Compliance is a major issue in todays post-Affordable Care Act world of employee benefits for advisers and employers alike. It has never been more important than it is now, says Beverly Beattie, CEO and founder of Miami, Fla.-based Seldon Beattie Benefit Advisors.
Compliance has become this big monster to deal with, says Beattie, yet many employers arent fully aware of their responsibilities and assume theyre complying with the law. We find that there is still a big mentality of, My brokers got me covered, she says. Theres a false sense of security there.
Its critical for advisers to ensure their clients are fully compliant, Beattie says. A good measuring stick for advisers is to ask if their clients are prepared if they receive a Department of Labor audit letter. Every single employer should be DOL audit-ready, she says.
Thats difficult for employers to manage, especially given a constantly developing compliance environment, says Suzanne Spradley, senior vice president, senior counsel at NFP. Every month, theres something new or something is changing, she says. I see such a reliance on the broker for keeping employers up to date. It is an enormous advantage for brokers that can do it well.
Consolidated system helps manage compliance
Staying compliant takes time and money and using separate systems to manage compliance costs both. Yet, many businesses continue this practice.
Companies appear to be wasting valuable resources by maintaining disparate IT systems or using manual processes to remain compliant with laws and regulations governing their workforces, according to a study by ADP, a human capital management solutions provider.
Half of companies use multiple, separate IT systems or manual processes to manage their HCM-related compliance, according to the study done in collaboration with CFO Research, the research group at CFO Publishing LLC. That lack of integration is costly 78% surveyed said it increases their companys compliance costs. Sixty-two percent said the attention needed for HCM compliance was a drain of resources, according to the survey of 161 senior finance and HR executives at U.S. companies with at least 250 employees.
The survey also found:
- 57% said entering or updating data takes more effort than it should.
- 40% said the time and effort needed for compliance substantially or moderately increases the cost of complying with the ACA.
- 24% said their companys management rarely or never uses compliance data to support their business decisions.
Staying compliant also uses a companys valuable time more than one-third surveyed said theyre spending more time on HCM compliance than two years ago. The research clearly shows that many companies are wasting resources and increasing their risk by using time-intensive manual processes to manage disparate systems for HCM-related compliance activities, says Doug Politi, ADPs president of added value services.
Brokers, too, are feeling the time-related effects of compliance.
More time is being spent on calls about compliance, Spradley says, and brokers are spending less time on sales and therefore interact with fewer clients a day. Still, helping clients with compliance is crucial. NFP address more than 500 compliance-related questions each month, about half concerning the ACA, Spradley says.
The ACA has brought compliance to the forefront employers are also asking about ERISA and HIPAA and Spradley doesnt see that decreasing anytime soon. The compliance questions will continue, she says.
Compliance management programs miss the mark
The programs used to manage compliance are inadequate at a majority of businesses. The study found that 58% of respondents graded the usability of their software systems and applications a C or lower. Nearly one-third said their companys system was difficult to understand, and 42% said they dont have access to real-time, consolidated compliance data via a dashboard or another technology platform.
Companies know this trend cant continue 80% said making their companys compliance system easier to use is important. Businesses that use disparate IT systems are more likely to face penalties for noncompliance, as their existing systems cant keep up with the pace of changing regulations and dont keep companies fully compliant, ADP says.
Nearly four in 10 said improving existing compliance technology would benefit their company the most, while 26% said investing in new technology is the way to go and 24% said consolidating is the best choice.
Finance and HR leaders are eager to support innovation at their companies, and innovative companies want every activity they pursue including compliance to capitalize on data and analytics to help drive strategic, profitable growth, says Celina Rogers, vice president and editorial director at CFO Publishing. This research shows that finance and HR teams are increasingly looking for unified, secure compliance solutions to help them drive business efficiencies and create the conditions for sustained growth.
Register or login for access to this item and much more
All Employee Benefit Adviser content is archived after seven days.
Community members receive:
- All recent and archived articles
- Conference offers and updates
- A full menu of enewsletter options
- Web seminars, white papers, ebooks
Already have an account? Log In
Don't have an account? Register for Free Unlimited Access