After making the decision to outsource health and welfare benefit administration and then selecting a third-party supplier, breakdowns in the implementation process can quickly erode benefit team and employee confidence in the new administrator. The risks of implementation can be mitigated by committing resources to partner with the benefit administrator, reviewing in detail all of the benefit plan requirements, and developing a comprehensive change management plan.
Most large companies adopt health and welfare benefit administration outsourcing to provide employee benefit customer service, online enrollment, carrier interfaces, and management of qualified life events. According to the PWC 2016 Health and Well-being Touchstone Survey close to 80% of employers with 5,000 or more employees elect to either outsource or co-source benefit plan administration with a third-party. These organizations offer the potential to deliver compliant and engaging benefit programs more effectively, thereby allowing the benefit department to focus on escalating costs and program strategy.
Despite the market prevalence and appeal, the outsourcing solution often fails to meet the employer plan sponsor’s expectations. For companies implementing benefit administration for the first time or transitioning an existing relationship, Kerrigan Reid identified three key considerations for implementation success.
- The Internal Time Commitment: Although the expense of outsourcing benefit administration represents only a small fraction of the total cost of benefits, companies should allocate significant internal time and resources to ensure a successful implementation. Potential suppliers are overly optimistic on their capabilities to implement benefit administration and downplay as a selling point the required involvement of the benefit team. Without your guidance and partnership, the benefit administrator will not only miss distinctions in your plan, populations, culture, and data, but also lean towards expedient although potentially inappropriate requirements. Additionally, the benefit team also plays a key role facilitating integration with the multiple implementation dependencies that impact internal (e.g., payroll, HRIS, IT, corporate communication) and external (e.g., insurance carriers, benefit consultants) stakeholders.
- Requirements Scope: Employers that fail to scope the requirements spend unnecessary time and cost post-implementation revising administrative processes to the disadvantage of impacted employees. It is important to fully understand the eligibility and benefit structure of each of your populations in order to articulate accurately the administrative requirements to the benefit administrator. With a solid understanding of program design, your benefit administrator is positioned to recommend adjustments to make the program more effective.
- Employee Change Management: Employees are increasingly asked to be more engaged in benefits, but when changes are made to programs or processes they are often the last group to be considered or informed. Employers should dedicate time through multiple communication channels (e.g., online, written, webinars) geared towards your employee population to educate on benefit changes and to demonstrate how the new system and tools work. Forgetting the employee end-user of outsourced benefit administration undermines the implementation timeline and turns a positive message negative that the benefit administrator and employer will spend the length of the contract trying to reverse.
The benefit administration implementation establishes the partnership between the employer and the administrator. With a strong foundation of benefit administration, employers can direct attention to executing strategic priorities like managing cost and risk and engaging employees.
For more information contact Bill Kerrigan at email@example.com
This document is intended for general information purposes only and should not be construed as advice or opinions on any specific facts or circumstances. The comments in this summary are based upon Kerrigan Reid’s preliminary analysis of publicly available information. The content of this document is made available on an “as is” basis, without warranty of any kind. Kerrigan Reid disclaims any legal liability to any person or organization for loss or damage caused by or resulting from any reliance placed on that content. Kerrigan Reid reserves all rights to the content of this document.