Most business owners started their businesses to address market needs, serve the community, possibly to create generational wealth. I haven’t met one business owner yet who told me they started the business because they like compliance and administration.
It’s more common that they might view these areas as a barrier to entry, or at least to company growth. Companies know that in order to grow, they’re going to need good people which only amplifies the administrative responsibilities of the business.
So, it’s no wonder that when companies start adding people, that they look for efficiencies and expanded sophistication in payroll and benefits. Having a strong payroll system to support process and compliance is critical as a company grows, and payroll companies have deep expertise in this area.
A dedicated and visible health insurance broker can enhance the employee value proposition by making sure the employees feel connected to their benefits. On site meetings, one to one consultations, and visibility during open enrollment help employees to feel valued.
While marketing experts stress specialization, there has been a move for payroll companies to offer insurance benefits as an additional service. Here are four blunders I’ve witnessed from one national payroll vendor from the least egregious to just unacceptable.
- Mismatched Benefit Plans – the benefit plans should match the financial needs and culture goals of the company, the type of employee they are targeting, and the experience they want to provide the employee. If you want a Platinum health insurance plan, make sure you pay 100% of the premium for the employee and rich vision and dental benefits. The vision and dental does not add much cost, but keeps the program consistent in terms of quality. Gold and Silver plans also have a place for employees responsible for dependent costs.
- COBRA / Continuation of Benefit – Departed employees who wish to continue coverage pay the premium to the employer, and the employer submits the premium to the insurance carrier. When using a payroll company, the premium may get paid to the payroll company. In one case, a terminated employee found a new job with benefits, the payroll company didn’t collect premium from the employee once new coverage was secured but continued to bill and pay the premium on behalf of the employer. When the employer submits premium directly to the insurance carrier, they can see if the money has been collected.
- Failure to Terminate Coverage – Not terminating employees in a timely fashion can create administrative and compliance problems and the responsibility remains with the employer. Having direct access to an online system either at the insurance carrier level, or preferably through a Third Party Administrator who handles insurance benefit administration, ensures there is a process in place with checks and balances.
- Letting Coverage Lapse – If the employer is not sending in the premium payments, how do they know if coverage goes unpaid? While it seems unlikely that this would occur, this happened with a new client as of January 1 who found that one of the plans had lapsed for non-payment some time the previous year.
In fact, all four of these issues came up with the same client last year, a key reason they needed to make a change. So why change to an insurance broker for benefits management instead of a payroll company?
This business owner wanted a vendor partner who is attentive to their business, cares about their people, understands their value proposition, and find ways to work towards that mission. If you don’t feel like your benefits broker understands your mission, consider making a change and see how powerful it could be if they did.
David Hillelsohn founded DHill Financial, LLC with the mission of enhancing the cohesion among families and businesses by prioritizing meeting obligations and taking steps to ensure people know you care. His vision is for people to want to do for others thereby doing for themselves. David is an independent agent licensed in the majority states around the country, and he can be reached at 703.435.6028 or by email at firstname.lastname@example.org.