We all know benefits are the name of the game in our industry. But what really keeps clients happy? Service. Sure employers may select their benefit offering with you, but if employees hold onto their policy, they may live with the carrier's service for years. And the most common service interaction between employers, policyholders (i.e., employees) and the carrier? Premium payments. Yes, claims carry a lot of weight, but ideally those are few and far between. On the other hand, premium payments occur regularly, and, if employers are handling deductions, it's often the most common interaction between employers and carriers. Unfortunately, it can be the most painful one. A survey of brokers found that their number one administration pain point with carriers was billing. How do we, as brokers, work to alleviate this pain point? There's obviously no answer that will erase all billing challenges, but there is a solution that can help you move toward a better service experience for your clients and their employees: ACH deductions. By deducting payments directly from a policyholder's bank account you can eliminate headaches and add value for your clients and policyholders. How, exactly, will these ACH deductions make life easier for your clients? Let's look at 4 big ways:
#1 – Embrace the "set it and forget it" model
With the rampant popularity of platforms like Amazon and Netflix, most people are used to this "set it and forget" payment model. ACH deductions employ a process that's familiar to employees as their deductions are made automatically directly from their bank account. There's no need to worry about missed deductions if an employee has a leave of absence or is terminated. There's also no need for the employer to manage these deductions and premium recovery processes. Both sides win.
#2 – Employees can take coverage with them when they leave or retire
One of the great things about voluntary products is portability. And ACH deductions make portability even easier and more seamless for policyholders. Many employees may not even realize they can port their policy when they change jobs. Once payroll deductions end, they don't switch to an alternative payment method and end up losing their coverage. But, with ACH deductions, the payments can just continue seamlessly when they move to another position or retire. In this case, employees are more likely to retain coverage, which is often in their best interest.
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#3 – Much simpler for employers
As you probably know, administering benefits through payroll deduction requires coordination between the carrier and employer. This is a big concern for us, as brokers, too. When billing issues come up, we all know we're liable to get the call from an unhappy client.
However, with ACH deductions, employers no longer have this burden since payments are drafted directly from the employee's bank account. The result? No more file feeds. No more need to initiate that first deduction. No more need to make up missed premium payments. It all runs automatically without any burden on employers, HR and payroll departments.
#4 – Employers will save money, too
Many employers spend money on payroll vendors and payroll slots in their systems to offer certain products. By using ACH deductions, you'll remove the need for a payroll slot dedicated to a carrier's product. Some employers may also be paying a TPA to do ACH payments already. If you work through certain carriers, you can also eliminate that additional cost! In the end, if you provide world-class service to your clients you'll win more business. It's as simple as that. Encouraging more clients to use ACH deductions may not seem like the sexiest strategy in the world—but it sure can be effective. It can make employees' lives easier and it can simplify processes for employers and save them money, too. It's also in line with the global trend we see in all industries toward convenience and ease of doing business. After all, why would you want to make things harder for your clients and their employees?
Frank Morang is a regional sales manager at Trustmark Voluntary Benefits. He develops and manages voluntary group and worksite distribution in the Empire region, encompassing New York and Connecticut.
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