A Comprehensive Guide to Managing Benefits in 2021
Benefits are COMPLEX! But they are also one of the primary levers an organization has on its mission to attract and retain talent to meet its business objectives. Many of today’s human resource (HR) leaders feel like they are stuck between a rock and a hard place having to pick the right technology, drive the implementation, and manage a myriad of changes internally and externally, including the ever-changing compliance laws and regulations.
For many employers, the pressure to expand their benefits programs and the growing challenge of managing them has become unsustainable. What further complicates the matter is a lack of transparency and control, which keeps employers from fully realizing the return on one of the largest costs to the organization. This can also reduce the value of these benefits from the employee’s perspective and eventually negatively impact their views of their employer.
So what options does today’s HR leadership have in navigating this increasingly complex world of benefits? Our team of benefits experts has put together an easy-to-read guide to help HR professionals navigate benefits’ murky waters—and ultimately come out on top in creating sustainable benefits programs.
Here’s your success guide to managing benefits in 2020.
Step 1: Which benefits should I offer?
A number of research studies recognize that benefits are crucial for recruitment and retention. In one study, 92% of employees indicated benefits are important to their overall job satisfaction; 78% indicated that they would likely remain with their employer because of the benefits.
Employers are aware of the trend as well: the majority had cited “recruitment” as a reason for increasing benefits offerings; seven out of ten leverage expanding benefits to drive retention.
Less than half a decade ago most mid-market employers could get away with providing only medical, dental, and vision benefits—and very little regarding a 401(k). In order to be competitive these days, employers had to expand their offerings with telemedicine, pet insurance, tuition reimbursement, college loan repayment, identity theft protection, legal services, elder care, mental health care, and more. Multiple factors drive what goes into the offering including the local market conditions, current team demographics, as well as future expected demographics.
Based on this explosive growth, the annual cost of benefits broke the $20,000 mark for the first time in 2020. What’s more, these costs don’t reflect growing operating expenses to manage richer benefits portfolios and, more importantly, compliance and liability risks associated with them.
So which benefits should you offer to your employees? Here are some factors to look at:
Hint: 50% of Americans own a pet. Offering pet care discount plans or pet insurance is inexpensive (or free) and can go a long way in showing that the employer cares about non-human members of their employees’ families.
Step 2: How to approach choosing the right benefits technology solution
Organizations can no longer use the “wing it” approach to managing benefits. Relying on outdated technology and processes—paper forms, spreadsheets, multiple disconnected systems—and getting by without lack of transparency into their data trends and liability risks is no longer sustainable. We know that benefits technology is absolutely crucialfor today’s world of benefits.
So how should an HR leader select the right solution for their organization’s existing and future needs?
Get corporate buy-in. Do you go mountain climbing without the proper gear? Would you perform a surgery without proper tools? That’s the mentality to set yourself and your leadership up for success. You may need to educate your management to help steer them in the right direction. With so much that’s changed in benefits in the past decade, your leadership team may simply not be aware that a change needs to happen on the technology front as well. Spend some time preparing for this conversation—it will make the following steps go much easier!
Here are some points that will help you get your corporate buy-in:
Set a clear objective. Identify what is critical for your department and overall organization in terms of your benefits needs. Make a bullet list of what’s needed to get from point A to B. Here’s a start:
In summary, you may be looking for benefits automation solutions that will help you manage your employee adoption, enrollment, monitor usage, and keep you in the green in the light of compliance.
Assess your existing processes. How much of the HR team’s time is spent managing the enrollment process and life change events? How do you handle COBRA and ACA compliance? How much time is spent manually reconciling your benefits provider invoices against the actual enrollment and benefits deductions data to ensure no inaccuracies? Or better yet, how much time is spent hunting down and fixing mistakes? The toll of unproductive time has a real financial and liability impact for your organization. It also takes away from your leadership mission and does not allow you to scale your organization. Not to mention the frustration and stress! (cross links?)
Create a budget. As a company, you spend $20,000 a year per employee per month on benefits. (link)That’s $1,666 per person—not counting the time of your team on it. Thinking about an investment of $10–$15 per employee makes sense. That is a modest increase over your monthly per employee cost that provides piece of mind in so many ways. Sometimes your broker may chip in to help make it palatable as long as it stays clear of any regulatory pitfalls.
