Free benefits administration: Establishing its value
During an online search, I recently came across an Employee Benefit News opinion article from last year in which Anne Burkett, national HR technology practice leader for USI Insurance Services, made the case against a no-cost employee benefits administration solution.
It may sound like a great idea, especially for an employer struggling with labor intensive processes and a limited budget, Burkett wrote, but free benefits administration solutions are often difficult to integrate into existing HR systems and may do little to improve processes.
Burkett’s statements contain multiple fallacies and do not take into account the reality that many employers of all sizes (especially government and nonprofit HR departments) lack benefit administration because enterprise and payroll solutions charge excessive fees for this crucial feature. Well-constructed solutions including free benefit administration, plus proven integrations for services and benefits, result in excellent outcomes with more flexibility and lower cost. These solutions continually improve, increasing their value.
With a free benefits administration solution, each party profits from collaboration. Brokers and their clients can save a lot of money and enjoy high-quality benefit administration, or obtain benefit administration for a wide range of situations. Comparisons from independent sources such as Capterra bear this out.
Let’s challenge additional misconceptions stated in Burkett’s article:
1. “Free benefits administration solutions are often difficult to integrate into existing HR systems and, as a result, may do little to improve processes,” she writes.
Free solutions have been available for more than 20 years. The software can coordinate with dozens of HRIS platforms. However, eliminating the benefit administration module typically saves $5 to $7 per employee per month. Clients receive a payroll file (often automated) instead.
2. “An employer may give up a significant amount of control over employee data and strategic management of benefit plans,” Burkett says.
Free solutions can provide HR total control of all plan design and access. Clients can schedule automated payroll file transfer to both HR and broker, with confirmations for both sent and failed transfers.
3. “An employer that relies on a free benefits administration solution also may struggle to sever ties with the owner of the technology if a decision is made to partner with other carriers or even change consultants in the future. Since a consultant or carrier in such an arrangement owns the technology, the company can lose electronic access to their benefits administration solution and all the current and historical data, requiring an employer to collect all new data from employees,” Burkett says.
Contractual solutions exist, eliminating this concern. These contracts include “flexible but standard” free data transfer on termination. If a client wants a custom export, there is a reasonable fee, typically not more than $600.
4. “Automated data file feeds between payroll/HR systems and the free benefits administration solution are not widely available or often limited, which can impact data integrity,” Burkett says.
Solutions provide robust export tools. When asked to compare the renewal process from a well-known competitor, the free system did in one minute what the other program required a full hour of tedious data reentry to accomplish.
5. “While the data can be shared between systems with manual bulk imports and exports, these processes are challenging to adopt, and many HR teams end up entering the data by hand,” Burkett says.
A free solution has sophisticated tools, including the ability to build and maintain 834 EDI files. The solution is hosted in the cloud (Azure), a HITRUST environment, and the vendor has its own SOC1SAE18 Type II certification.
6. “An organization that receives benefits administration at gratis from another party has no ownership control over the employee data and is at a major disadvantage if it decides to terminate the relationship,” Burkett writes.
The contract is with the employer.
The free solutions offer collaborations including:
- Integration with any payroll system (including automated data feeds).
- Collaborations with any medical carrier.
- Selection from more than 100 voluntary benefits.
- Administrative services (FSA, HSA, COBRA).
- Wellness strategies (both physical and financial).
- Single, side login with health assessment.
- Dependent and claim auditing.
In addition to the huge portfolio of discounted collaborating services available, some free solutions can integrate with any system (insurance carrier, payroll, third-party administrator, etc.).
HR enjoys more options with each vendor (ACA, FSA, voluntary benefits) rther than packages with expensive alternatives. That is because the core of the system, benefit administration, is free. In my view, the savings an employer can realize using free benefit administration is significant. There is no sacrifice of control or capability, and the free system, with a bilingual self-service platform, improves engagement, an essential but often overlooked component.