Employers are all too familiar with payroll deduction and the administration necessary to collect and remit premium payments for their employees. Each month they have to deduct, aggregate, reconcile and remit employee payroll dollars to satisfy the numerous benefits they have purchased. While it has been the most prominent way for employees to pay for benefits, it has also been the most time consuming and labor intensive function HR departments perform each month. This administration becomes a barrier to new product sales and inhibits employers from offering more choice to their employees, shutting you, the benefit broker and adviser, out from new business opportunities.

What if you found a way to free your clients from this burden? What if you could offer benefits to employees without having to convince employers to take on the additional administration? Here are five important facts that can help free your clients and prospects from the burden of administration all while offering their employees more choice, more benefits and more value.

  1. Employers don’t need to be a bill payer or a bank: If you were to ask any one of your clients about payroll deduction administration, what would they say? That they are sick of dealing with incorrect bills? They are tired of keeping up with frequent changes, additions and terminations? New premium direct deposit technologies are now making it possible for them to step back from this burden and free up their department’s time to focus on more important tasks. No more insurance bills to pay and no more premium reconciliation.
  2. An employee’s paycheck is more powerful than you think: Instead of an employer having to act as the bank and payment processor, the employee’s paycheck can actually do this for them. That’s right, the employee’s paycheck can pay bills, and without the employer’s involvement or oversight. That means you can offer both full- and part-time employees a full range of benefits, including voluntary and exchange based products, without passing on any additional administration to the employer.
  3. You can both add new policies and replace existing policies: Whether you want to change the employee’s existing, payroll deducted, benefits or add new policies for full and part time employees, their paychecks can pay those bills so your clients don’t have to.
  4. You can send employees to the federal- or state-based exchanges and still enable them to pay for their premiums through their paycheck: Payroll deduction, while labor intensive for the employer, has always been the best financial wellness tool for employees. They have premiums paid directly out of their paycheck rather than receiving large bills at home that they cannot budget for. With exchange programs, payroll deduction will no longer be an option for these policies. With premium direct deposit, those employees will still be able to budget effectively by having their premiums directed out of their paycheck and remitted directly to the carrier ensuring policies stay in place and employees don’t lapse coverage.
  5. Employers don’t need to open up a payroll slot to offer benefits to their employees: With premium direct deposit employee dollars are directed out of their paycheck the same way they have deposit funds into their checking or savings accounts. How many times have you heard from a prospective client “I am sorry, we are not opening up any more payroll slots,” and had to walk away from business? With premium direct deposit technology, there are no more payroll slots.

Payroll deduction has always been the most convenient way for employees to purchase benefits, but it comes with the cost of administration. Recognize that the paycheck is more powerful than you think and that it should be paying for benefits instead of the employer. Use this power to open up new benefit opportunities, unburden your clients and prospects from cumbersome administration and make more money.
Mardis is a business consultant with BenefitVault Inc. He can be reached at 215.990.9187 or scott.mardis@benefitvault.net.

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