Benefit Administration Q&A

Strategic HR has prepared the following Question and Answer Reference Guide to assist potential clients with their decision on whether to outsource their benefits administration requirements. This guide will answer the most-often-asked questions or concerns heard from employers.

Isn’t it too expensive to outsource our benefits administration?
It’s too expensive not to outsource your benefits administration. In many situations, companies can’t afford a high-level benefits expert and have someone in their accounting or administrative areas handle all benefits. Even if your company is large enough to support a full-time Benefits Representative, are you 100% confident that they are knowledgeable enough in all compliance-related areas to minimize your risk?

Also, by outsourcing to Strategic HR Services, you recognize savings by leveraging economies of scale. Our strategic alliances and systems open up products and services that may not be available to you as a standalone company, often at a much lower price. Let us do the math for you. In most situations, we can save you money.

Benefits administration simply consists of having employees fill out forms – why do I need an expert for that?
There is much more to benefits than filling out forms. In fact, by outsourcing to us, you may be able to eliminate many forms! Do you know that a violation of COBRA law can cost you fines of $100 per employee, per day? Do you know what "red flags" the Department of Labor would look for if they ever audited your benefits? If you have employees in other states, do you know the laws in those states?

Unknown liabilities due to improper benefit administration can be devastating to your company. Proactive management by a professional benefits team can prevent problems down the road.

My broker does everything – why do I need to involve another company?
Your broker should do a considerable amount of work for you, including annual validation of your insurance coverage and rates, carrier negotiations and general troubleshooting. Although your broker may provide you with excellent service, he or she generally won’t perform day-to-day administrative functions such as answering employee questions, managing payroll deductions, billing reconciliation or processing of all new hires, terminations and changes.

Strategic HR is not a broker and will provide you with objective information about brokers and carriers so that you make the best decisions for your company and your employees.

Our employees are happy with our benefits package.
That’s great! As you know, a robust benefits package is key to employee satisfaction and retention. Although you may not require any immediate changes, you can still realize some cost savings and efficiency gains by outsourcing to Strategic HR. We can add value to your benefits package by offering online services, a national call-center, customized communications and electronic transmissions to carriers. Also, through the use of monthly management reports, we can help you evaluate trends and help spot educational needs for your employees. If something should change and a benefit offering becomes less popular, we can help you spot it immediately and recommend alternatives.

If employees choose not to participate in benefits, isn’t it their loss?
As you may or may not know, low participation can cause carriers to cancel your policy or may create discrimination-testing issues in some retirement plans.

How do we know if outsourcing will fit into our culture?
Strategic HR is sensitive to the fact that every work environment is different. As a result, we spend a significant amount of time getting to know your workforce in order to determine the best services for them. For example, we will not recommend an internet-based enrollment if only 20% of your workforce has access to a computer. We will adjust our services in order to make your employees more comfortable. If your company has different shifts or scheduling needs, we will plan meetings around your schedules. If you have different language requirements, we will do our best to accommodate them. We have conducted meetings on factory floors, in model homes, in executive conference rooms and auditoriums, with slide shows or without, in large or small group settings, including one-on-ones. The bottom line is that we work very closely with you to determine what your employees will respond to.

You mentioned that you help reconcile carrier bills. Why do I need help with billing or why do I need management reports?
If you have ever reconciled a carrier bill, you know it is usually not fun! Each carrier has a different format for their bill - often sending several separate invoices for the same policy. In addition, each carrier has different rules about the corrections they will accept on the bill. Most carriers will not grant credit for terminations or changes that occurred several months ago (most will only provide 30 or 60-days maximum credit). Therefore, timely tracking of changes, new hires and terminations through the use of management reports is critical to you. Many companies lose money on lost refunds on a regular basis and don’t even realize it or know when or how to fight it. We help you get the credits that you deserve and make sure you are being billed properly.

Why do we need a benefit "strategy" - aren’t benefits just a necessary evil?
This couldn’t be further from the truth. According to a national survey by William Mercer, benefits were one of the top three decision criteria employees considered before accepting a job. Your benefit strategy should be designed based on your company goals and updated whenever your goals are revised.

Why should we be concerned about ongoing communication? Employees will find out what we offer in their new hire kit and through word of mouth.
Your employees will read their new hire kits about half of the time. Unfortunately, most employees don’t know what they have for benefits until faced with an emergency situation. Some will blame you for their lack of knowledge. Some employees may even be lured away by another prospective employer with "better benefits." It’s not that the other employer necessarily has better benefits - they may have just done a better job communicating them or selling them to employees. Would you want to lose a good employee in order to find this out?

How does it all work?
Every client relationship is different because every company has different needs. We go through a very thorough implementation with you and develop customized procedures that will integrate into your needs. It is our objective to provide seamless administration and service with minimal change or disruption to your day-to-day functions. In most cases, we will help you operate more efficiently, and your employees will notice more, not less, attention and service.

How will you provide our employees with more attention and service if you are not on site?
Your employees will be able to access us via a national call center that can answer their benefit questions, as well as address any other general human resources issues. They might also be able to access us through the Internet, if that is a service you elect. In addition, your company will have a dedicated Benefit Specialist that is responsible for the overall management of your account. That dedicated Specialist will take calls that cannot be resolved by the call center and serve as the primary contact for people in your organization, such as members of executive management or the payroll department.

Where do I begin?
The first step would involve meeting with members of Strategic HR’s Benefit Team to determine goals and objectives. We will conduct a preliminary audit and provide you with a timeframe for implementation. The length of your implementation period is heavily influenced by how many changes you would like to make, whether or not your records are already automated or if you have any pending enrollments in the near future. We generally start taking employee calls immediately and work with you on all employee communications. At the end of the implementation period, we provide you with procedures and management or audit reports. Most clients find that the implementation period is a "discovery" period, and as a result, their records and processes are cleaner and more efficient than before.

Can I keep my relationships with my existing carriers or broker?
Absolutely! We will honor any previous relationships and will ask you to introduce us to your broker and carrier (if we don’t already work with them). If your carriers or broker has questions about the way our services work, or how we would interact with them, we would be happy to talk with them directly.