Employee benefits premium reconciliation is a crucial task for organizations offering employee benefits. Reconciling billing statements provides both operational and financial value.
Operational
- Happier Employees: When data and carrier communications are synchronized, the delivery of services improves when employees access their benefits.
- Less Work, More Time: It takes longer to fix errors and address complaints than to synchronize data (and premium discrepancies).
Financial
- Control Budget Variances: Ensure your benefits budget stays on track by aligning actual expenses with what you budgeted.
- Control Costs: Minimize wasted resources by reducing the need for staff due to budget variances and employee service issues.
The prevailing attitude in the benefits business has been that reconciling premiums is a losing proposition. The time and energy spent is not worth the returns.
Over the past five years, the tide has changed. Large and small employers have begun a more aggressive process to address both service and financial gaps.
The Main Types of Monthly Employee Benefits Premium Reconciliation
List Bill Reconciliation
The most popular type of billing reconciliation involves comparing a company’s enrollment file to carrier bills. When there are changes throughout the month, the benefits administration platform is the first to get updated, and then the changes are submitted to the carriers for future adjustments.
Self-Bill Reconciliation
If a company uses self-bill, the reconciliation happens between the current month’s enrollment file and the previous month’s enrollment file to flag any changes to submit to the carrier.
Payroll Reconciliation
The next step in reconciliation is to reconcile the enrollment file with the payroll. Payroll reconciliation allows companies to catch discrepancies between what an employee has enrolled in and what premium is actually coming from their paycheck. (See our recent article “The Critical Importance of Employee Benefit Payroll Deduction Audits” for more information on payroll reconciliation.) If this data is incorrect and not enough is coming from the employee for an employer-sponsored Section 125 plan, the responsibility to make up the difference falls to the employer. For voluntary plans, the responsibility to make up for the shortages falls to the carriers.
The larger an organization, the more complex it becomes to perform reconciliation. Hence, while manual reconciliation using spreadsheets has been the traditional approach, automation offers numerous benefits, including increased accuracy, efficiency, and cost-effectiveness.
The Importance of Premium Billing Reconciliation
Employee benefits premium billing reconciliation is essential for several reasons:
- Early Detection of Errors
Regular checks allow for the timely identification and correction of errors, preventing them from escalating into significant issues. - Accurate Payroll Deductions
Ensuring correct payroll deductions maintains employee trust and satisfaction and decreases service-level complaints. - Cost Avoidance
By identifying errors early, companies can avoid costly charges that may arise from discrepancies. Most carriers limit retroactive adjustments to a 30–60-day window. - Data Integrity
Overall accuracy and integrity of an organization’s benefits data lead to improved service delivery and staying on budget.
The Manual Billing Reconciliation Process: A Time-Consuming Task
Traditionally, employee benefits premium bill reconciliation has been a time-consuming and tedious manual process. Entities performing manual reconciliations are spending days to weeks: one AdminaHealth client with 350 employees that offered 14 benefits told us that the process took them 27 hours/month to complete manually.
Regardless of the number of employees in an organization, the number of benefits plans offered determines the complexity of the reconciliation process. Another element is the timeliness and accuracy of data entered into the enrollment system. Keeping data in multiple carrier systems synchronized with the enrollment system is an unending task. Furthermore, each carrier employs its own process for updating changes and recording life events.
This manual process is highly time-consuming, prone to errors, and inefficient. It requires significant resources. Most importantly, it often distracts the HR team from other critical tasks.
The Benefits of Automated Premium Billing Reconciliation
Automated reconciliation technology, such as AdminaHealth has developed within the patented AdminaHealth Billing Suite®, offers a more efficient and accurate solution.
Key benefits of automated technology include:
- Increased Accuracy
Automation reduces the risk of human error, ensuring accurate reconciliation results. - Time Savings
Automated systems can complete reconciliation tasks in a fraction of the time required for manual processes. - Improved Efficiency
Streamlined workflows and automated data entry eliminate manual data entry and comparison. - Enhanced Data Integrity
Automated systems can help maintain data accuracy and consistency. - Cost Reduction
Organizations can achieve significant cost savings by reducing the time and resources required for reconciliation. They can also enjoy cost savings from the identification and correction of premiums that were incorrectly being paid (premium leakage). - Real-time Insights
Automated systems can provide real-time visibility into reconciliation status and identify potential issues early on. They can also track changes month over month until resolution and provide comprehensive audit trails. - Scalability
One of the most persuasive factors for companies switching to an automated reconciliation process is that automated solutions can easily accommodate increases in employee benefits plans offered and company growth. - Focus on Human-Centered Tasks
Frees up staff to focus on tasks that require critical thinking
The AdminaHealth Billing Suite: A Powerful Tool for Benefits Premium Reconciliation
The AdminaHealth Billing Suite is a comprehensive benefits administration software platform with advanced automated reconciliation capabilities. HR teams and benefits billing reconciliation managers no longer need to create complex spreadsheets to find discrepancies. This automated software solution performs enrollment, invoice, and payroll reconciliation and can even perform detailed sub-reconciliation for groups with multiple locations, franchises, or departments.
Key features include:
- Integration with any BenAdmin or Payroll Platform
- Invoice and Payroll Reconciliation
- Detailed Sub-level Reconciliation (by location, franchise, department, etc.)
- Any Plan Size (typically >100)
- Any Mix of Health & Voluntary Coverages, Self or List Bill
- 6-8 week Implementation Timeline
- White Glove Customer Support
Automating Premium Billing Reconciliation for Company Harmony
Automating employee benefits premium reconciliation is a strategic imperative for organizations of all sizes. By adopting automated solutions like the AdminaHealth Billing Suite, companies can significantly improve the accuracy, efficiency, and cost-effectiveness of this critical process. Regular reconciliation helps prevent financial penalties and contributes to overall employee satisfaction and organizational success.
Would you like to see if the AdminaHealth Billing Suite is a good fit? Contact us today for more information: