Amid an evolving compliance landscape, new pressures to rein in costs and ongoing retention issues among job-hopping millennials, health care benefits technology has become an area of increasing importance for employers.
EBNs recent research confirms this trend. Their survey found that 41 percent of benefits decision makers plan to increase their technology spend next year, with 45 percent having already increased their spending from 2013 to 2014.
As employers increase their investment in benefits technology, managers should look at workplace benefits and related technology through, what I like to call, the four Cs: Consumerism, Compliance, Cost and Culture. We can no longer think of benefits as a standalone offering it must fit within the broader scope of Human Capital Management.
Employers are rapidly moving beyond consumer-driven health benefits toward the broader concept of consumer-driven employment. The new consumer expectation is that the entire employment experience, from hiring to retirement, should be as simple and convenient as shopping or banking on a mobile device.
While benefits selection is far more complex than purchasing a book online from Amazon, the consumer expectation remains the same. The benefits selection process needs to be clear and visually engaging, with decision support tools that provide insight into plan choices. Within benefits administration and all aspects of business, full HR integration helps create an experience thats not only more user-friendly, but engages employees in a consumer-like way.
While a slick front-end design can help drive employee engagement, employers cant afford to neglect effective back-end data pipelines that are necessary to ensure the accuracy of benefits information and seamless usability.
The Affordable Care Act has transformed what was once an annual open enrollment benefits decision into an ongoing monthly process of tracking and reporting. One missed step can be the difference between compliance and materially significant financial penalties.
Many employers are turning to outsourced compliance solutions that can manage calculations around affordability of and eligibility for health care benefits. Employers also need to consider the labor-intensive interactions they may have with the public Exchanges and the IRS (appeal and reconciliation) requirements that are often overlooked. ADPs new ACA compliance solution, ADP Health Compliance, gives employers the ability to outsource multiple tasks and end-to-end processes related to ACA compliance.
In addition, organizations must submit and certify critical ACA tax filings. In the event of an audit, your corporate tax and finance departments need to provide proof of your organizations compliance with the law. Proof includes data from benefits, payroll, time and labor, and absence management systems. If your company still operates in data silos, consider a solution that breaks down barriers right now and combines your disparate data. January 2015 is fast-approaching, and employers can be penalized for non-compliance based on their actions or inactions starting next year.
Faulty technology and poor administrative systems can be a major barrier to executing a coherent, cost-effective health benefits strategy. Your overall benefits strategy should leverage an integrated system that can seamlessly achieve the following:
- Track benefits coverage offered to each individual
- Enroll an individual into the appropriate health plan
- Introduce pre-tax Health Savings Accounts that can help reduce total cost
- Offer access to cost calculation and management tools
- Enable real-time communication to answer any and all questions in a timely manner
- Provide tools that enable transparency into the costs of local health care providers
- Administer financial incentives to reward good health practices and appropriate use of health care
One additional consideration is that disjointed administrative systems leave employers vulnerable to premium leakage and unnecessary costs, resulting from faulty dependent verification or benefits that are not discontinued when an employee leaves. I have encountered individual employers where resulting cost overages were greater than 10% of total employer paid health premiums.
Benefits arent just a perk theyre a huge value proposition in any employment relationship. In fact, on average, benefits represent about 8.5% of total compensation paid in the U.S. today, according to data from the Bureau of Labor Statistics. Beyond cost alone, health care benefits are the one element of total rewards that the CEO shares with every front-line employee.
Employee benefits contribute to an employers overall culture of engagement. They have the ability to drive loyalty and retention, and can make candidates view your organization as an employer of choice in your industry.
The best way to deliver against the four Cs is to pursue an integrated approach to HCM. When considered in a silo, new health benefits technology can provide only so much value. Research by EBN suggests that there is much work to be done: 20% of survey respondents reported that their employers benefits and HR systems are only partly integrated, while 22% indicated they are not at all integrated. Not only will a truly integrated approach to the four Cs enable employers to navigate the evolving regulatory landscape, control costs and engage employees, it will also enable employers to turn their attention to their core business.
Christopher Ryan is vice president of ADP Strategic Advisory Services.
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