Would be nice to have a spreadsheet here. There will be a total calculator here when we got one.
Other things. Cloud-based and mobile capable…that goes without saying these days. You know that your sensitive employee data will be accessed over the internet, so ensure you have the proper diligence in place to guarantee your benefits technology partner uses the best level of care to handle that. Understand what infrastructure the future benefits technology provider had in place to accomplish that. Find out if annual SOC2 audits, team training, HIPAA practices, and other measures are in place to protect your data.
Also, check out our Technology Matters E-book that covers some of the possible "tricky" benefits scenarios can come with manual processes and outdated technology.
Step 3: Meeting the needs of your constituents
Let’s zero in on the needs of your audience: you and your employees.
What Every HR Admin Needs
Your plan line-up. Once you refined your optimal benefits portfolio (link to above),your broker will help improve your offering by adding carriers, setting up carrier plans and policies, and helping you understand how competitive your offering is compared to others in your space. Your inputs regarding your own population current and desired demographics will help to further drive decisions. Your benefits will help define your team so plan accordingly. Do you want your work environment to be a welcome home to employees with new families, seasoned knowledgeable workers, boomers, millennials, Generation Z, and so on?
Deciding on the optimal contributions. How much is fair, competitive, legally appropriate, and makes financial sense to contribute to employee coverage? Your broker and legal adviser will help drive the best approach for that. Consider using defined contribution buckets in your ancillary benefits rollout. You decide how much to contribute to the bucket each year and employees can pick from the portfolio of products that cater to their life stage and needs.
Governance. Creating employee policies, defining enrollment period(s), and deciding your eligibility policies—who qualifies for what benefits and when. Don’t overlook the internal permission model—who has access to what records and how approvals will work. Modern benefits administration solutions offer powerful configuration capabilities, allowing accommodation for just about any scenario (retail, healthcare, manufacturing setting, in the public sector, etc.).
Common features. These are some of the most commonly asked questions about available functionality:
Integrations. Payroll, ERP, and time keeping—these are just some of the pieces of the puzzle driving the entire HR experience. Make sure you have satisfactory answers about how the data syncs with your other important services will be accomplished. What is the setup time and ongoing maintenance like?
Implementation and ongoing support. While on the topic, how will the rollout be accomplished? What’s the implementation process like, and what is the expected timeline? What will the experience be like for you and your employees? And once you are in production, what is the process to keep you and your team informed of any changes? How can you get help if you need it?
Accountability, reporting, and analytics. We always have fun with this question. You should alwayshave access to all of your data. The question is, what do you wantto know? What do you needto know? Do the tools available make it easy for you and your team to stay ahead of the trends, understand utilization, and build expectations for the future? (link to the dashboard link or something like that)
Security of your data. Make sure you spend time to thoroughly understand how your data will be handled.
We can keep going but in the interest of this list being manageable, printable, and foldable, we’ll stop here. Feel free to reach out for additional insights on how to have a successful assessment.
What Will Delight Your Employees
Moving on to the other side… In addition to delivering a better benefits portfolio, what are your actions to ensure that employees are able to engage with them in the most hassle-free way to maximize the value of those benefits? Employee satisfaction with benefits programs will depend largely on what they get out of those plans.
Once employers choose the right technology, they must leverage all of its functionality to ensure employees have the essential tools.
Self-service benefits enrollment. Employees today are much more comfortable doing things themselves. They only require convenience and intuitive tools to do so. Effective employee self-service benefits provides access to all of the information employees need to choose the benefits that fit their lifestyle and family situation, to identify the right level of health benefits coverage, and to determine affordable contribution levels for all benefit plans—including 401(k) plans, health savings accounts (HSAs) or health reimbursement accounts (HRAs), and health insurance.
Employee features. People should have the ability to see the plans selected, make changes to their information, add/change dependents, support open enrollment and life change events, and get help from HR. From the compliance standpoint, the ability to download their benefits summary (1095 ACA form) online and other important forms. Conversely, being able to securely upload and store adoption papers as well as marriage and birth certificates. For those employers who offer defined contribution plans, the ability to visually see the available information online so the best choices can be made by each subscriber. Support for more advanced features like Evidence of Insurability is something more and more employers and employees ask about.
