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Benefits administration technology helps employers and their employees

Friday, November 15, 2019
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Administering employee benefits can be costly and complex. However, an efficient benefits administration system could save you money and effort.

Benefits administration systems remove manual processes and reduce reporting errors for employers while making benefits easier for employees to use.

“Employers spend a ton of money on health care and other benefits, but the rollout and the presentation to employees many times is not good,” said Erik Hinz, a Sales Executive in Minneapolis for The Horton Group, an insurance, employee benefits, and risk advisory firm. “They are looking for ways to streamline processes and to engage and communicate with employees.”

The complexities of health insurance drive much of the costs of benefits administration for employers, and many of the coverage questions for employees come from the complexities of health insurance. “There are a lot of rules, and they’re changing constantly. It’s not fair for HR teams to do something outside of a technology solution,” said Ken Olson, President of The Horton Group’s employee benefits services division.

Benefits inquiries account for more than 80% of the texts, emails, and phone calls that HR teams handle, according to an HR Technologist article on what’s next for digital benefits administration. But HR professionals can provide “higher-value support to employees with fewer resources” by streamlining benefits administration with technology.

Whether it belongs to a broader human capital management (HCM) platform or stands alone as a tool that a company uses separately, a benefits administration system can increase efficiency for employers while improving the experience for employees.

Removing manual processes

Most HR administrators or insurance brokers make more than 34,000 manual enrollment and carrier adjustments per year, according to statistics compiled by The Horton Group. At an average of five minutes per change, that totals 2,800 hours per year or almost 120 days.

Automating the carrier adjustment process alone could create significant savings based on the hourly expenses of the administrators or brokers involved. But if a company with 4,400 employees were to move from completely manual to all automated processes, it could save more than $1 million annually, according to The Horton Group.

A white paper from The Horton Group explained that a benefits administration system can save time and money by automating functions like the following.

  • Reconciling billing statements from insurers with premiums owed by the company.
  • Tracking an employer’s defined contribution to an employee’s health care.
  • Calculating premiums for partial health insurance enrollment coverage according to an insurer’s wash rules.

Reducing reporting errors

The Affordable Care Act “imposes significant information-reporting responsibilities based on an employer’s health plan and number of employees,” according to a Society for Human Resource Management blog post on the employer shared responsibility penalties permitted by federal laws.

For example, employers must report health coverage by filing an information return with the Internal Revenue Service and providing a statement to individuals, the IRS notes in questions and answers on information reporting by health coverage providers.

The limit on penalties for failure to file a required information return with the IRS doubled from $1.5 million to $3 million — with no cap if the failure can be proved intentional — in 2016, American Westbrook Insurance Services reported in a blog post on how penalties doubled for Affordable Care Act reporting noncompliance.

The IRS recently started to issue penalty notices for the 2017 tax year, according to an Accounting Today article on how the IRS is intensifying ACA enforcement efforts. A company found to be noncompliant could face millions of dollars in penalties, the article noted.

A benefits administration system can help employers properly prepare and report the information required by the Affordable Care Act, including coverage details like the number of people insured. For example, a technology-enabled, rules-based system can verify when employees and their dependents are added to the company’s plan or dropped, Olson said.

Improving employee experience

Employees engage with their benefits more as their experience improves. ”Enhancing the employee experience honors the employer’s investment in their employees and their dependents and brings new value for their employees to appreciate,” Olson said.

Employees may not use their benefits if they don’t understand their choices. But not every employee gets the information they need from paper enrollment processes during onboarding or group meetings for open enrollment.

A benefits administration system can provide employees with information on a range of benefits, including health, life, and even pet insurance, “This functionality is essential, as employers want to offer more choices to employees to help with recruitment and retention,” according to The Horton Group’s benefits administration system white paper.

Systems also offer decision support, which helps employees choose benefits by showing them how different choices would meet their needs. “This tool is gaining importance as more employers are offering multiple plans, including higher deductible options,” The Horton Group wrote.

Evolving employee expectations and shifting regulations make administering employee benefits challenging. But a benefits administration system can streamline your processes while improving your employees’ experience.

https://www.bizjournals.com/twincities/news/2019/10/21/benefits-administration-technology-helps-employers.html

Material posted on this website is for informational purposes only and does not constitute a legal opinion or medical advice. Contact your legal representative or medical professional for information specific to your legal or medical needs.

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