Analyst Perspectives

As most employers are aware, the Patient Protection and Affordable Care Act (PPACA or Affordable Care Act) goes into effect in January 2014 which I recently assessed the need to be technology ready. The new law was signed into law on March 23^rd 2010 and with the Supreme Court decision in June of 2012 which upheld the law and the re-election of President Obama in November, the law complex regulatory requirements that businesses need to understand before then. Those that don’t prepare may incur substantial expenses, such as fines known as Employer Shared Responsibility – payments of roughly $2,000 for every employee after the first 30. Many companies already worry about such issues. Our benchmark research on governance, risk and compliance found that the top two reasons organizations fail to deal with issues of governance, risk and compliance are high costs and lack of resources. In the case of the Affordable Care Act, the costs of inaction are likely to be greater than the cost of planning ahead.

While the act has many parts, to satisfy the employer mandate, it gives organizations two options: Provide qualifying health insurance options to their employees or pay a penalty to the government for not doing so – it’s sort of a play or pay decision. To determine the better course, employers should model the costs of each. Having the right analytic tools and access to relevant information can help them visualize the costs of each choice and make better decisions for the business and its employees.

Equifax is a software vendor that plays in this market. Its Equifax Workforce Solutions division helps organizations address workforce governance, risk and compliance, which my colleague Mark Smith has discussed. Recently Equifax released Healthcare Reform Impact Analysis. Based on the modeling and analytics engine Equifax gained with its acquisition of eThority in October 2011, the product packages capabilities to help users model and understand potential costs under the Affordable Care Act, including formulas and calculations for key variables employers need to evaluate. The software lets users create what-if scenarios to compare possible costs of different decisions. Also, if Equifax manages the customer’s employee pay records, it can load employee-level data into the system, so users can work with actual employee records. Healthcare Reform Impact Analysis also includes standard compliance reports to meet specific needs, such as reporting on health insurance coverage (IRC 6056), as well as more general internal dashboards and reports to help managers  be sure that they comply with the law.

In our recent research on compliance we found that by far the number-one objective of organizations was to reduce their overall risk exposure (51%), and second was to reduce the risk of noncompliance with laws or regulations (25%). The same research also found that while satisfaction with technology solutions for risk and compliance vary among organizations, only 40 percent were satisfied or very satisfied with the tools they use for managing risk and compliance. Improving information, technology and processes to understand the risks an organization can address better both compliance with the Affordable Care Act and overall risk. The release of Equifax Workforce Solutions’ new product is well timed as many organizations anticipate these needs.

Regards,

Stephan Millard
VP & Research Director