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Looming reporting rules the latest health benefits hurdle

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After a temporary reprieve, employers covered by the Patient Protection and Affordable Care Act’s shared-responsibility, or “play-or-pay,” mandate must begin measuring and reporting worker hours to the federal government or face steep penalties.

Employers with 100 or more full-time workers had to begin tracking worker hours at the start of 2015; the requirement kicks in next year for businesses with 50 to 99 full-time workers.

Complying with the new reporting requirements may be the most unforgiving exercise many of them have ever encountered.

“It’s staring them in the face, and they’re like a deer in headlights,” said Mike Colarusso, managing director for the Mid-Atlantic region of the employee benefits consulting firm Charon Planning, an NFP company in Warrington, Pennsylvania, which represents middle-market employers, large regional companies and multinational corporations. “They’re trying to figure out how they’re going to get this done.”

Under complex federal rules, employers must determine who qualifies as a full-time employee applying the government’s 30-hour definition, not employers’ historical 40-hour benchmark.

Counting hours that employees log on the job sounds simple enough. But in reality, employers must figure out what data they need, where that information resides and who will be responsible for culling and compiling it.

They may need to tap benefits administration, payroll, health plan and leave-of-absence data — information that may be siloed in different departments or held by a company’s external vendors.

Federal regulations specify two methods for calculating employee hours: month by month or a year-long “look-back.” If an employer relies on a monthly measurement period for salaried employees and a look-back for variable-hour workers, the measurement methods must remain consistent for each type of employee.

“You can’t be flip-flopping categories,” Mr. Colarusso said.

Ryan Moulder, a partner with Health Care Attorneys P.C. in Los Angeles, who represents a number of fast-food franchise owners with several hundred to several thousand employees, said installing compliance software or upgrading existing systems to track employees’ paid work hours, enabling employers to determine workers’ health benefits’ eligibility, can cost $10,000 to $20,000 a year or more, depending on the number of employees.

“One of the problems here is if you have 100 employees, you need the exact same technology as the Wal-Marts of the world nowadays because you need to track your employees in the exact same way,” he said.

But botching your employee count is costly, too. Penalties of $2,000 to $3,000 per full-time employee, minus the first 30 employees, may be assessed for failing to offer adequate or affordable coverage.

“I think you’re going to see a lot of situations where employers don’t track their employees properly,” Mr. Moulder said.

Even in industries with relatively few part-time workers, calculating and reporting worker hours is “a significant exercise,” said Amy Bergner, managing director for global human resource solutions at PricewaterhouseCoopers L.L.P. in Washington.

Employers with stable full-time workforces are generally much better prepared to comply with the new reporting requirements than companies with large numbers of variable-hour employers or multiple operating divisions, Ms. Bergner said.

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