On June 25 in a 6-3 decision, the U.S. Supreme Court ruled that millions of Americans will retain their right to receive federal health care subsidies under the Affordable Care Act.
For employers, this meant that any hope of avoiding the bevy of reporting required by provisions such as the employer mandate, individual mandates and the pending excise tax, known as the “Cadillac tax” was lost. Employers must continue to work to comply with ACA legislation.
“Employers and individuals alike will be able to continue their planning for ACA compliance now knowing all exchanges will be treated the same,” said Gary Kushner, president and CEO of Kushner & Co., a Michigan-based benefits consulting firm. “It also means that the employer responsibility provisions of the ACA will be unaffected. Any employer holding back on their planning in anticipation that the Court would overturn some or all of the ACA should get started immediately.”
If they weren’t before, employee benefits managers are now very much on the hot seat. Even though the legislation is five years old, many still feel underprepared to comply with the ACA’s upcoming deadlines.
According to a 2015 Guardian Workplace Benefits Study, even though 61 percent of employers surveyed reported that they understood the importance of preparing for the post-health care reform era, only 40 percent felt they had successfullyprepared to meet the ACA’s mandates.
“There were some people that kept hoping the ACA is going to go away,” said Scott Kirschner, director of benefits strategy at Iron Mountain Inc., an enterprise information management services company headquartered in Boston. “I think that some other companies woke up and realized it’s 2015 and they have to do this in a year, so they have to get going.”
As a result, many benefits managers have turned to technology. The same Guardian survey found that 47 percent of companies with more than 1,000 employees intended to outsource some portion of their benefits administration processes in the next year. Companies with fewer than 1,000 employees aren’t far behind, with 30 percent intending to do the same, the survey said.
But compliance isn’t their only concern. Employers are also demonstrating a renewed interest in helping their employees make better benefits decisions. On a 10-point scale, the Guardian survey found that employers ranked helping employees make better benefits decisions at 7.5 and providing benefits education at 5.8.
For Ben Jackson, executive director of health and welfare benefits at telecommunications firm AT&T Inc., these two goals can be achieved by creating an engaging benefits platform.
“A key tenet for benefits, particularly on our health care team, is that we want our participant experience and our employee experience to align very closely with our core function as a company,” Jackson said. “That means that we want to connect people to their benefits, and we want to leverage our core tech to enable that to create a frictionless, effortless experience.”
Finding a balance between designed platforms that engage employees to make benefits decisions and the necessity of a technology that can handle ACA compliance is the biggest challenge for benefits managers.
Obey the ACA
The two most pressing issues that human resources technology can solve for a benefits manager is helping accurately count full-time employees and subsequently offering employees health insurance coverage that meets the affordability test under the ACA legislation, said Jayson Saba, the vice president of strategy and industry relations at Ceridian, a human resources software provider headquartered in Minneapolis.
The employer mandate states that all businesses with 50 or more full-time-equivalent employees must offer affordable health care insurance to at least 95 percent of their full-time employees and dependents up to age 26 or pay a fine. Affordable health insurance is defined as coverage costing less than 9.5 percent of an employee’s gross annual income.
The problem with achieving this goal, however, is that it requires payroll and benefits — areas of a company that are typically separate functions — to work together.
“Benefits and HR are tasked with working on long-term planning and making the employer a good employer of choice — all the sexy stuff that we hear about at the conferences we attend,” Saba said. “They don’t want to deal with the nuts and bolts of hours worked and tax filings. But with the ACA, there is no offshoring of that responsibility and getting away from that burden and putting it on payroll. HR, benefits and payroll have to work together.”
That means if an employee crosses the 30-hour-a-week threshold that defines a full-time employees, payroll needs to alert the benefits manager so that an affordable health care policy can be offered to the employee. Benefits must then communicate the plan selection to payroll to ensure that the appropriate amount of money is deducted from the employee’s check each pay period, Saba said.
Achieving this goal requires a nimble technology software that is able to integrate payroll, time and labor data; leave of absence data; and then health plan data, said Gerry Leonard, president of benefits services at HR benefits firm ADP.
“A robust solution will run through weekly payroll fees and automatically figure out who is eligible for benefits,” Leonard said. “It then takes those eligible for benefits through a process reviews absence data and all of their ‘look back’ data. If they’re still eligible for benefits, it will direct employees to a tool that will help them make a plan decision. If they’re not eligible for benefits, they will be given the option to move off into public exchanges.”
Typical vendors are not equipped to seamlessly integrate tasks that cross department lines, Saba said. To compensate, they partner with smaller, specialty companies to try and fill in the gaps. Saba cited the partnership between Kronos Inc., which has strong time and attendance software, and ADP, which specializes at tax filing. Unfortunately, when benefits managers attempt to patch together different products themselves, the result is often ineffective and expensive.
Iron Mountain, for instance, partnered with health care tech firm bswift to handle its compliance issues, Kirschner said. Its product provides the integration Saba and Leonard describe while also producing the necessary 1094-c and 1095-c forms that must be filed with the IRS to prove that health insurance was offered.
