Will the Affordability Care Act be a Catalyst for HCM Analytics?
Will the Affordability Care Act be a Catalyst for HCM Analytics?
Yvette Cameron was VP and Principal Analyst at Constellation Research, Inc. focusing on next generation HCM processes and technologies, and is founder of NextGen Insights. Yvette is now a Constellation Research alumna. , Title: Big Ideas CRM concepts will transform HCM processes for new levels of Employee Engagement and Business Results Companies are investing heavily to understand and optimize their customer relationships, but less so with their employee relationships. We must apply the tenets of CRM to HCM processes to understand, engage and align the workforce, because customer success begins with employee success. From “Command and Control” to “Engage and Inspire” Traditional work practices and business structures are evolving at an unparalleled rate. New thinking and disruptive…...
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HR leaders on the fence about investing in an analytics platform may now have the justification needed for moving forward, courtesy of the US Federal Government and its impending Patient Protection and Affordable Care Act (PPACA), which goes into effect on January 1, 2014. With complex requirements and potentially significant financial consequences, the PPACA will require many employers to move beyond standard tracking and reporting platforms to more advanced, real-time decision support tools to proactively manage the many aspects of this complex legislation.
Fundamentally, the PPACA is about reducing the number of uninsured Americans (numbered at more than 50 million in 2010) while attempting to address the affordability and quality of that healthcare coverage overall. State-level health insurance exchanges (HIX) are being formed to make available the minimum requirements across benefit coverage and cost-sharing standards, while employers grapple with tradeoffs in health benefit plan designs and premium costs vs. the federal tax credits and subsidies available to low- and middle-income workers.
For employers, the requirements of the PPACA quickly get complicated with look-back and ongoing calculations of hours worked and future hours, benefits eligibility vs. enrollment, premiums to wages ratios, and evidentiary reporting to government agencies. Non-compliance with this still-being-clarified legislation can lead to significant penalties for employers, not to mention the many downstream impacts on employee relations and employer brand.
For some organizations, calculating and paying the penalty will be the quickest route to compliance while others will want to weigh various workforce modeling scenarios to determine their best approach (provide coverage as intended, reduce worker hours for a percentage of employees, etc.). Leading payroll and workforce management platforms such as ADP, Ceridian and Kronos are actively enhancing their software to deliver the calculations and reporting required by the ACA, often including the ability to anticipate when benefits eligibility will be triggered based on future labor schedules.
Across the many mandates of the PPACA, (employer mandates, healthcare tax credits and individual mandates), behaviors at work will change that will affect the costs – both direct and hidden – of compliance choices. Shifting workers to part-time will result in increased unemployment claims; additional part-time staff may be hired to fill the gaps of the reduced workforce; turnover may be adversely affected; workforce tax credit eligibility can be affected and additional training and ramp-up time needs to be factored in. As they evaluate the direct costs of their compliance alternatives such as benefits premiums, labor expenses and penalties, employers must also take into account these and other indirect or hidden costs associated with their choices.
Getting to a clear understanding of the direct and indirect costs requires complex analysis and modeling, a prime use case for an analytics platform.
One of the players in this market is Equifax, which recently augmented its Equifax Workforce Solutions division with the acquisition of analytics technology provider eThority in 2011. Leveraging the eThority platform, Equifax is introducing a new solution called the “Affordable Care Act Impact Analysis and Management” tool to help employers model and monitor the impacts of PPACA on their business. The tool enables employers to see costs (including labor, benefit premiums and potential fines) at group or detail levels based on different modeling scenarios. It also highlights the associated costs resulting from anticipated new hires and increased unemployment claims that can offset savings from those initial scenarios, a level of analysis that many traditional payroll and workforce software providers are not offering. Equifax can also leverage the data reported to them by thousands of employers across the country, representing tens of millions of workers, to report on labor and payroll trends across regions, industry and other segments, further augmenting the modeling scenario evaluations. As desired, Equifax also provides additional consulting services including evaluation of new assumptions as well as overall program management and audit support.
The modeling platform is interactive, adapting to changes in law and assumptions. Delivered via subscription or available on premises, employers can access data beyond their own workforce data to make better, more informed choices with regard to how they will achieve compliance with PPACA mandates.
Investing in an analytics platform can bring more than just workforce insight and modeling capabilities: it can be a powerful tool in managing risk and compliance across the entire enterprise. In the case of the Affordable Care Act, it may be the only tool that will effectively support employers in their daily need to monitor and manage the complexities of this legislation. The requirements of PPACA actually begin before January 2014, with employers needing to make decisions and communicate benefit options, costs and coverage to employees during the Fall Open Enrollment schedule. Employers should be evaluating their options now, and the availability of new tools like the Equifax ACA Impact Analysis and Management solution are timely additions to the market.
Filed under: ADP, Analytics, Ceridian Dayforce, Equifax, GRC, Kronos Tagged: ACA, Affordable Care Act, analytics, Ceridian, constellation research, Employment, Equifax, Governance, GRC, HCM, Health insurance exchange, healthcare, HR, HR Tech, Human resources, Patient Protection and Affordable Care Act, PPACA, workforce analytics, workforce planning, Workforce Technologies, yvette cameron 
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