At this point in employer implementation of the U.S. Affordable Care Act, there's probably only one clear takeaway. Unfortunately, it's that very little is clear. Meanwhile, the clock ticking down to 2014 -- and open enrollment for new insurance plans this fall -- grows louder every day.
The problem is the federal government has yet to flesh out a number of regulations for "Obamacare," and the high degree of uncertainty is making it difficult for employers to proceed. "For us, it's like we're in the backseat of an old jalopy," said Dan Lombardo, president and CEO of charitable organization Volunteers of America Delaware Valley, headquartered in Collingswood, N.J. "We're just going up and down as we hit every bump, and we're not sure where we're going."
Despite the uncertainty, experts offered some action items for how employers can proactively prepare. But even with webinars and reports from vendors and consultancies, without official word from the government, business leaders are left scratching their heads.
More on workforce management technology
Get tips on how to select time and attendance software
Discover strategies to combat employee resistance to a new workforce management system
Find out how time and attendance software can cut labor costs
"I think there's a lot of misinformation because those regulations are being drafted right now, and until you get something from the IRS, it's ambiguous," said Chuck Kelly, CFO of Volunteers of America Delaware Valley. "You always try to make the best decision with the information you have on hand, [but] there's not a whole lot."
Businesses trying to balance ACA costs with customer service standards
Since proportions of part-time workers vary widely among industries and even specific businesses within industries, it's difficult to generalize how employers are approaching workforce management in the wake of the Affordable Care Act. However, many are reducing part-time workers' hours to under 30 per week to prevent them from becoming benefits-eligible, and Kelly said his organization plans to employ this strategy to manage costs.
Kelly also expressed frustration at the government's definition of a full-time worker as one who works 30 hours or more per week. Volunteers of America defines part-time employees -- which represent approximately 20% of its workforce -- at 34 hours, and "32-36 hours [is] a pretty standard guideline," he said. "In no business is 30 hours or more defined as a full-time worker."
Christine Pollack, vice president of government affairs at the Retail Industry Leaders Association (RILA), pointed out that managing hours to less than 30 per week is not easy in the industries she works with, such as retail, grocery and pharmacy, where schedules fluctuate. "For my companies, it's not as simple as saying you're going to be below and you're going to be above 30 hours -- it's how do you schedule people to make sure you have coverage."
Todd Black, product marketing manager at workforce management software vendor Kronos, said this has been a common sentiment among the customers he's spoken to, mostly at larger businesses. "Most organizations are looking at it from a standpoint of making sure they have the best resources in place in order to continue on their level of customer satisfaction," he said. "So it's not necessarily how much am I going to pay in penalties or benefits going forward. It's more how is this going to affect our bottom line and customer satisfaction if we choose strategy A, B or C."
But Kelly said small employers in his industry are acutely aware of the balance between potential penalties and the cost of benefits, especially when taking annual cost increases of healthcare into consideration -- which the Affordable Care Act has done nothing to curtail, in his opinion.
"If an employer is paying $4,000 per individual for healthcare coverage and the penalty is $3,000, every employer in that situation sees a business decision -- its 25% cheaper if you have the federal government do it," he said. "That may not be something that's going to happen in year one or two, but if you're experiencing double digit increases in [insurance] cost, the decision's going to be made for you." Lombardo added that the cost of his organization's healthcare benefits increased by nearly 30% from 2012 to 2013.
Compliance report still undefined
A major sore spot for employers nationwide is the number of Affordable Care Act regulations that have yet to be defined. For instance, the compliance report they will be mandated to submit to the government is still hazy. "A lot of the customers we've been talking to are anxious to see what the report will look like and what data elements will go into [it]," Black said.
Pollack said the report will likely require data from a variety of sources, which will be a taxing feat to assemble. "Some of [the data] is in-house, other data points are through vendors. So I call [those] reporting requirements death by a thousand paper cuts, because it's a tremendous IT burden," she said. "And businesses have to start gathering this information, but we don't have regulations yet."
Kelly said it's also unclear how the government-funded health insurance exchanges will operate, which adds to employer's unease in choosing whether or not to extend benefits. "What are the prices going to look like when the exchanges are set up? We have no idea. Are they going to be competitive? Who knows," he said.
Preparing IT systems for ACA no simple task
In addition to adjusting workforce models, organizations will also have to examine their workforce-related systems to make sure the time and attendance, benefits management and payroll components are all "talking" with each other.
For us, it's like we're in the backseat of an old jalopy. We're just going up and down as we hit every bump and we're not sure where we're going.
president and CEO,
Volunteers of America Delaware Valley
Indeed, Pollack said the delay in regulations is especially frustrating because readying systems for compliance will be a significant undertaking. "IT system development takes a long time, and there's a misperception in the administration that it's just a flick of the switch," she said. "One of our companies did a timeline: To get their IT systems up for all the requirements, it's going to take 18 months from the time we get regulations."
Because aligning disparate systems from a variety of vendors is challenging, implementing integrated platforms, or adopting additional modules from a current vendor, could become an attractive option. Black said he has already seen a slight uptick in Kronos sales due to the Affordable Care Act, both among current and new customers, and he expects the trend will accelerate as 2014 draws nearer.
Volunteers of America uses Ultimate Software's UltiPro for payroll, benefits and time and attendance, and Lombardo said integration between modules was a key reason why the organization adopted it two years ago. "We had a trifurcated system in the past, and it just becomes dysfunctional after a while," he said. When asked if the organization is undertaking any special systems preparation for Affordable Care Act implementation, Kelly said they are more concerned about keeping a closer watch on hours, but that UltiPro could help achieve that end.
ACA action items for employers
Black recommended that employers analyze internal workforce data to determine look-back periods and note how many employees currently fall above or below 30 hours per week, and talk with benefits providers to see if any new healthcare plans need to be offered.
"Most of the folks I've talked to are behind the curve in that respect -- they haven't started to talk to benefits providers yet," Black said. He added that if employers do not offer low-cost health insurance plans, they risk losing valuable employees to competitors that do.
Pollack said business leaders should educate themselves. "First and foremost, businesses need to realize that this is the law of the land, and they should remain vigilant in knowing that there are still so many moving pieces to the law," she said. "I would recommend that businesses look on the federal department's website, and not trust everything they might see on TV or hear on a radio."
But while Kelly reads as much as he can, both he and Lombardo said it's hard to know how the Affordable Care Act will play out.
"It's not like that old [saying] -- just hum a few bars and we'll pick it up. It's far more complex than that," Lombardo said. "So if you hear question marks in our voices, it's [because] we're listening to everything we can, but we really don't know how it's going to evolve."
Emma Snider is the associate site editor for SearchFinancialApplications.com. Follow her on Twitter: @emmajs24.
This was first published in April 2013