Compliance, cost containment overwhelm benefit managers

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A majority of U.S. employers feel overwhelmed in the race to control costs, manage benefit programs and meet compliance regulations, according to a recent survey sponsored by The Guardian Life Insurance Company of America.

Sixty percent of employers said they feel overwhelmed by the increased demands and complexity of managing their company’s benefits programs. Meanwhile, 69% of respondents from larger firms (with 100 to 500 employees) admit to struggling with issues related to rolling out new coverage, changing insurers, conducting open enrollment and communicating with employees.

The insurer conducted the survey, which is the third set of findings from its fourth annual Guardian Workplace Benefits Study.

“The findings were surprising in the sense that many more employers today, especially in the 100 to 500 employee segment, are starting to feel the pinch from the changes to state or local leave laws that have been put in place in the last few years,” says Gene Lanzoni, assistant vice president, group and worksite marketing for Guardian.

“They’re also feeling the pressure of doing more with less and being more efficient and using technology in terms of benefits administration. They are really feeling the need to better integrate many of their benefits-related systems along with human resource information systems and their payroll that were more the domain of large employers,” Lanzoni says. “Large companies have made a lot of progress, but smaller companies didn’t necessarily see the need or it wasn’t as high a priority.”

The cost of compliance

Like other highly regulated industries, compliance is the chief concern for more than 25% of U.S. employers surveyed, but fewer than 33% responded that their companies are well-prepared to meet those regulations. Guardian found that 70% believe their firms cannot adjust to new rules added on the federal, state or local level. This includes sweeping laws pertaining to the Affordable Care Act, the Family and Medical Leave Act, the Americans with Disabilities Act, and paid parental leave laws.

“There’s just so much going on in the legal and regulatory environment right now as it affects employee benefits that many of these smaller companies don't have the in-house expertise to handle them,” Lanzoni says. “They don’t have access to the same kind of general counsel that a larger company would.”

In response, these smaller companies are turning to third-party firms for their compliance needs more and more.

“There are more solutions available in terms that are providing technology that helps to automate the process of staying on top of what's happening in various state laws or various regulations that impact benefits,” he says.

Containing costs while doing more with less is a big concern, as well. Guardian found that fewer than 33% of companies believe that employee cost-sharing and high-deductible health plans have been highly successful in achieving target savings.

“Employers seem to be struggling to meet their cost control goals so much that they're looking for new ways that were more the domain of larger employers,” Lanzoni says. “We’ve seen an increase in the number of outsourcing vendors that they're using to manage these activities.”

And management is taking notice of these changes and their new demands.

“There’s been more focus at the senior management level in these companies as in, ‘we need to do things differently,’” he explains. “We need to take a longer view of our employee benefits strategies if we're hoping to continue to reduce costs at the rate we need to.”

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