Understanding the Affordable Care Act — Where We've Been and What to Do Next

Colleagues examine documents on compliance around a table

"There aren't a lot of experts out there that understand the intricacies of running eligibility and affordability calculations monthly, looking at the data across every single employee and doing that in a very simple fashion. How do we help elevate clients' and prospects' understanding of the ACA but also simplify it for them?" — Michele Tomassetti, DVP/GM of Health Care Reform for ADP's Compliance Solutions business unit

The Affordable Care Act was enacted in 2015, and since its inception, organizations have faced the challenge of understanding and complying with its mandates. To combat this, employers have turned to outside providers to handle some or all of the ACA's components.

In this post, Michele Tomassetti, DVP/GM of Health Care Reform in ADP's Compliance Solutions business unit, provides takeaways on four key questions for readers looking to manage ACA compliance.

1) What is most challenging about the Affordable Care Act for organizations currently?

"The ACA has only been in effect since 2015," says Tomassetti, "so unlike payroll, there aren't a lot of true ACA experts out there."

The ACA is unique because it is the first mandate that requires employers to compile various forms of organizational data monthly — benefits, HR, payroll, multi-employer, leaves — and use that data to determine whether the organization is compliant. This requirement means that there's a risk of data conflict, which can lead to penalties.

"It's critical to understand the intricacies of running eligibility and affordability calculations monthly, how this data impacts monthly penalty exposure by FEIN, how to look at the data across every single employee – and doing all that in a simple fashion," says Tomassetti. "Our goal is to be both a strategic partner and to simplify all aspects of ACA for our clients."

To continue to evolve offerings and to support clients' needs, Tomassetti's team engages a very active client advisory board. The body meets about 10 times a year and includes representation from about 50 clients. The outputs from these sessions directly impacts how ADP helps organizations manage their ACA compliance.

Through these strategic sessions, Tomassetti's team established a plan to review the ACA's evolving requirements monthly and successfully refined the review process by upgrading clients from a manual solution to a technology-driven one.

"This includes innovative technology that streamlines data accuracy, a service model that provide strategic guidance, and the ability to proactively help clients do the right work on a regular basis to minimize their exposure to IRS penalties," says Tomassetti

2) What have we learned since the Affordable Care Act came into effect?

Tomassetti has been involved with the ACA since its launch in 2015. In the beginning, employers focused their attention on preparing and delivering forms. Then, in the fall of 2017, the U.S. federal government began activating additional pillars of the ACA. For example, the threshold for how many ACA-eligible employees to whom an employer had to offer health insurance was 75 percent in 2015, and that compliance threshold rose to 95 percent in 2016.

The ACA being repealed is incredibly unlikely — it's here to stay. At the end of the day, it's likely to be more complex.

- Michele Tomassetti, DVP/GM of Health Care Reform, ADP's Compliance Solutions business unit

Additionally, the first IRS penalty notices were issued in fall 2017 for the 2015 tax year. Roughly 50,000 notices worth $4.5 billion were distributed to the applicable large employers. In 2018, 37,000 notices were distributed.

This highlighted the fact that organizations need to understand all the pillars of the ACA and, according to Tomassetti, helped put ADP "into a position of strength because we had a very robust offering that was comprehensive... and covered all aspects of the ACA."

Tomassetti says that one of the key lessons we've learned since the implementation of the ACA is that clients need a provider not only to help get forms out the door, but also to simplify the ACA process for them.

3) What risks can be mitigated through solid internal business practices? Which ones should be outsourced to outside partners?

Tomassetti says that, for employers, "The tightest business practices should be around putting in the proper and enhanced rigor around how you manage your employees' data."

Data is captured through both system and people actions. Some of these include hiring, benefit offerings, job status change, payroll, etc. Employers should check that their data entry processes are standardized to ensure the accuracy of employee data in a timely fashion. Miscalculations in your monthly results, can trigger an IRS penalty which are assessed monthly.

Outside partners can provide full service expertise, which may include assistance with matters ranging from tracking eligibility, affordability, and safe harbor data to printing forms or transmitting data to the IRS. They can even handle responding to the IRS in the event of a penalty. A full service approach also tends to increase organizational satisfaction, ADP Research Institute's® 2018 ACA Pulse Check report shows.

Tomassetti recalls how one variable workforce client of approximately 10,000 employees previously used a system that only aggregated data and produced forms. This meant that they didn't have strong internal practices for reviewing and reconciling data inaccuracies, which resulted in form inaccuracies and a multi-million-dollar penalty.

They were not taking advantage of ADP's penalty management service at the time, and this took place during a tax year when ADP was not a provider for this client. However, Tomassetti and her team took the time to help them through the penalty process, and the organization has since upgraded to ADP's penalty management service.

4) What should business leaders consider next?

According to the 2018 ACA Pulse Check report, 44 percent of large employers believe that the future of healthcare reform will include "more burdensome" developments. Tomasetti agrees with this assessment.

"The ACA being repealed is incredibly unlikely — it's here to stay. At the end of the day, it's likely to be more complex," she says. Adding to the complexity, a number of states and municipalities (New Jersey and Washington D.C., for example) are looking to add additional reporting requirements.

Tomassetti recommends that organizations focus on finding the most effective ways to streamline their assessment processes. To reduce their exposure to penalties, businesses must ensure that their data-keeping practices are accurate and review the requirements for ACA compliance monthly.

With their technology solutions, deep understanding of the ACA's pillars, and effective service structure, Tomassetti and her team put their clients in a proactive position to manage their compliance and penalty risks effectively.

Take the Quiz

Whether or not you're certain you have it down, take our ACA compliance quiz and see how your knowledge compares to our survey respondents. After taking the quiz, you'll have the opportunity to see your results and get a copy of the ADP report: ACA Compliance: Confidence, Confusion, and Change.