It can be extremely challenging to administer employee benefits, and it is crucial to understand the various considerations underlying this process to determine if you must deal with the administration of the benefits on your own or you should outsource specific parts of it or in completion.
Owners of small businesses are typically extremely busy. They tend to juggle a host of responsibilities and might even contemplate integrating employee benefits administration with their list of tasks. But the job of administering such benefits is not only complicated but also takes up a lot of time. The decisions pertaining to the handling of employee benefits administration can only be taken by you.
There are a few questions that you must ask yourself when you are contemplating whether the administration of benefits is something that you wish to handle on your own or would want to seek someone else’s help:
Did you want to be involved in the administration, and to what extent?
Is the software or hardware something that you can purchase comfortably for handling the process on your own?
Will a lot of time be required for you to administer them?
Can you find someone to administer the benefits at a cost that is reasonable?
Today, it is quite easy to come across a good administrator for a reasonable cost, and this way, you can dedicate more time towards leveraging your own skills and knowledge. There are several entities that offer administrative services for a specific fee, including insurance companies, consulting firms, banks, payroll service companies, and investment brokers.
While there are several firms, as well as people who are skilled in plan administration, it is a good idea to seek the services of the company whose plan you purchased. For instance, the insurance company whose policy you purchased or the investment company dealing who is dealing with your pension funds can be turned to for this service. Typically, such services are delivered for a small additional charge.
Thus, if the plan that is purchased does not handle the administration and you wish to provide benefits without recruiting a full-time employee for their administration, it is best to outsource the process.
Outsourcing Benefits Administration
When benefits administration is outsourced, workers can be kept as your business employees, while the burden of working on administrative tasks or engaging in paperwork and going through the legal hoops associated with the administration is lessened.
When it comes to identifying and hiring a good administration, there are two essential steps:
the use of proper selection criteria when it comes to selecting an administrator
performance measurement to ensure that the administrator is working out
Selection tips. Choosing the right administrator to deal with your employee benefits cannot be achieved hastily. Instead, you must keep the following aspects in mind:
While you can change your administrators each year, the process can be expensive and disruptive. Hence, it is important to remain diligent while making your choice and always assume that the relationship that you establish will continue.
There has been a shift towards paperless administration, and it is important for you to remain comfortable with the type of technology, sophistication, and commitment leverage to remain updated with the latest trends.
In case you are looking for bids on your coverage, you must clearly describe your plan design and your administrative requirements. Otherwise, you would be looking at unanticipated expenses.
In case you want your administrator to deliver particular performance standards, like paying claims within a specific number of days, your request for a bid must include this.
Measuring Performance. Regardless of whom you choose to assist with the administration of your benefits- insurance or plan company – it is important to employ a tactic that can help measure the performance of your administrator. Essentially, two aspects are crucial in such a scenario: timeliness and accuracy. One great tactic to gauge performance is to interact with your employees and learn about their satisfaction with the service.
Most administrators will provide you with a package of information that can assist you with measuring the effectiveness of your plan too. A customized package may be offered with an additional fee. Needless to say, a major portion of this information will only be available upon using the administrator for a minimum of one year.
You must also be able to compare the experience of your employees against those of others. Check with your administrator if it can provide the report that enables you to break down comparative features based on geography and industry.
Generally, the term "claim payment performance" is used to refer to how promptly the claims are paid by the administrator. A few employers tend to discuss claim payment performance with the administrators, while the contracts of others include specific performance standards. In case you know how promptly the claims must be paid, you must include such requirements also in the contract. Here are a few items that you could monitor:
claims illustrated in the system
claims that are being adjudicated
paid or denied claims
mailing of checks
handling of phone inquiries
accuracy of claim payments for dollar amounts
Have any questions about outsourcing your benefits administration? Contact us at (212) 365-4553 or email@example.com to learn more.