Employers are at Risk of Non-Compliance, Employee Benefit Adviser Says

The Affordable Care Act is making regulatory compliance more complex; the risk of noncompliance can be costly, totaling hundreds of dollars per employee for each violation.

Employee Benefit Adviser’s Open Enrollment Readiness Benchmark (OERB) scores for March show that employers with first-quarter benefit start dates, which represent the preponderance of the employer community, are failing to keep abreast of numerous federal and state regulatory requirements.

The March scores, which are based on self-reporting by more than 400 employers, show a low aggregate score of 28 out of 100 for all five open enrollment preparation tasks that the index computes and a composite score of 37 for overall enrollment readiness. With respect to reviewing compliance and eligibility issues, respondents score just 22 out of a possible 100.

The Affordable Care Act and its requirements have meant regulatory compliance has become more complex for benefit advisers and their employer clients; they are a key element of a successful open enrollment. For employers, the risk of noncompliance is considerable, with the IRS assessing penalties on the order of hundreds of dollars per employee per violation. And because verifying who should and should not be receiving benefits is central to any compliance effort, failing to identify which employees are no longer eligible for coverage can also lead to inflated benefits costs.

To apprise them of these risks, “Every adviser needs to have a discussion with their clients about their responsibilities as an employer,” notes Jack Kwicien, a managing partner at Daymark Advisors, a Baltimore-based consultancy that works with advisers.

For advisers seeking to ensure that their clients remain compliant during their upcoming enrollment periods, “The best place to start is to get accurate employer census data,” says Scott Wenger, Editorial Director of SourceMedia’s Employee Benefits group, which includes EBA and Employee Benefit News. “First and foremost,” he says, “the data needs to account for all full-time employees eligible for benefits.” This means ensuring that no eligible employee has fallen through the cracks, but also that those that are no longer eligible aren’t slated to receive benefits.

The OERB tallies employer self-assessments in 26 activities that need to be completed in four key stages for a successful open enrollment. No progress receives a score of zero, while completed tasks earn a score of 100. The open enrollment period, which most often takes place in the fall, is a critical time for employers as they look to engage their workforces in health and retirement planning, among other benefits.

The Open Enrollment Readiness Benchmark, sponsored by ADP, is a data-based performance benchmark that gauges how prepared employers are for their annual employee benefits enrollment periods. Each month SourceMedia Research and EBA survey more than 400 screened HR and benefits executives at organizations of various sizes and across multiple industries. These professionals are asked to rate their completion levels for 26 activities — from selecting health plans to reviewing enrollment metrics — that take place during the four critical phases of open enrollment: benefit plan design, enrollment preparation, employee enrollment and post-enrollment analysis. Scores range from a low of zero to a high of 100 and reflect the degree to which an employer considers itself prepared for a particular activity. The activity scores are then averaged to determine scores for each of the four phases and an overall readiness score. A complete analysis of the most recent OERB data is available here.

About Employee Benefit Adviser

Employee Benefit Adviser (EBA) is the information resource for employee benefit advisers, brokers, agents and consultants, providing the current awareness and perspective they need to anticipate changes in the marketplace and optimally serve their clients. EBA delivers a broad range of critical content, including comparative market data, legal and regulatory updates, the latest products and services, and best practices in benefits delivery — including health insurance, vision and dental insurance, and voluntary and retirement benefits. The benefits broker community relies on EBA to stay connected through its website comment forums, its social media communities and live events.

About SourceMedia Research

SourceMedia Research is a full-service B2B market research service that draws upon SourceMedia’s market expertise and proprietary database of engaged executives to develop information and insights for clients. SourceMedia Research provides research solutions for marketers, agencies and others targeting sectors such as banking, payments, mortgage, accounting, employee benefits and wealth management.

About SourceMedia

SourceMedia, an Observer Capital company, is an innovative, growing digital business information and performance media company serving senior-level professionals in the financial, technology and healthcare sectors. Brands include American Banker, PaymentsSource, The Bond Buyer, Financial Planning, Accounting Today, Mergers & Acquisitions, National Mortgage News, Employee Benefit News and Health Data Management.

About ADP

Powerful technology plus a human touch. Companies of all types and sizes around the world rely on ADP’s cloud software and expert insights to help unlock the potential of their people. HR. Talent. Benefits. Payroll. Compliance. Working together to build a better workforce. For more information, visit http://www.adp.com.

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