BOSTON--(BUSINESS WIRE)--Data released today from HighRoads’ Fifth Annual Compliance Trends Survey shows employers continue to grapple with the requirements and costs of complying with the Affordable Care Act (ACA) compliance-related challenges. And while many employers measure the success of their efforts by year-over-year cost reduction, compliance teams appear to be getting larger and organizations continue to have a vague picture of the aggregate costs of writing, producing and distributing compliance documents.
HighRoads surveyed mid- to large-size companies representing 5 million total plan participants about their compliance and governance operations; their approach to producing, updating and distributing Summary Plan Descriptions (SPDs), and the steps they are taking to generate the Summary of Benefits and Coverage (SBC) and other required notices under the ACA. Respondents included Catholic Health Initiatives, Bozeman Deaconess Health Services, Chico's FAS, San Antonio Community Hospital, Wells Fargo, CHE Trinity Health, Lancaster General Health, Synopsys, Advanced Micro Devices and Aetna. For a copy of the report, please go to ComplianceExperts@HighRoads.com.
Highlights from the survey include:
- Despite the risks associated with noncompliance, only two-thirds of respondents have a formal compliance strategy and, while 69% have a dedicated governance and/or compliance team, 31% do not.
- Fewer employers planned to update their SPDs this year, with just 16% planning a rewrite for readability (down 50%) and 67% planning content updates.
- About a quarter (26%) of respondents update and distribute SPDs to their active employees every year, but by far summaries of material modification (SMMs, 67%) or notices in annual enrollment material (46%) were the preferred methods for alerting participants to new plan changes.
- More employers (45%) are using or planning to use social media (such as Twitter or Facebook) to communicate with employees and retirees.
- The biggest challenges facing employers when it comes to producing SPDs are having sufficient resources and managing the review process. And twice as many respondents as last year indicated “writing” was a challenge.
- More employers are producing ACA-required materials in-house than in previous years. Forty percent of respondents generated SBCs themselves this year (up from just 18% last year) and 68% planned to produce the Notice of Coverage Options in-house.
“What we are seeing is the continued struggle of employers to comply with ACA requirements, yet wisely manage resources and costs. It is a challenge that will only increase as new regulations under the ACA take effect, current safe harbors and postponed effective dates expire, and enforcement of the regulations begin in earnest,” said Kim Buckey, principal, compliance communication services, HighRoads. “For example, plan sponsors have had a two-year ‘best efforts’ safe harbor for complying with SBC regulations around format and length,” noted Buckey. “Employers have been waiting for the other shoe to drop ... and this may be the year.”
Having sufficient resources (budget, time or people, 38%), and managing the review process (31%) continue to be the biggest challenges as employers produce their SPDs. Employers struggle with finding resources with both benefits knowledge and writing skills to prepare their documents – the number of employers citing writing or updating content as a leading concern doubled from last year. Some 63% indicated they planned to streamline the process of updating their SPDs (up from 47%).
Responding employers produce from fewer than 10 to more than 100 separate SPDs and consolidation is not taking place except for those with the largest numbers of documents. Not surprisingly, the SPD teams are growing. For the first time, a quarter (27%) of respondents reported that their internal SPD team consists of six or more people, while 55% get the job done with two to five team members. In 18% of companies, SPDs are handled by one person.
“Employers have struggled for years to find the resources, time and budget to produce accurate, reader-friendly SPDs on a timely basis,” said Buckey. “Add to that the requirement of producing documents such as the SBC and the new Notice of Coverage Options, an increasing government focus on readability, and HR and benefits staffs that are already struggling to do more with less, we see more and more companies seeking new technologies that can support and streamline the development and distribution of compliance materials. Equally important is having resources who know benefits, know compliance and know how to accurately and clearly write about both.”
Employers were also experiencing the second year of SBCs, with a new template and required information. Despite the change, twice as many respondents opted to produce SBCs in-house this year (40%, up from 18% last year). Far fewer (36%, down from 53%) planned to have their carriers handle SBC production. The 2013 SBC required employers to validate whether their plan met minimum value standards, and the agencies gave employers multiple options for determining whether they met that requirement. Three quarters (73%) of respondents relied on their actuaries for this determination, 23% used their carrier and only 5% used the calculator provided on the Department of Labor website.
Employers were required for the first time in 2013 to provide a Notice of Coverage Options. Given the relatively simple nature of the form, more than two-thirds of respondents (68%) planned to produce these in-house. Twenty-four percent were reaching out to their consultants and just 12% were using their carriers to generate the notices.
Distribution of compliance documents continues to migrate toward electronic channels, with 33% of respondents reporting they used e-mail to alert participants that SPDs and other materials had been posted online, and 31% posted directly to the portal. Interestingly, employers seem to be providing broader online access – 63% said they allowed access from anywhere (not just from work), although 30% limited access only to active employees.
“The continued challenge of compliance may be a contributing factor to the decision of some employers to move their employees and/or retirees to a private exchange,” noted Buckey. “Almost 88% of our respondents indicated that they have considered moving to an exchange within the next five years. Our research indicates, however, that private exchanges will not eliminate plan sponsor responsibility for compliance.”
For a copy of the report please visit http://www.highroads.com/compliance-trends2014/
HighRoads, the industry leader in benefits plan management and health care compliance, has served as the benefits system of record for many of the largest organizations in the country for 15 years. Its patented technology collects, manages and repurposes benefits plan data throughout systems, processes and documents. For more information, visit HighRoads.com, become a fan on Facebook, a follower on Twitter @HighRoads.com or read the Compliance Connection blog.