The initial computer breakdown during the debut of the health-insurance exchanges that make up Obamacare shows how difficult it will be for corporate employers trying to get their own technology running in time.
While companies received a one-year reprieve on reporting requirements and tax penalties for failure to offer affordable health coverage to employees, many still have a lot of work left to do to get systems in place to meet IRS rules, Bloomberg BNA reported. Those 12 months may not be enough, according to Anne Phelps, a member of EY’s Washington Council, which helps clients navigate regulations.
“This is really the first time in the history of employers providing benefits that we’ve seen this kind of data collection” to be provided to both the Internal Revenue Service and to employees under the Patient Protection and Affordable Care Act of 2010, Phelps said.
Beginning in January 2016, employers have to provide “an unprecedented amount of data” on health benefits, including details on who received an offer of coverage, what the coverage included and what its value was, Phelps said. They need to make sure they have systems in place before then to track the number of full-time employees, obtain the necessary data from them and communicate to employees about their health care coverage, Phelps said.
The goal behind the massive collection of data is greater transparency for individuals and to enforce the individual and employer mandates under the law, she said.
The federal health exchange saw repeated software troubles and long waits in its first days last week, as 7 million people visited healthcare.gov to check out the insurance offerings under the Affordable Care Act, known as Obamacare. The 14 exchanges run by individual states, including Nevada and Connecticut, reported similar delays after opening Oct. 1.
That may be a wake-up call for companies, especially big businesses built with acquisitions.
A key question for employers to consider in setting up their systems is where to find all the data necessary to meet the measuring and reporting requirements under the law once the Jan. 1, 2015, compliance deadline kicks in, said Clayton Gammill, with EY’s Human Capital Practice department.
If a company has three or four payroll systems built through acquisitions and multiple benefits providers, data isn’t in one place and they have to consolidate reporting to give to the IRS and employees, Gammill said.
Companies with separate human resources, payroll and benefits data systems will also face more complexity in meeting the requirements, he said.
“What I think most people need to do is bring the data into some centralized place,” Gammill said.
Whether this occurs through building a data warehouse or hiring a third-party service provider, “they need to make sure there’s data cleansing, there’s data consistency, so it’s not just a flat data dump,” he said. “There’s going to have to be some logic involved.”
While employers received a reprieve from their reporting obligations, they will still have to engage with the exchanges since they opened to individuals on Oct. 1, Phelps said.
Interactions with state and the federal exchanges will vary widely, as evidenced by the variety of requests the exchanges have already made of employers about their employees, she said. Because the law allowed states to establish their own health care exchanges, “each state has chosen a little bit of a different path,” Phelps said.
More than half of the 50 states have opted for federally facilitated exchanges, with the remainder implementing their own insurance marketplaces or an alternative or hybrid model.
The multitude of state responses to the law will affect how employers can appeal the determination of an employee’s eligibility for premium tax credits, which could subject an employer to a shared responsibility payment, Phelps said.
State- and federally facilitated exchanges will make the initial eligibility determinations, and may choose to contact employers as part of a sample review process, she said. It will be critical to ensure employees going to the exchanges now have all the information they need, she said.
“That interaction is so important to make sure that employees understand if they did have an offer of coverage, are they eligible for that credit,” Phelps said. Accurate information from the employer that is provided by workers to the exchanges is critical to ensure companies minimize their risk of being hit with undue penalties, she said.
“The reason why is there’s a link back,” Phelps said. “If employees get a tax credit, that is the link where the employer may be on the hook for paying an excise tax.”
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