HR has been and will continue to wear a lot of hats when it comes to healthcare reform. One tool HR pros may be overlooking, according to systems developer Marco L. Padovani: analytics.
Starting in 2014, healthcare reform requires employers with over 200 full-time employees to enroll all of their staffers (new and existing) in a healthcare plan.
Additionally, employers with over 50 full-time equivalent employees will be subjected to an assessable payment if they don’t provide minimum essential coverage — or if that coverage is not affordable.
Beyond the accounting and compliance headaches this poses for firms, the new law also changes the ROI calculations as to whether or not new people should be hired, and if so, then in what capacity. Is it better to do without a new person, to hire part-time people, to hire a full-time person, or to contract out the work elsewhere?
These have always been the choices facing employers, but now the math has changed. The government has its new definitions of full-time (although even that leaves room for interpretation), and the requirements and penalties affect the equations.
Whether or not it is in the domain of the HR function to determine which of the above choices should be pursued is irrelevant to this discussion. What is relevant, though, is regardless of who makes the decisions, HR is in a unique position to offer insight into the decision-making process. So it behooves you as an HR pro to be proactive. Hiring decisions occurring in less than a year (and in some cases, occurring right now) are dependent on and also subsequently affect this analysis.
The important role HR plays in reform analytics
Both the finance and HR departments probably have overlapping data that can be incorporated into actionable analytics, but only HR can offer insights into the numerator of the ROI equation – the value component. Finance cannot offer analyses of the relative performances of comparable full-time, part-time, and outsourced people. Only HR has the data to mine that information.
Moreover, especially given the government’s fluid definition of “full-time,” only HR can properly classify individuals at any data collection point. And even the compensation costs that finance uses will ultimately come from HR.
Calculations to show HR’s value
So why concede your value to the organization? Start today planning which metrics will be of value in staffing decisions, especially vis-à-vis the upcoming Affordable Care Act provisions.
The government lets you define a measurement period of not less than three months and not more than twelve months for calculating the average hours worked of every employee. Moreover, the calculation can differ for specially designated groups of employees – union vs. non-union, salaried vs. hourly, employees of different entities, and employees in different states.
Regardless of time period and employee classification, though, the calculation is the same. For workers paid weekly (or bi-weekly), you must add up all of their hours worked and divide by the number of weeks. If the average is 30 or more, the person must be treated as full-time (and must be offered the minimum essential coverage).
Also, you cannot include in the calculation weeks for which a person is paid but did not work, such as for vacations and FMLA. For monthly (or semi-monthly) employees, the calculation is similar, except that the baseline is 130 hours per month.
So, as a starting point, if you have historical wage data, it could be valuable to analyze which time periods would be most beneficial for your organization to measure each type of employee. At the same time you can determine how many of each employee type would have been defined as full-time by the new calculations. You can then use this information to project these numbers into 2014 and beyond.
Marco L. Padovani is a systems developer at PDS, a leading HR, Payroll, and Benefits software company, with experience in business and statistical analyses.