As double-digit increases in medical insurance continue, many employers look for ways to keep their budgets lean. Employers across the country are cutting back on employee benefits as one measure to combat a lagging economy. A few payroll companies, however, have developed unique solutions that are helping their customers and their benefits brokers become more efficient.
Payroll service bureaus have a distinct advantage in capturing data and now are using technology to eliminate the manual errors that ultimately cost employers valuable dollars. The process of enrolling an employee into each benefit plan, typing in the correct payroll deduction, collecting the employee portion from their paycheck, and moving that money to the carrier is prone to human error. Studies show that on average a 3 to 8 percent error rate exists in the annual administration of employee benefits. These monies are in addition to premium paid to the carrier and directly impact a company's bottom line.
HR specialists are charged with the arduous task of tracking benefit eligibility for new hires, collecting paper forms, notifying the insurance companies, setting up payroll deductions and the list goes on. Combine this manual quagmire with an aged model of how employers, brokers, carriers and payroll systems communicate with each other and you have a recipe for significant cash leaks. Employees that were terminated are still on the plans, deductions were not collected for those employees who are out on leave or otherwise missed a paycheck, and employees who did not earn enough to meet their premiums are just a few of the items that HR must guard against.
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Integrated brokers are those who offer solutions that seamlessly integrate the payroll activity with benefits administration. We are leveraging a company's most accurate database – their payroll data, to manage a very high budget item.
Scott Day, CEO/ Decatur Hotels, Inc., "We see improved utility and time savings in this new benefits model. A convenient one point of contact for all benefits from Health Insurance and Voluntary products to 401K helps our HR staff manage their jobs from one portal. More importantly though is that we expect this new tool to save us about 5 percent of our benefits outflow."
Tom Swayne, President of David M. Gilston Insurance Agency agrees, "This may be a trend that shapes the future of how brokers deliver future services to the employee benefits industry. Though the insurance sector has been slow to move toward automated communications, what advances have been made require an employer to stop their work flow to accommodate its technology." Although most carriers offer online enrollment and termination capabilities- HR personnel must first record the event in their payroll system, and then remember to log into each carrier's site and enter repetitive data for each benefit plan. Integrated technology by comparison is the ability to enter data in one place, and a symphony of different actions happen automatically. (Tracks eligibility, enrolls in a plan, updates Voluntary Deduction for payroll, generates COBRA notices, Census updates, Billing reports updated, etc.) In other words….Technology fits their workflow, not the other way around. All parties (including the broker) can view this data at anytime. This allows brokers infinitely more servicing capabilities with a technology weapon and an additional stream of revenue.
Service + Technology = Differentiator.
Relationships alone may no longer represent a sustainable advantage in the marketplace. Technology, consolidation, and service will eventually win customer loyalty. In a tight market like this one, customers want partners who can save them money. At least some brokers won't be staring down the business end of a gun barrel.
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