Reflect for a moment on your compliance with the Affordable Care Act’s (ACA’s) employer reporting requirement for 2015. You provided your employees with 1095 tax forms as mandated and managed to check the compliance box. Phew!
Moving forward in 2016 and beyond, however, you may want to consider the ACA’s evolving reporting requirements as a strategic “opportunity” to view your workforce (and the ACA requirements) from a more comprehensive labor cost optimization approach, rather than the task of manually reconciling data from multiple disintegrated systems. The ACA can act as a burning platform for discussing the importance of leveraging workforce analytics across your organization, selling it up the chain as a value outcome of meeting ACA compliance.
Just as the ACA is driving large employers to rethink their benefits strategies in an effort to reduce costs and the risk of compliance penalties, organizations can also consider leveraging the Act’s reporting requirements to make the business case for a move to a comprehensive workforce analytics platform.
The need for dynamic monitoring
As many employers are discovering, meeting the ACA’s employer reporting requirements can be a multi-step process to answer a series of key questions: Who are our full-time employees? What offer of coverage did we provide to these individuals? Was the offer of coverage affordable? Which employees were offered coverage and who accepted it?
Answering some of these questions might not be as straightforward as you may think. For example, while the ACA’s definition of full-time employees might be simple at the surface (full-time means 30 hours or more a week), some employers may find it difficult to translate this into practice for all populations and situations.
Even if you define full-time employees as those who work 20 hours a week or more and offer them benefits, you still need to assess and potentially report employees who could be considered full-time under the ACA. Examples of these populations include summer interns, temporary hires, transfers across your legal entities, on-call employees, employees who move abroad or come to the US, and even retirees. You need to determine if you were required to offer, and actually did offer, benefits to these employees for ACA purposes.
Given the potential for financial penalties and higher 2016 thresholds, dynamic monitoring of the impacted populations becomes critical. This tends to be especially true for employers with significant populations of part-time and contingent workers, on-call employees, leave-of-absence situations, transfers, and low-compensation employees. You need to accurately count the hours of these employees as they move back and forth between part-time and full-time status every month, and demonstrate that an offer of coverage was made when required.
Closing the data gap
A common challenge is that ACA reporting requires data from multiple systems, including HR, benefits, payroll, time and attendance, and absence management. These types of data can come from both within and outside your organization, and they are not usually aligned across the various systems and vendors, nor are they typically designed or tracked with ACA in mind.
Additionally, the various entities under your parent company structure may use different systems and vendors, likely making tracking and aligning your employee and non-employee information not only difficult but also subject to errors and inaccuracies. Looks like a burning platform to us!
Burning platform for workforce analytics
Suddenly, for some, the ACA has gone from compliance-based requirement to the catalyst for a well-designed and implemented workforce analytics platform that can serve as a flexible tool for ACA data gathering as well as powerful tool for integrated, comprehensive workforce analytics. With a clear view into your ACA-impacted populations, you can be armed with the insights needed to:
- Take action—The workforce analytics platform plays a central role in the dynamic monitoring of labor, productivity, and ACA-related challenges, and sparks a series of actions and processes that can remedy those challenges.
- See exactly how you’re doing—The workforce analytics platform can help diagnose the source and scope of persistent labor problems. Where are the problems arising, and which are most acute? How complex are they? How quickly are they changing?
- Make the case for change—Frontline managers gain facts to support changes and adjustments to their workforce strategy. Executives gain insights that support the business case for larger-scale changes in the organization.
How can you reap these insights? Specific success factors are paramount to realizing the demonstrated benefits of deploying a workforce analytics platform:
- Design with intent—Be clear about the targeted outcomes related to ACA reporting, FLSA, and other compliance and labor cost optimization opportunities.
- Ownership—The fragmented workforce management model should be replaced with a single owner of a total workforce view including contingent labor.
- Workability—The platform should be designed for ease of use, simplicity, and accessibility and make sure the data collection process flows are operationally efficient.
- Labor cost optimization—Address hidden spending and lost productivity challenges by diagnosing labor costs and identifying ways to take action on the specific issues driving rising labor costs.
Once you have successfully deployed your workforce analytics platform, you will be able to track impacted employee population data in real time and visualize how and when employees are reaching various ACA-related thresholds, which can significantly simplify your periodic reporting efforts.
The decisions you make on ACA and your investments in various types of employees might vary based on the workforce segments critical to your business strategy, i.e., you might offer different benefits to segments you care more about. With ACA reporting requirements under control, you can move up the value chain to focus on the actionable insights required to develop benefits strategies that not only satisfy ACA requirements, but are also enhanced for your prioritized workforce segments and the competitive reality of your talent markets.
As used in this document, “Deloitte” means Deloitte Consulting LLP, a subsidiary of Deloitte LLP. Please see www.deloitte.com/us/about for a detailed description of the legal structure of Deloitte LLP and its subsidiaries. Certain services may not be available to attest clients under the rules and regulations of public accounting.