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Driven by the demands of the Affordable Care Act (Pub. L. 111-148) and the increased use by employers of private health exchanges, some benefits experts predict a greater reliance on the use of human resources technologies by payroll departments to aid implementation of the law.
“The best platforms will enable an organization to integrate the numerous functions of benefit administration with their weekly payroll functions,” said Tom Hayes, employee benefits practice leader for the Regions Insurance Group.
The integration of payroll operations is necessary for the streamlined and efficient administrative processes of adding new or updated enrollments and deductions, Hayes said in a February article for HR Professionals Magazine. Additionally, new hires and terminations involve the payroll department and the administration of company health plans, he said.
Starting in 2015, employers with a least 100 full-time equivalent employees are to offer health-insurance coverage to 70 percent of full-time equivalent employees, according to final rules (T.D. 9655) under tax code Section 4980H issued Feb. 10 by the Treasury Department.
Employers with at least 50 full-time equivalent employees must offer coverage to at least 95 percent of full-time employees and their dependents starting June 1, 2016.
Employers planning to integrate payroll and benefits platforms should be aware of several key functions, Hayes said. The features include:
• Payroll integration.Technology platforms that interface with payroll systems are important for the integrity of health-exchange data, Hayes said. Payroll integration is needed to add or update benefit enrollments and deductions, along with new hires and terminations, which often occur first in payroll.
Payroll also has to deal with address changes by participants, compensation adjustments and the monitoring of variable-hour employees through various measurement periods to determine if they are eligible for mandatory coverage, Hayes said.
• Eligibility and maintenance. Most payroll systems already collect data needed to track health-care eligibility and accompanying plans, a plus for employers, Hayes said.
Technology platforms that interface with payroll systems are important for the integrity of health-exchange data.
• Benefit enrollment. Enrollment procedures for benefits can include cost-tracking systems that show employees how their selections affect payroll deductions and employer contributions, Hayes said. “The best private exchanges include a strong decision support engine that leads the employee through a series of questions equipping the system to recommend the plan best suited to their needs,” he said.
• Carrier integration. While many platforms allow for information connections, employers should see if their systems support exchanges with health carriers, Hayes said. Many insurers use a standard electronic data interchange enrollment file to create the connections, he said.
• Consolidated billing. Many benefits plans involve multiple insurers, Hayes said. Auditing and paying related invoices each month is difficult without a platform that can streamline the process, he said. Greater efficiencies can be obtained through consolidation, he said.
• Deduction management.The best platforms can record the payroll deductions created by changes in enrollment and status, Hayes said. Systems also should show if deductions are pre-tax or post-tax and how contributions are provided.
Private health-insurance exchange enrollment could grow by the end of the decade to cover tens of millions of employees from the fewer than 1 million today, the investment advisory company Moody's Investors Service said March 4 in releasing a report, “Benefit Consultants Early Winners in Private Health Exchanges.''
Private exchanges are proprietary, for-profit online marketplaces owned by a variety of benefit consulting firms and other investors, such as Aon Hewitt, Mercer, Towers Watson and Buck Consultants.
Private exchanges are separate from state- and federal-run public health exchanges authorized by the ACA primarily to provide subsidized coverage to low-income recipients.
Employers contract with private exchanges to make health insurance and related products available to current and former employees. Employers also provide workers with a fixed amount of funds to buy defined-contribution coverage, Moody's said.
Growth in private-exchange membership is expected to come primarily from employers that have multiple locations and could benefit from assessing multiple insurance-carrier networks, from those with higher than average cost increases and from those struggling to administer their health plans, Moody's said.
“The most successful exchanges will be those that minimize growth, or generate savings, in overall health-care costs, rather than simply shifting costs from employers to employees,” Bruce Ballentine, Moody's senior credit officer, said in the statement accompanying the report.
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