By Art Brooks, Vice President, BeneTrac
As if not already seen as a cost center in many corporations, Human Resources departments are feeling added pressure to do more with less in the current economy. Many organizations remain focused on best methods to retain employees in preparation for the economic recovery. Still, there is a tendency for others to look at ways to cut back on staff, if not directly, then through reducing benefits and broker services or in asking for more for less. Understandably, brokers may feel increased pressure to justify the added expense of ancillary services and ever-expanding health care costs during challenging economic times. HR departments are being tasked to look more critically at existing offerings. And, while these factors can challenge brokers, they can also offer an opportunity to fill a void and become more of a trusted partner to HR professionals needing critical assistance during this time.
Expanding the Broker’s Role with Technology
Now, more than ever, making advancements with technology can help brokers to play a pivotal role. As companies strive to cut costs and operate more efficiently, brokers with a strong tie to technology can be seen as a trusted partner to help HR managers, of various levels, make the move to technology. Technology can be the “marketing differential,” the distinguishing factor between brokers. A broker-offered platform to automate processes, better manage information and report on the successes of benefits decisions is a major value-added offering. And as health savings accounts and high-deductible plans grow in popularity, technology will become even more of a necessity to support the complexity of managing these plans.
With technology, the role of broker can be altered, from offering benefits to serving as a valued consultant. But, in order to achieve an added layer of efficiency and knowledge, the broker must look to technology that reflects positively on his/her organization.
Technology must be robust in its abilities, including being able to import data from multiple sources (spreadsheets, databases, paper documents, etc.), interface with other systems and data, accommodate company-specific eligibility rules, and enable employees to enroll/make changes. It must provide brokers with a “window” into companies to best address their needs for tactical and strategic support. It must offer the same reputable level of integrity and service, through readily available technical support and hands-free maintenance, such as with an application service provider (ASP).
Finally, the most successful technology implementations often result from working with providers that show a sincere commitment to the broker and to helping him/her most effectively meet the HR client’s needs. A total broker distribution model should include training, marketing materials, branding, pricing based upon the relationship, sales, and client services support to help him/her capitalize on the true value add of the system.
Those technologies that offer the potential to give brokers an edge can often change the game when it comes to looking to a benefits provider, and transform arguments from, “How can I afford to pay xyz,” to “How can I afford not to?”
Efficiency in a Down Economy
Seeing the truth in change—such as taking on a new cost that will actually allow a company to save in the long run—is not always easy, but it is a needed reality in a down economy. The potential for costly mistakes is higher today, especially with HR departments tasked to do more with less, and at a time when many are more understaffed than ever before. The right technology holds strong potential to increase checks and balances and reduce the cost of doing business. It is projected that technology could reduce time required to manage benefits alone by 75%. However, technology does come with some cost, and justifying that expense and determining how companies can best use technology to their advantage, is part of establishing the broker’s role as a trusted adviser.
Frequently, organizations may not realize they are stuck in processes that ultimately come at a higher price when compared with the cost of making a defined change. Out of habit or seeming necessity, HR may find itself focusing on administering mundane transactions, when time can be better allocated to recruiting, retaining employees, training them on job efficiency, etc. Errors surrounding improperly approved transactions or those that are never kept in check can result in huge costs. These can be monetary, such as paying premiums on terminated employees when an organization misses the deadline to get information to a carrier; or they can be harder to define, such as reduced satisfaction when an employee discovers during a doctor’s office visit that he/she was not added to a plan, despite properly enrolling and paying premiums on time.
Technology, conversely, can be used to quickly resolve billing and eligibility issues, manage notifications and billing for COBRA policies, and automate the processing of information in batches. It can offer a more “green,” efficient, effective means of communication, greatly reducing the expense of printing and mailing material to carriers and employees; provide more options through which to communicate, such as email and electronic "bulletin boards"–avenues that today’s younger generations demand; and target communication by location, department, insurance plan, enrollment status, retirement status and others. Technology can offer greater satisfaction, by enabling employees to access their personal information and make changes in their own time. Technology that interacts with payroll and other systems can offer HR professionals added efficiency, through reduced data entry, timely updates and cross-function reporting. Increasingly, technology is becoming a must for self-funded groups, where employers and employees manage and pay for benefits. Companies with administrative services only (ASO) health plans that require multiple transactions to buy use of doctors’ and claims’ systems, for instance, can benefit by using technology to handle all of the details.
Conveying the True Value of Compensation to Employees
In addition to educating HR and management about much-needed efficiencies, brokers can use technology to inform employees about the often eye-opening, complete cost of compensation for the organization. Labor costs, including salary and benefits, are among the largest operating cost categories, accounting for an average of 36.4% of total operating costs and 29.8% of total revenues for U.S. companies (Saratoga Institute, “2007/2008 US Human Capital Effectiveness Report Executive Summary,” PricewaterhouseCooopers, 2007). In 2008, employer health insurance premiums increased by 5%–two times the rate of inflation. The annual premium for an employer-sponsored health plan covering a family of four averaged nearly $12,700, and the annual premium for single coverage averaged over $4,700 (The Henry J. Kaiser Family Foundation, “Employee Health Benefits: 2008 Annual Survey,” September 2008). While Human Resources and management may be well aware of rising health care costs, many employees may be unaware of growing figures, especially those who contribute only a fraction or nothing at all to premium payments. This information can be easily summarized and provided to employees when they enroll in benefits plans through online management systems, and as they continue to log in and make updates. Greater knowledge about company contributions and costs can help increase employee awareness, satisfaction and retention, especially as good benefits plans become increasingly more coveted.
A Window into the Soul
Perhaps the biggest benefit of technology for brokers and HR managers is its ability to lead to more informed analysis of benefit information and options. Robust HR tools can provide access to reports on census information, employee preferences, usage and enrollment details. This can give the broker a clearer picture into the best company plan options for the future. Armed with a history of the company’s benefits information and its existing workforce, brokers can make better recommendations on plans and potential options for greater cost savings, leading to more informed decision making. Technology that supports multiple carriers can offer clients a competitive environment for pricing, and independent systems allow HR professionals and brokers to maintain and transfer company-specific information, regardless of switches in providers.
As the benefits of HR management systems continue to grow, and tougher economic times call for employing the most intelligent solutions, integrating technology offerings into a broker’s value proposition is becoming more and more of a necessity. With the right tools to make access easy, automate procedures, and inform organizations of efficiencies, brokers can take advantage of this time to further expand their roles as trusted and valued providers in the marketplace.
Art Brooks is Vice President of BeneTrac, a Paychex company and provider of powerful, web-based electronic enrollment and employee benefits administration software online at www.BeneTrac.com.