Benefits administration leaders and practitioners alike face myriad challenges when it comes to controlling budget spending. The cost of key benefits, like medical insurance, continue to rise. Many benefits budgets are tight, with little, if any, cushion for errors or wasteful spending. And, in the worst of examples, companies that exceed their allotted budgets for benefits administration may find it necessary to make cuts in other areas, limiting customer services, innovation and growth.
Benefits make up nearly 30 percent of total compensation costs, according to the Bureau of Labor Statistics. Despite the increasing costs of medical insurance, this proportion has held steady in recent years. But that doesn’t mean that, as expenses continue to climb, employers won’t see that figure grow. Regardless of future projections, company’s leadership teams may rightfully push for benefit budgets — including the costs associated with benefits administration — to get leaner and more efficient.
Benefits practitioners may feel this as pressure to improve processes, reduce errors and root out sources of wasteful spending in benefits administration. Fortunately, there is a straightforward solution for controlling costs while improving ROI: leaning on the capabilities of your benefits administration partner.
In this article, we’ll explore five specific challenges that, if not managed efficiently, tend to result in wasteful spending. By partnering with the right vendor, employers can address these issues head-on and get more out of benefits budgets.
1. Claims Payment Errors
It’s entirely likely that errors in claims payments go unnoticed, costing employers untold amounts. So it’s crucial that the audit process is handled efficiently. Since your benefits administration partner may have already integrated your claims data, it makes good sense to have them manage your claims audits (and the subsequent recovery process). This is a highly effective strategy for ensuring that errors are identified and resolved, while providing confidence that the job will be done well.
Most often, overpayment is the result of simple human error – a data entry mistake or something equally unintentional. However, amid those innocent errors lie the occasional nefarious intent. Claims fraud can cost an employer tens or even hundreds of thousands of dollars more than their actual responsibility in just a single instance of deception. Working with a partner that keeps your claims audits up to date can help you feel confident that fraudulent claims won’t go unnoticed.
Learn more in A Timely Look at the Claims Overpayments Problem.
2. Billing and Payroll Errors
Errors in benefits billing and payroll deductions make up another common issue that contributes to wasteful spending. Outsourcing your billing and payroll processes is a simplified solution to a complex, time-consuming challenge that can be fraught with errors.
To get the most out of this move, consider outsourcing these three key tasks:
- Direct billing, which your benefits administration partner can automate so you don’t have to worry about missed premiums while employees are out on leave or once they return;
- Carrier billing services, where the benefits admin partner can gather list bills, generate self bills, reconcile against enrollment data, allocate by cost center and make payments on behalf of the employer; and
- Payroll reconciliation, which your benefits administration partner can tackle to validate actual payroll deductions against enrollment information, identify differences, and automatically adjust deductions for future pay runs. This closed loop process piece is crucial, as it can help protect the organization — and your employees — from overpaying.
3. Ineligible Dependents
Ensuring that you only cover eligible dependents is critical to the financial – and legal – stability of your benefit plans. But for most benefit teams, determining eligibility can be a long, tedious and overwhelming effort. It can also lead to tension with employees if not handled carefully. Benefits administration vendors may provide dependent verification services to help make things as painless as possible. Offering both one-time dependent eligibility audits and ongoing verification, they take the work off your plate to efficiently protect your plan rules and find opportunities to save your company money.
4. Poor Enrollment Decisions
A common, yet largely invisible, cause of wasted benefit spending stems from less than optimal enrollment decisions. Oftentimes, employees wind up overinsured (meaning they’re paying more than they need to and thus can’t invest as much for retirement or other expenses) or underinsured, which often leads people to delay care, tap into emergency savings, or make early withdraws from their 401(k) plan.
Generally, we can assume a poor plan fit might happen when employees do not fully understand their benefit options or which choices to make to support their needs and priorities. Working with a vendor that can provide employees with personalized guidance about enrollment decisions frees in-house benefit teams from those often time-consuming conversations, and gives employees access to expert support.
Uncover more insights in The Truth About Why Your Employees Need Better Benefits Decision Support.
5. Poor Benefit Utilization
Even when employees are enrolled in the most appropriate benefit programs for their needs, it’s possible for those benefits to be underused – effectively leaving money on the table. Making sure employees are equipped to make informed benefit decisions is the first step. Beyond that, one common strategy for boosting utilization involves proactively engaging with employees in benefits throughout the year, not just leading up to the open enrollment period.
Offering a care navigation tool which employees can use to identify high-quality in-network doctors – is a convenient, on-demand resource that helps employees access the care they need while making the most of their benefit coverage. Supporting employees with information on where to get care can help them avoid making a costly trip to the ER when a telemedicine visit would suffice, or selecting a covered, in-network doctor rather than the one that happens to be closest to their home but might cost more.
Embracing the Future of Benefits
Leveraging the support of a quality benefits administration partner is a crucial strategy for identifying and attacking various causes of wasteful spending. The right partner can help you resolve and prevent errors to save the organization and your employees money and improve health outcomes.
Leveraging technology solutions that streamline processes, reduce the likelihood of errors, and connect employees with valuable information can all help control the overall costs of benefits. Ultimately, outsourcing certain aspects of benefits administration can help organizations optimize their offerings and maximize the return on investment for both employers and employees alike.
