The Value of Automating Benefits Administration

With the cost of healthcare still on the rise and the decisions that await around healthcare reform, it only makes sense to take a step back and look at all aspects of healthcare expense, not just the insurance itself. Employers have attempted to control medical rate increases by making benefits cuts or outright elimination of benefits, increasing cost-sharing to employees, and adopting consumer-driven health plans with HSA’s or HRA’s. There can be inherent dangers in these approaches including decreased employee satisfaction, which can ultimately lead to voluntary turnover of good employees.

I suggest taking a look at the soft costs associated with the administration of the benefit plans as a strategy to mitigate this expense. Depending on the size and complexity of your organization and benefits offerings, up to 25% of your total spend could be tied up in the transactional costs of benefits administration. This warrants considering process improvement or retooling as a means to controlling this cost. Regardless of the size of an organization, deployment of the right technology will dramatically improve open and continuous benefits enrollment by reducing errors, speeding up the enrollment process, and increasing employee education and satisfaction around the health plans offered. Organizations of all sizes report the benefits of automated enrollment to come in the form of: Time Savings, Increased Productivity, Improved Data Integrity, Greater Employee Satisfaction.

An enrollment system will automate manual or redundant, paper-based processes, engage employees with self-service tools, and enable employers to access benefit participation patterns. Several methods for automating the benefits administration function are available to even the small market. I suggest exploring each and discussing options with your benefits consultant or an outside HR Consultant to determine what works best for your organization.

Issues to Consider When Automating Benefits Administration

1. Deployment of Employee Self-Service – The technology application that you choose must have a self-service functionality that is easy to use, includes workflow capabilities, and is accessible via the internet. If you properly train employees on how to use the benefits enrollment portal thoroughly most employees will complete it successfully the first time. Studies also suggest that more than half will do it at home with a spouse, thus making them more productive at work. Data accuracy is also improved when enrollment info is entered at the employee level as opposed to the administrator level. The more participants that have access the better. The use of kiosks should also be considered for those employees who may not have the internet readily available. Expanded reporting and survey capabilities also give added bonuses to employers who successfully deploy ESS.
2. Technology Integration – A stand alone benefits administration portal gets you halfway there but to truly maximize efficiencies, I suggest a fully integrated payroll/HRIS/Benefits application. Payroll data tends to be the most accurate data set in any organization, so it makes sense to build benefits technology off this data to ensure utmost accuracy for employee contact information, eligibility, premium deductions, and termination. Many systems also include interface capability to the insurance carriers. This type of integration allows for ONE point of entry for all payroll, HR, and benefits related information. This created a more efficient, less error prone process. Integration eliminates profit leaks with terminations and eligibility because all employee data is resident in a common place that connects with the carrier.
3. Expense – Who should be responsible for this cost? In many cases there are three different parties involved with the process: the insurance carrier, the insurance broker, and the technology provider. You as the employer are clients of all three. I suggest putting them in touch with each other to see what makes the most financial sense for your organization. Many times brokers will absorb this cost as a value added service. The carrier may be willing to cut you a deal to retain or attract your business. Thirdly, the technology provider may have extensive experience with your carrier and may be willing to reduce this cost because less work has to be done on the front end. At the end of the day, it is worth the financial investment and time up front to create the carrier feeds and maintain connectivity especially if you plan to stay with that provider for several years.