Offering employees comprehensive benefits while also managing the related costs remains an ongoing challenge for employers. According to PWC research, in the last five years, benefits costs have increased an average of 5.5 to 7 percent each year. This year will be no different, with benefits costs estimated to rise by 5.3 percent, according to the Business Group on Health (BGH). And, there is a chance the increase may be even greater as employees increase their use of mental health and specialty services, seek COVID-19 vaccination, and resume elective and preventative procedures they put off in 2020.
Though the need to manage rising benefits costs will not go away, there are actions you can take to offer employees a range of cost-effective and competitive benefits options. Here are three ways you can control benefits costs while still meeting the needs of your employees:
Help Employees Make Informed Benefits Decisions
The costs of different healthcare plans vary, and without a careful review of their options, employees can end up selecting more costly benefits than they need. Not only do employees need to understand the differences between healthcare plans, but they also need to weigh their individual and family needs against each option. However, since benefits can be so complex and nuanced, many employees struggle to know which are the most cost-effective options. According to a survey conducted by the International Foundation of Employee Benefits Plans, only 19 percent of surveyed employers said their employees have a high level of understanding of their benefits.
By educating employees on cost differences and available plan features, you can help them choose the right plan for them and potentially lower their benefits spending. Some great ways to help employees make better-informed benefits decisions include:
- Offer multiple opportunities for employees to learn about their benefits options during open enrollment, including live kick-off meetings, Q&A sessions with benefits specialists, and clearly-written benefits resources.
- Highlight programs available to help employees manage benefits costs, for example, health savings accounts and wellness rewards programs.
Increase Benefits Administration Efficiency Through Automation
Day-to-day benefits administration requires keeping track of employee elections and changes, payroll deductions, and numerous regulatory requirements. Given all the moving parts, the opportunity for error is great, especially if you are working with a limited budget and short on resources. By automating the key components of benefits administration, you can avoid errors that could be costing your organization time and money, such as incorrect employee deductions, erroneous enrollments, and late coverage terminations.
Upgrade Your Benefits Reconciliation Process
With various benefits plans to manage and employee changes happening throughout the year—elections for new hires, open enrollment changes, coverage additions, and terminations—you can easily experience a mismatch between actual enrollment and carrier invoices. Without an effective method for reconciling the two, you can miss billing errors and end up spending more on benefits premiums than you should.
Using a manual process for conducting your monthly benefits reconciliation is time-consuming and subject to human error. But when you have a technology solution for reconciling your carrier billing with employee enrollments, you not only save hours of your time, but you also have an easy way to catch and correct errors that cost your organization money. Fully-automated benefits reconciliation compares payroll and enrollment data with carrier invoices and highlights inconsistencies so you can take action quickly. With this smart technology to do the reconciliation for you, you can avoid costly errors such as:
- Overpayments and underpayments: An employee adds or drops benefits, but the change isn’t reflected in carrier billing.
- Incorrect deductions: An employee changes coverage levels, but payroll deductions don’t reflect the change.
- Employees enrolled in the wrong plans: An employee enrolls in one coverage level but is reflected as another coverage level by the carrier.
- COBRA errors: A terminated employee enrolls in COBRA, but the effective date or premium amount is incorrect in carrier bills or payroll records.
Controlling benefits costs requires taking a fresh approach to educating your employees and rooting out potential sources of waste and overspending. With the right resources and technology, you can automate your benefits enrollment processes and identify new ways to achieve cost-efficiency in benefits administration.
This post was contributed by EverythingBenefits, a provider of benefit technology solutions and services. Check out their blog for more helpful employee benefits information.