Get relief: automate or outsource benefits administration
Have you considered whether your company is unnecessarily overpaying monthly health-care premiums?
There is an expensive secret in benefits that is frequently overlooked but has significant impact on a company’s premium payments and ultimately its bottom line. The secret is that employee benefits costs are impacted not only by carrier rates but also directly by a company’s own internal benefits administration processes.
A typical benefits program includes options with one or more health insurance carriers and other benefit providers. The process for managing these benefits involves the employer notifying the carriers when enrollments, terminations and other changes occur. The carrier, in turn, sends a monthly invoice which should always be reconciled prior to payment. However, as companies grow and more employees are added, this reconciliation process, along with other aspects of benefits administration, can take a lot of time and be fraught with error if done manually.
Benefit Cost Containment Through Better Technology
Mark Ruszczyk, Senior Vice President of Marketing and Sales for Excellus, says that “we have seen employer groups save 2-5 percent of their healthcare costs by managing their employee eligibility, reviewing dependent status and/or conducting dependent audits (ensuring they have the right individuals/family members on the plan).”
An employer today who has 100 employees enrolled in the company’s health care plan may be paying annual premiums of $750,000. A 5 percent overpayment equals $37,500. Errors occur when ex-employees or ineligible employees and dependents inadvertently remain on the company’s plan. Such overpayments may take months to catch, and are typically not refunded by the carrier.
But the secret to containing costs goes beyond invoice reconciliation. Companies also reap savings by replacing spreadsheets with HR technology that can actively manage all aspects of benefits administration while reducing overhead, eliminating errors and providing more flexibility through employee and manager self-service.
The savings gleaned when manual processes are replaced by automated ones can be used to help defray skyrocketing health-care costs. Web-based technology provides a snapshot of participants enrolled by class (active, dependent, COBRA or retiree), contribution levels and premiums paid, and eliminates the countless hours spent manually completing, filing, submitting, correcting and reconciling forms and invoices.
This is true not only for medical benefits, but across the benefits spectrum – health & welfare, retirement, and time off/leave programs. Relying on manual processes rather than leveraging automation and technology to track employee status changes, FMLA and terminations is expensive in terms of wasted time, effort and dollars. It can also lead to costly compliance mistakes as things continually “fall through the cracks.” HR systems that automate and track these events lead to more efficient and accurate processing. These systems also place more information and processing ability in the employee’s own hands, leading to instant service with 24/7 access to their benefits information.
Outsourcing as an Option
If your company doesn’t have HR technology and/or no one has time to properly administer benefits internally, then outsourcing may be an option that pays for itself. Long popular with large corporations, the outsourcing of benefits administration has become a viable option for smaller and mid-sized companies – particularly given that health care is getting costlier.
Driving the trend toward outsourcing are two goals: cost containment and offering employees better service and options.
A provider of outsourced benefits administration continually invests in technology which allows an employer to deliver consistent benefits support to employees through self-service technology and call centers, without hiring an expert to handle the burgeoning complexity of benefits and without investing its own resources in searching for a technology solution.
Vendors of benefits administration outsourcing offer bundled services as well as a la carte options that allow clients to:
- Serve growing employee populations without adding staff;
- Provide employees with a flexible, innovative, competitive benefits packages;
- Reduce the costs of processing;
- Speed up key processes; and
- Boost managers’ and employees’ access to vital information.
- Support with benefits communication strategy
- Open enrollment
- New-hire benefit orientation
- Process of new hires, terminations, job-status changes and family-status changes
- Maintenance of benefit history
- Reconciliation of premium billing
- Management of FMLA and other leaves of absence
- Broker negotiation
- Online, real-time reporting
- Monitoring of benefits eligibility
- Dedicated account managers to help your employees
- Discrimination testing
- Assurance of COBRA compliance and HIPAA certification
Conclusion
With health care costs continuing to increase in double-digit percentages each year, no company can afford to be paying for coverage on ineligible employees or dependents. And yet, because managing benefits administration manually is time-consuming and prone to error, many employers wind up doing precisely that – and spending precious dollars unnecessarily.
For companies seeking new cost-containment strategies, automating benefits administration either internally or via outsourcing can provide significant relief.
