Hub International Limited (HUB), a global insurance brokerage, recently undertook an in-depth small-middle market employee benefits study called the Employee Benefits Barometer: SMB Perspectives and Priorities in an Era of Disruption. More than 400 senior-level human resource and finance executives at U.S. companies with 50 to 1,000 employees were surveyed. The goal was to understand the priorities and challenges facing today’s employee benefits decision makers.

Surprisingly, only 58% of respondents ranked compliance with the Affordable Care Act (ACA) as a top priority, despite 2016 being the first year of ACA reporting and IRS audits. It ranked third behind employee wellness and productivity improvements (83%) and cost management (76%).

While ACA compliance was not the top priority, 64% of respondents said they would struggle to stay in business as a result of ACA compliance, with 57% concerned about the burden of calculating affordability and 45% concerned about calculating full-time employees and equivalents—key red flags for IRS audits.

Sixty-six percent are experiencing a return on investment on their health and performance initiatives, with 35% reporting improved productivity and 34% citing improved morale, but key benchmarks for these initiatives—which include employee turnover (21%), absenteeism (18%), and chronic disease management (16%)—are lagging.

Most respondents (65%) believe they are doing all they can to rein in rising benefits costs, although only 51% are using voluntary benefits, 31% pharmacy carve-out, 18% self-funding, and 16% narrow network strategies to manage costs.

Collaboration between HR and finance is critical. While seventy-eight percent of finance respondents consider HR a strategic partner, finance has significant concerns with benefits costs (97%), HR missteps with executive liability (93%), and ACA audits (88%). A third of finance respondents expect HR to go over budget (32%), mismanage ACA reporting (34%), and pay IRS audit penalties (35%).