More and more employers are being overwhelmed by all of the compliance requirements associated with managing employee benefits. Many small employers are just finding out that the burden of compliance fall on them, not the insurance company or broker. Compliance has come to the spotlight recently due to increased audits by the Department of Labor, Health and Human Services, and the IRS, catching employers off-guard and scrambling for answers.
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
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
For a more comprehensive list of employers’ benefits-related requirements and useful links, please go here.
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. See below for a list of vendors L & A Services, Inc clients have used in the past.