Voluntary benefits continue to enjoy overwhelming growth and popularity. Unfortunately, the area of billing or deduction management creates noise, frustration and in some cases it can turn clients into former clients if not managed effectively.
Success in voluntary benefit or VB sales, enrollment and administration has always been determined by the attention given to the customers needs and desires. One size has never fit all, and with todays increased capabilities, that phrase has never been more accurate.
Self-billing with a single source
Lets take a look at the process of billing, reconciliation and distribution of premiums for VB. For small employers that have a few VB products and little turnover, the standard paper bill is often the preferred method of invoicing and payment. However, for the larger employers with multiple VB products from multiple carriers, paper invoicing is a thing of the past. The concept of self-billing addresses all of the issues the employer has with the traditional payment method and gives the sales and enrollment organizations peace of mind.
The effective self-billing process is as follows:
- Enable the employers accounts payable department to send or distribute participant and premium information
- Most employers can send premiums via electronic process such as ACH payment directly from the companys payroll system
- Many times a single source (such as a licensed and bonded third-party administrator) can:
- Reconcile the bill for the employer
- Distribute the premium to various or multiple insurance carriers
- The single source will also send participant change information provided by the employer on to the carrier(s)
- The single source must be able to accept the employer data in the format the employer sends, and distribute the carrier data in a format where the carrier can integrate the data into its policy administration system
- The TPA must be able to take updated deduction information (additions, changes, terminations) from the various carriers on at least a weekly basis, and securely forward that information to the employer in a format that can be immediately integrated into the employers administration and payroll system
This closed-loop system methodology enables and assists the employer with consistently administering accurate payroll deductions and remitting them without human intervention. It also enables the carriers to apply the premium and pay the resulting commissions according to their standards.
Self-billing can work for any size employer. The key is interviewing the employer to find what works best for the HR and payroll departments and matching the billing solution to those needs.
Tinker Kelly is an EBA Advisory Board member and president and CEO of Voluntary Employee Benefits Advisors (VEBA) in Nashville, Tenn. He can be reached at email@example.com.
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