The Affordable Care Act and its Employer Shared Responsibility “Play or Pay” mandate has emerged as one of the most paralyzing topics of discussion for employers and HR professionals. We get it; Obamacare has forced employee benefits specialists to become as much regulatory experts as brokers, and it isn’t easy. When helping clients build their compliance strategy, we try to make the analysis process as simple as possible.

As Affordable Care Act consultants, we see the primary Obamacare question applicable large employers need answered as follows.

“Based on my compliance status, how will the Affordable Care Act change the way I develop my health care benefits strategy?”

The focus of this blog will be guiding employers and HR professionals through the process of answering this question (as simply as possible).

In the military, we quickly learn that there is such a thing as too much information, and there is always a point where reconnaissance (research) yields diminishing returns. That being said, let’s whittle our research down to the minimum essential information needed to answer this pressing question.

1. What is my current benefit-eligible population under the ACA, and how will it change over time?

Obamacare’s definition of full-time employees definitively identifies an employer’s benefits eligible population—the most direct internal impact to an employer’s health care costs. Hence, the first order of reconnaissance is identifying an employer’s full-time population, and tracking how that population will grow or shrink over time. Keep in mind, individual measurement periods can cause this number to change on a monthly basis, so don’t fall into the trap of identifying your full-time population solely during open-enrollment.

{{cta(‘d541c9b6-e19a-48f8-a404-65bacb898d74′,’justifyleft’)}} For some companies, particularly those with large variable-hour populations and high turnover, their full-time population is a constantly moving target. For others, particularly those who use their health care package as an incentive for talent recruiting and retention, the ACA has had little impact on their enrollment population.

Either way, nailing down an employer’s full-time population is step 1, which leads us to employers’ next order of reconnaissance in being able to identify Obamacare’s impact on their health care strategy.

2. What are my current vulnerabilities to ACA penalties, and how will they change over time?

“Play or pay” penalties stem directly from an employer’s full-time population, so identifying those full-time employees who have not been offered affordable minimum value plans is the next step in assessing Obamacare’s impact on your company.

It’s in this final analysis where we get the answer to our question about Obamacare’s impact on employer health care benefits strategy. On one hand, few to no gaps in compliance, as we’ve seen in many of our clients with static full-time populations, means no urgent need to change benefit offerings. On the other hand, large gaps in compliance will mean performing cost-benefit analysis to weigh the impact of potential penalties versus offering benefits to substantially all of your full-time population. Either way, once an employer identifies where they are vulnerable to ACA penalties, he or she has the data needed to make an informed decision on future benefit plan structuring.

Quick note: Whether you have to restructure your benefits strategy or not, you still have to report!

Related Blog: Everything You Need to Know About Affordable Care Act 1095-C Reporting

I know this may sound like an oversimplification of the issue. Indeed, nailing down a dynamic full-time population and the ensuing penalties can be cumbersome, especially for larger companies with high turnover. But this should not impact the simplicity of the above decision-making model. The answer to the “Obamacare impact” question will always depend on two contingent data points: full-time population and potential penalties. As long as an organization’s administrative compliance strategy can make that information accessible, employers will always have the key data they need to drive adaptive health care decisions as needed.

Related Blog: What to Look For in ACA Compliance Software

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