In speaking with colleagues in the industry, Kirschner said he has found the biggest complaint to be the high cost of having to use separate vendors for each part of the reporting process.
“Their existing benefit administrator is not going to be able to accommodate them, so they’re having to look at stand-alone solutions, and some of the stand-alone solutions are really expensive,” Kirschner said. “Some of my colleagues are paying upwards of $200,000 for a solution. We pay a tenth of that using a single vendor.”
Furthermore, employers can accrue fines of up to $3,000 per employee for incorrectly filling forms with the IRS.
The industry seems to agree with Kirschner that fewer vendors are the way to go. According to the Guardian survey, 58 percent of companies with more than 1,000 employees are reducing carriers to cut costs and improve efficiencies.
Not Just a Pretty Face
Once benefits managers have gotten the government off their backs, their focus can turn to helping employees get the best health insurance. At AT&T, this begins with providing employees with technology that allows easy access to the company’s health care portals regardless of where the employee is based.
AT&T currently has 240,000 employees — a number that will likely reach 300,000 now that the Federal Communications Commission approved its merger with DirecTV. With employees spread out across 56 countries, Jackson needed software that met a variety of needs.
“The way that we interact with them is going to be different and on different timelines,” Jackson said. “What we’re very focused on in benefits is unlocking the necessary channels to engage employees. Whether that’s company portals, intranet sites or an app, we want to meet people where their preferred ways of interacting with their programs are best optimized. We have a multichannel approach, and we’ve leveraged that tech where we can in order to meet that employee need.”
Earlier this year, AT&T partnered with Castlight Health to offer employees access to a transparency tool that creates a consumer-driven health care experience with the company’s self-insured plan. The native application works across a variety of mobile devices to allow employees to compare the cost of certain health care procedures before choosing a health care provider.
“Say you’re at the doctor, and they tell you that you need an MRI,” Jackson said. “What they don’t tell you is the hospital a mile down the road may have better quality at half the price. We don’t really have this element of consumerism in health care, which is really odd because we have that in pretty much any other industry that we interface with. The ability to see cost and quality on the go and in the moment when you need it is a really powerful thing. And it’s ultimately what’s going to help drive a little bit more efficiency in the health care space going forward.”
The app itself is built to resemble an Amazon.com online shopping experience, Jackson said. Employees can pick and choose providers and compare ratings as if they were purchasing a new TV or picking a restaurant on Yelp. Handing employees this decision-making power is particularly important given the rising popularity of high-deductible health plans, which have shifted a great deal of the cost of health care onto the consumer.
“I really respect what Castlight is doing to create some more transparency and efficiency within the health care industry,” Jackson said. “AT&T’s perspective is that we have a role to play not only with our people, but with the broader marketplace to try and bring awareness to these issues and solutions as well.”
While bswift’s product has a similar online shopping feel, Kirschner said he values the platform’s video-based decision support tools to engage employees and drive their overall understanding of their benefits options.
“We have rolled out some new decision support tools to help people be more mindful about what is available to them and to make better choices,” Kirschner said. “We put together videos with bswift explaining the benefits options and put them up on the website. We’ve had a lot of people view the videos.
“I think video can be a very effective, quick way to communicate things to people that they remember. They see it, they hear it, they read a quick blurb on something and it sticks in their mind vs. just having a paper document sent to their home and they read through it. Those things have been effective, and we’ve been talking to them about: how do we support this more complex structure in the future?”
This strategy seems to be working. According to Kirschner, even though the program was just recently rolled out, they’ve had 3,100 out of 8,000 U.S. employees use the decision-support tool. Of that number, 600 employees have made a plan selection change based on the information they learned from the tool.
In addition to allowing employees to make better health care choices, technology is helping employers to one day intervene before a health crisis occurs.
At AT&T, their health platform application anonymously collects data on employees’ search topics. This data mining gives the company greater insight into the health demographics of its employees.
“It helps to give us information about a possible communication need or maybe there is a gap that we have in a program or a policy that we can close because we see significant volume in the Castlight tool around a certain topic or around a certain procedure,” Jackson said. “It’s makes us better informed about certain different topics. Just because you search on a particular topic doesn’t necessarily mean that you need care, you may just want to know more about it. It’s just really a good line of sight to what our people are looking for.”
For example, one of the top fivesearches at AT&T was “colonoscopies,” which isn’t something that shows up on Castlight’s broader scope of business as a top five search. In response to that information, AT&T organized an event where one of the company’s senior leaders shared the story of her fight against colon cancer, and it went viral internally at the company.
“Not only are we going to create better health outcomes for people, but we’ll hopefully get to that really virtuous place of preventing claims and catastrophic issues with people,” Jackson said. “The ability to track your vitals and track your health day-to-day and communicate with your doctors and integrate that into a really easy experience. It’s going to get easier and easier as those worlds continue to merge. It’s a really exciting space.”