The Affordable Care Act (ACA) has brought unprecedented complexity to the compliance efforts of U.S. companies. Among the many ACA questions for CFOs to consider is how to best adapt to the ongoing, multi-year implementation of the health care overhaul while simultaneously controlling costs and retaining talent.
According to a 2015 PricewaterhouseCoopers survey, only about 10 percent of surveyed companies had a solution in place, either via in-house resources or third-party vendors, to enable them to comply with the full compliance requirements of the ACA.
The following are four big ACA questions for CFOs to investigate for their organizations:
1. How Much Will the ACA Change the Company's Health Care Offerings?
This is a complicated question, depending on the choices you make. Employers have an array of possibilities to consider as they comply with the ACA to offer health insurance benefits to their employees. Depending on the needs of your organization and industry, creative options could include health savings accounts, enhanced employee wellness programs, self-funded plans, HMOs, private health insurance exchanges, in-house medical services and Medicaid. Work closely with your leadership team, advisers and third-party providers to develop the best solution for your needs. Carefully consider whether to pass additional health care costs onto your employees and what the impact might be if you do.
2. How Will the ACA Affect Hiring and HCM Strategies?
Despite the law's intent to expand coverage and control health care costs, the ACA will likely raise your company's health care-related costs, both directly and indirectly. For instance, the ACA will impose a "Cadillac tax" of 40 percent on high-end health plans starting in 2020. Additional indirect costs will arrive through developing the capability to aggregate and report ACA compliance-related data. The reporting requirements of the ACA will place increasing stress on your IT systems and compliance teams to be more agile in meeting the evolving data demands of ACA compliance, so be sure to question and evaluate your IT readiness.
Consider expanding your compliance capabilities, whether by recruiting talent to bolster your in-house team or by seeking third-party vendors with ACA expertise. Long-term strategic implications will be as important as looking at short-term costs.
"When we have discussions about health care with CFOs, they start on cost and end on cost," according to Paul Keckley, executive director of the Deloitte Center for Health Solutions. "Having a wider view of the implications of some of the costs or potential changes to health plans can benefit CFOs as they take on a bigger strategic role."
3. How Will We Monitor the Ongoing Implementation of the ACA So We Can Stay Ahead of the Curve in Our Compliance Efforts?
Be sure you understand what the ACA requires and when those requirements will go into effect. Then, assess your company's level of preparedness to meet the ACA's evolving demands. For example, if you face compliance gaps as deadlines approach and big ACA penalties loom, you can expect to either pay to bring in know-how at the last minute (and in a tight market for ACA capability) or pay penalties related to noncompliance. Either way, you'll need to spend appropriately to have a good answer to this question.
4. How Will We Coordinate the Collection and Reporting of Our Employee- and Health Care-Related Data?
To ensure compliance with the ACA, reevaluate your IT systems and any data silos you confront. Integrating systems within HR that hold disparate informatin (payrol, benefits, time tracking, etc.) to support data sharing and reporting will be a key component of ACA compliance.
Keep in mind, however, that you will be coordinating data across systems that carry sensitive employee information. Work with IT to ensure that you have the right security measures in place. Consider limiting the access to any integrated systems to one or two people within HR.
ACA compliance will remain an increasing challenge for U.S. companies. CFOs will have a heavy burden in staying ahead of regulatory changes, building ACA compliance capabilities and keeping their compliance teams prepared. Asking the right questions will help CFOs lead their organization's efforts to remain compliant while controlling costs.
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