Scenario planning. No one knows what the future will bring, however, effective benefits technology can provide insight into a variety of “what if” scenarios that show individuals how specific benefit choices will play out in real-life scenarios. That’s where AI-decision support solutions come in handy. They provide comfort to move forward with potentially life-impacting decisions that all of us only have to make once a year. Using the insight gained, employees can then choose and change their benefit elections during the open enrollment period.
Support. Self-service is important but there will inevitably come a time when employees have questions and need support for their decision-making and choices. Tech should be able to supplement artificial intelligence tools with human interactions to help guide employee decision-making based on their circumstances—age, income, location, current health, and other personal information—and generate personalized benefits recommendations.
Administrative ease. Throughout the year, an employee may see any number of life changes—the birth or adoption of a child, a change in marital status, and so on. Effective technology provides self-service benefits apps and systems that allow employees to check every element of their benefit choice while also handling any administrative issues that come up. For example, technology should allow employees to upload legal documents like adoption papers, marriage and birth certificates, etc., to support benefit changes due to a major life change.
Departing employees. What is your experience going to be for your retirees, employees on FMLA, and COBRA participants? In the age of social media, how well employers treat departing employees matters quite a bit. Therefore, benefits technology provide departing employees with tools and support necessary to manage 401(k) rollovers, COBRA continuing health insurance coverage, and any other benefit issues and questions that may arise as they leave the organization.
Step 4. It’s not all about benefits enrollment! What else to think about…
Once an employer has set up employee benefits programs and becomes comfortable with the benefits enrollment solution, the next step is to ensure that all of the other details involved in keeping these programs operating smoothly are taken care of. For a larger employer the natural thought process is to approach benefits management holistically, incorporating other elements beyond enrollment and life change support into the puzzle.
COBRA. Whether on the federal or state level, continuing health insurance coverage for employees and their families is a complex area that requires careful administration. When an employee dies, divorces, or leaves the company, employers need to make sure employees and their families have access to the required information in a timely manner to make informed decisions. Employers need to have peace of mind knowing the changes that are happening with their benefits enrollment and management system proactively and accurately reflect potential COBRA compliance events.
Benefits reconciliation helps to automatically flag benefits provider billing irregularities including under-billing, over-billing, and under-deductions. Additional benefits include the ability to confirm that employees and their dependents are enrolled in the correct plans, as well as incorporate insights from retirees, employees on FMLA leave, and qualified COBRA participants.
ACA compliance and reporting is a vital component in the benefits administration equation. Ensuring that your benefits management solution is seamlessly communicating with your ACA compliance solution—and gaining access to powerful analytics to verify you are keeping compliant and are up to date with your employee benefits data—will make your everyday life easier. Automated form printing and filing capabilities will give you back your January and February.
Billing consolidation and payments can reduce the administrative complexity of generating insurance invoices, incorporate any necessary adjustments, and even handle the payments process.
Dependent eligibility audits are vital to help ensure that only those employees and dependents who are eligible to participate are enrolled in benefits programs. By conducting these audits regularly, employers can be certain they are maximizing the impact of their benefits spending and helping safeguard their plan compliance. Modern benefits technology solutions allow for making these fair, equitable, and hassle-free to employers and employees.
Step 5: You got it, now what? Make your rollout a success!
Once an employer has developed their benefits program, it’s time to present it to employees and communicate its value. By setting the right expectations, employers can avoid overselling the program and potentially disappointing employees. With a clear timeframe for rollout, employers can also ensure that company management, who has an important communications role to play, buys into and supports the benefits program.
Creating a detailed execution plan for the rollout will help reduce inevitable surprises. Most of us are naturally averse to changes and surprises. Drive success by providing ample time to get familiar with the new solution and identifying new solution champions in every department and group that will help with the deployment team-wide.
One fiasco to avoid is scheduling new tech rollout at the same time as the open enrollment. When assessing the new technology and putting together a timeline, plan to stay clear of the open enrollment to reduce the number of variables to work with.
Here are some additional helpful resources to make it easier for you to navigate the world of benefits:
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