If your employees are on a benefits plan, chances are you are overpaying your carrier bills by 1-5%. It may not sound like much, but by the time this slow drip of your company’s resources is discovered and shut off, you may have lost tens of thousands of dollars. But damages don’t stop there. Finance, HR and employees all take a hit from errors on benefits carrier bills.
Where’s the Leak?
In a normal month, insurance carriers send bills and accounting pays them. End of story.
Or is it?
It’s not uncommon for accounting to miss small errors. What if the carrier bill charged your company for a terminated employee’s health coverage? The correct information got recorded in the payroll system, but no one took the time to adjust the new premium rate with the carrier. Thus, the carrier continues to charge according to their records, and your company is oblivious as those extra costs slip by. Any time an employee has a life status change mid-month, there is a chance for data entry errors to occur which will result in errors on the carrier bills.
Finance Takes a Hit
When you ignore benefits leakage, the result can be a domino effect on your company’s finances.
Impact to the bottom line - Each month you lose a small percentage for unnecessary reasons—a waste of resources that could have been better spent on developing company growth. Instead it has been lost in a financial void.
This loss creates unpredictable outcomes in the future and inaccuracies on financial records, making it difficult for finance owners to close the books.
Surprise Adjustments - In some instances the carrier bills could be undercharging you because of new hires who were never accounted for. If your company has missed this, have no fear. Insurance companies will eventually catch the mistake and send you an adjusted bill. This adjusted bill can span anywhere from one to dozens of months, wreaking havoc on the books.
A Big Time Suck - The process to reconcile benefits statements can take days to review, and weeks to resolve. It involves matching each employee’s payroll deductions with the carrier bills, discovering any discrepancies, determining who owns the variance, contacting brokers, and resolving charges. This lengthy process consumes time, and restricts the ability for Finance to effectively support the company.
Employees Take a Hit
Things would be easy if, once employees signed up for benefits, the monthly deductions remained the same throughout their entire period of employment. However, marriage, children, divorce, disability and many other factors require continual updates and changes to an employee’s benefits. These changes are recorded in the payroll system, but they often never get reported to the carrier. When this happens and an employee takes their child to the doctor, coverage can be declined. Depending on the circumstances, this could have a negative affect on employee productivity, engagement and attitudes.
HR Takes a Hit
Retaining high-preforming employees is a top priority for HR departments. The cost of replacing an employee is estimated to be six to nine months of salary, on average. Some estimates project even more. However, when benefits are poorly administered and employees’ coverage is being declined due to errors on carrier bills, your company’s turnover rate may spike.
In addition, while employees are receiving poor coverage, you will also be redirecting resources that could have been used to boost employee engagement and productivity into hiring.
Technology can Plug the Hole
A cloud-based technology solution that contains both payroll and carrier bill data can solve this leakage problem. Experts can scan the data to look for discrepancies to know where the leak is, how it got started, and who needs to resolve it. Businesses, like yours, that adopt this system have reduced administrative burdens and increased chances of detecting any current or future benefits leakage.
Losing one to five percent of your bottom line causes more harm that just lost revenue. The damages extend to your finance and HR departments, and your employees. When you invest in an HR, payroll, and benefits solution that can provide the technology and processes your business needs to contain costs and scale effectively, you shut off that leaking faucet and gain control.
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