More and more employers are being overwhelmed by all of the compliance requirements associated with managing employee benefits.
The Guardian Life Insurance Company of America’s “Benefits Balancing Act” study found that 60% of employers are feeling overwhelmed with the increased complexity of managing their benefits programs. One of the main reasons for the additional burden is the Affordable Care Act, with its myriad of compliance and reporting requirements.
The employer mandate and the documentation and new filing requirements with the IRS are high on the list of compliance issues, as are evolving Family Medical Leave Act (FMLA) and ERISA requirements.
Interestingly, larger firms with 100 or more employees are having the hardest time, with 70% saying they are especially challenged by installing new coverages, changing carriers and employee communications and enrollment.
The shackles of compliance are so great that it’s the number one benefits-related concern for nearly 30 % of employers, the study found. In fact, 70% said that their firms are not equipped to keep up with the steady changes in federal and state laws governing employee benefits.
The top areas of compliance concern are:
- The ACA excise tax (“Cadillac tax”)
- Changes to paid parental leave laws
- ACA employer mandate
- ERISA requirements
- State and local FMLA requirements
In terms of administration the top concerns are:
- Employee communications and education
- Adding new benefits or changing plans and insurers
- Establishing electronic data interchanges
- Account management and service delivery
- Claims and employee customer service
- Enrolling employees
What companies are doing
As the regulatory landscape has shifted so dramatically over the last seven years, many employers have opted for outsourcing their benefits compliance.
This may be an especially smart move for smaller employers, which often do not have in-house benefits administration resources.
Among employers outsourcing at least some benefits activities, the study found that:
- 50% use the services of a broker
- 25% use an insurance company
- 25% use a third-party vendor (enrollment firm, HR services firm or a private exchange)