Marini, ADP’s managing director of Strategic Advisory Services, is that HR departments are now responsible for producing reports for the IRS that require the similarly detailed employee data which traditionally has been furnished by the organization’s payroll and finance departments.

Need for payroll, finance input

“This whole process is new, and HR needs to get the finance and tax people involved” in preparing reports such as the 1094C and 1095Cs that will need to be furnished to the IRS and employees after the end of the year, Marini notes.

Typical HRIS systems aren’t set up to pull in and integrate all the data that’s needed to satisfy reporting requirements, he says. For example, determinations of employee eligibility for health benefits, or combining employee hours worked for full-time equivalent calculation purposes, requires integration of absence management, FMLA, jury duty and military leave personnel information, among other data elements.  

At many smaller and mid-sized companies, “often that’s just done on a spreadsheet,” Marini says. The spreadsheet approach could create an enormous recordkeeping burden when detailed comprehensive monthly data for each employee is required to comply with ACA reporting requirements, he adds.


Among employers with 50-999 employees, only 46% of employers surveyed reported being prepared to handle annual health care reporting. Only a slightly larger percentage – 51% – of employers with at least 1,000 workers said they were ready.

Smaller proportions (33% for mid-sized and 38% for large) of employers said they’re ready for health exchange notice management. Similar numbers were reported for penalty management (36% and 40%, respectively).

In addition to limitations imposed by insufficiently integrated information systems, disparate job functions of all those who need to make ACA compliance happen contributes to this lack of preparedness, according to Marini. That’s the case at 64% of mid-sized and 59% of larger companies, according to the poll.

“A potential area of concern regarding the ACA involves the commingled administrative burden and associated financial risk of data quality and accuracy that supports documentation to the Health Insurance Marketplaces/Exchanges and the IRS,” warns ADP’s summary of its survey. “Incorrect data will likely result in a barrage of correspondence and complaints” from multiple parties, the summary adds.

Among the larger employer group, only 30% have outsourced ACA compliance tasks, a number ADP would like to see grow. Last fall ADP unveiled its “Health Compliance” service package; other vendors are also stepping up to fill the need for outsourcing these complex tasks.

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