Employee benefit planning is familiar ground for most benefit professionals, both advisors and their employer customers. However, there is a major pitfall when familiarity with concepts leads to assumptions that can destroy an effective employee benefit plan. Here are some of the bad assumptions I have observed over the years.
All employee benefit administration systems are the same – NOT!
Many times, it seems deceptively easy to choose a benefit administration system. After all, every system comes with a glowing description of its advantages. The functions all seem similar: maintaining employee and dependent eligibility, processing enrollment and terminations, tracking product deductions, providing reports, enabling employee benefit-related communications, etc. But don’t be deceived by the seeming similarities. Every system will say it is user-friendly, but the reality of using the system must be experienced, rather than simply described. Make sure the system is tested from the viewpoint of both the employer benefits administrator and the employees who will be using the system to enroll or make changes. I have personally seen “user-friendly” systems that made life miserable for users.
All enrollment processes are the same – NOT!
Most enrollments are conducted through some form of benefit administration system. That makes one part of the process efficient, but it also requires an effective enrollment marketing campaign to support the process. Employee education is the key to maximizing the value of enrollment. Employees need to know how to use the system as well as how to evaluate the products on the system. It’s important to integrate systems with human communication, either via in person meetings with employees, or in technology enabled person-to-person enrollment sessions.
All products are the same, so price is most important –NOT!
This is a frequent assumption. Unless you understand the nuances of a product, price does seem like the easiest thing to compare. After all, how different can products be? As with many things, the devil is in the details. Contrary to what might be expected, items like the definition of disability or critical illness can be vastly different from product to product. Another area that’s often overlooked is the exclusions and limitations of the contract, and how they affect the price. Even a product as straightforward as life insurance can have extra customer value through features like advanced benefits for critical or terminal health conditions.
The insurance company doesn’t make much difference – NOT!
An insurance company’s service level and ability to work with customers when there are issues make a huge difference in satisfaction on the part of employers and their employees. It’s vital that benefits advisors get to know their insurance carrier capabilities: how well they coordinate with benefit administration systems; how well they support effective enrollments; the clarity of their products; and the responsiveness of their claims department, especially when it comes to disability and leave related services.
Don’t forget about billing – IT MATTERS A LOT!
Billing processes represent the area where benefit administration systems, bills from insurance companies and other product providers, and payroll providers collide. In my experience, an employer’s administration team and their benefits advisors need to fully understand how these areas fit together, because this is the most common place for benefit administration to go awry. Take care to understand the different billing/payment nuances of various product types – many group products offer much more payment tolerance than individual products, where differences of a few pennies can create issues.
All benefits advisors are the same – ABSOLUTELY NOT!
Benefits advisors and brokers need to master the elements above so they can provide advice at every level of the benefits planning process. In some areas, such as enrollment, they may rely on third-party partners for expertise they do not own, but they need to select such partners very carefully. Employers can research advisors through third-party services that may help identify best-in-class advisors in their area. Benefit advisors should have available references from employers as well as being prepared to help employers avoid the pitfalls of bad assumptions.