The rising costs and increased regulation of employee benefits have become a distraction for even the most smoothly running U.S. employers.
For organizations characterized by constant workforce turnover, those distractions can prove detrimental to their bottom line.
Take for instance, the retailer that routinely adds 25 new hires a month. Or the restaurant group that holds semi-monthly training orientations to remain adequately staffed for each shift. Or the manufacturing company that hires and fires up to 40 people a week to keep up with the production schedules.
(Related: Helping Employees Understand HSAs)
In the mad scramble for personnel in these high turnover industries, it’s common to see benefits get lost in the shuffle. Mid- and large market employers, by sheer volume alone, are even more susceptible to the pains of maintaining a compliant benefits program in the midst of persistent staff turnover.
If your book of business includes employers that fit this criteria, the following practices will serve you (and, most importantly, your client) well.
- Audit, Audit, Audit
Conducting frequent, meticulous audits of the insurance carrier bills and invoices is critically important for employers with high turnover.
At least once a month, a representative of the company, or the broker, needs to cross-reference the most recent carrier invoice with payroll. How many employees listed on the invoice have been terminated in the last thirty days? Are there any employees on payroll being deducted for coverage that do not appear on the invoice? For cost and compliance purposes, it is imperative that the employer knows the answer to both questions each and every month.
If bills from insurance companies are not being actively audited, it is probable that the employer is paying for coverage that they shouldn’t be. For ancillary coverages like vision or basic life insurance, an incorrect cost likely won’t break the bank. But if medical carrier bills are left unmonitored, the premium dollars for ex-employees can add up to thousands, even tens of thousands, of dollars each month depending on the size of the employer. Bill and payroll audits also add a second layer of protection for newly-hired employees. Let’s say a new hire elects his or her benefits after satisfying the company’s 60 day waiting period. The coverage effective date should be April 1st, but the employer or broker never enrolled them in the carrier systems.
April 1 rolls around and the employee presumes they have medical coverage. A month later, they have an accident that forces them to seek emergency treatment. At that point, the individual is told that the insurance company has no record of them being an active insured. Had the employer reviewed payroll and the April carrier bill, they would have avoided a potentially major compliance and coverage issue – not to mention a scary situation for their employee.
- Ongoing Communication
Ensuring that bill/payroll audits and other necessary managerial tasks are performed is a two-way street, though.
Today’s employers are not alone in the often tumultuous administration of employee benefits. Brokers, consultants and advisors have stepped in over the years to relieve their client organizations of the day-to-day benefits responsibilities. However, even the most involved third parties can’t manage the entire benefits program from end to end. An enduring communication stream must exist between client and advisor.
For employers with recurrent staff turnover, communication becomes even more critical. As employees come and go, these organizations must lean on their brokers for administrative counsel. Enrollments, terminations, eligibility, troubleshooting issues, carrier negotiations/interactions and the countless other administrative duties of a benefits advisor have become too burdensome for employers to take on alone.
Large, high-turnover companies are especially reliant on broker partnerships to ensure that the daily benefits tasks aren’t impeding their core business objectives.
Modern benefits advisors should understand their clients’ businesses inside and out and view themselves as an extension of the team. What are their organizational objectives? What are their three and five-year plans? How does the employee benefit program factor into those plans? And let’s face it… high turnover employers typically translate into higher maintenance clients. They require a greater level of administrative support than companies characterized by long employee tenure.
With more change comes more responsibility, and with more responsibility comes the need for more frequent communication. A dutiful broker should set the expectation that they will be available every day to handle any issue for these high-turnover clients.
- Benefit Administration Technology
The evolving role of technology in the administration of benefits is a saving grace to high-turnover employers. Ben-Admin Systems (BAS) have simplified every clerical process for companies of all sizes.
At the low-functionality end, BAS can serve as editable cloud-based storage houses for employee demographic info and benefits data. At the high end, BAS allows for an employee-user experience where benefit elections and terminations are integrated directly with the insurance or payroll companies at the click of a button. In either case, the emergence of BAS options has streamlined administrative processes, while greatly reducing the potential for human error. Cumbersome tasks like payroll audits are now systematized and can be completed in a matter of minutes.
Successfully pairing an employer with a ben-admin system requires strategic consideration and consultation. Despite what the system architects might tell you, these platforms are not “one size fits all.”
Let’s profile a 3,000 employee retailer, as an example: The group has 125 locations nationwide, with approximately 24 people employed at each store. 75% of the workforce is between the ages of 16 and 35, with the remaining 25% scattered in between 36 and 60 years old. 40% of the staff are considered part-time employees based on weekly hours worked, leaving 1,800 benefit eligible employees. The average monthly staff-turnover across the organization is 85 employees – meaning that the rate of annual turnover is 34%.
With all these moving parts, the retailer requires a technological solution to help manage their ever-changing business. The retailer needs data-housing capability to administer their benefits and payroll as a single large entity, rather than 125 separate ones. It needs payroll integration with insurance carriers so that their up-to-date employment numbers accurately reflect the $325,000 in premiums they pay each month for coverage. It needs a customized employee-user interface where their 1,800 benefit eligibles can enroll in or modify their elections. It also needs a solution capable of maintaining a compliant benefits program. COBRA, FMLA, Section 125, ERISA, Form 5500… – every government regulated standard for an employer of this size should be addressed within their ben-admin system.
Like any major business decision, this technology piece needs to be implemented thoughtfully. If selected and negotiated with precision, the right ben-admin system is capable of effectively managing even the most disjointed high-turnover employers.
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