Employee Benefits Administration
EBA offers a variety of services tailored to each client. It provides specialized expertise allowing the client’s HR Department to support the organization’s core competencies. EBA will focus on:
- Administration of COBRA and HIPAA
- Administration of Flexible Spending Accounts
- Administration of Basic Employee Benefits programs — eligibility, enrollment, billing reconciliation and employee support through a call center
- An all inclusive level with all of the above
3.1 Service Description
1. COBRA and HIPAA administration
- COBRA is an acronym for the Consolidated OmniBus Reconciliation Act. It is a federal mandate which states that employers must offer terminated employees and their eligible dependents the option to continue their group health plan coverage for a minimum of 18 months by paying a monthly premium. There are many regulations governing the information and types of communications which must be distributed to the terminated employees. If the terminated employee and/or dependents elect this coverage, they have the same coverage and rights as an active employee. Employee Benefits Administrators will track the eligibility, provide the employee communications, and accept payment of the COBRA premium to remit to the employer or provider. EBA will have a working relationship with the benefit providers.
- HIPAA is the Health Insurance Portability and Accountability Act. It is also a federal mandate and states that employers must provide verification of group health insurance coverage to terminated employees and their eligible dependents. This notice is basically used by the terminated employee and/or dependent to substantiate their previous coverage, and can be used to meet all or a portion of any waiting period subject to ‘pre-existing’ conditions imposed by future employers’ group health plans. EBA will administer this process.
2. Flexible Spending Accounts administration
- There are two types of Flexible Spending Account plans: medical and dependent care. In a Flexible Spending Account arrangement (FSA), the employee signs a salary reduction agreement establishing per pay period contributions to either (or both) types of accounts. These deferrals are calculated on a pre-tax basis (federal and most states). The IRS sets a limit on the dependent care account of $5,000; the employer sets the limit on the health care account. As the employee incurs eligible expenses, they submit ‘proof of services’, usually receipts, and are then reimbursed from their pre-tax accounts. EBA will track eligibility, enrollments and changes, as well as process the claims submitted for reimbursement. EBA will have a banking agreement with each client.
3. Basic Benefits Administration for Group Health Plans
- EBA will handle: eligibility tracking, benefit plan enrollments/deletions, monthly billing reconciliation for all applicable providers, and a call center to handle employee phone calls. Employee communications are key to these processes, and EBA will conduct employee meetings and manage the communications and enrollment/change processes. It will also be necessary for EBA to establish solid working relationships with the benefit providers (insurance companies, or third party administrators). EBA, in effect, becomes the Employee Benefits Administration Department for their client.
- EBA will reconcile the monthly provider billings. For example: If an employer offers employees group health plan insurance with Blue Cross Blue Shield, the employer will be billed monthly for the premiums. EBA will reconcile these billings with the number of employees covered and the coverage options of each employee.
- EBA will also provide a call center to the clients’ employees. This call center is designed to handle ADMINISTRATIVE QUESTIONS ONLY. Below is a sampling of questions the call center will take:
- What type of coverage do I have?
- Can you explain the Explanation of Benefits I just received from the insurance company?
- Can you tell me the status of my flexible spending account reimbursement?
- How do I add a dependent to my coverage?
- Please note that these questions can be easily answered by either looking at the employee database Employee Benefits Administrators will maintain, or by receiving a fax from a covered employee or dependent of a processed Explanation of Benefits. The call center will not answer questions regarding the group plan legal document NOR will the call center decide or rule if a health care claim was processed correctly.
4. A service level that includes all of the options above
- Some clients may wish to bundle the above services and contract with EBA for all of the services it provides.
Within the first three to four years in business, EBA plans to expand its services from strictly benefits administration to offering payroll services and other HR administration programs.
3.2 Competitive Comparison
Companies that currently provide benefits outsourcing include: Benefit Concepts, Trion, The Javers Group, Arbor, ADP and Ceridian. However, these companies either provide partial outsourcing services and it is not their main line of business, or they target a much larger clientele.
Additionally, some insurance companies and brokers offer some degree of administrative support. EBA will tailor its services to each client, including offering a call center to answer employees’ questions. The call center, along with the principals’ 25 years of experience, are key factors that the competition doesn’t have. Unless a competitor is a third party administrator for processing claims, they will not provide a call center.
It has been the experience of the principals that no matter how much a company automates the benefits process, employees still want to pick up the phone and speak to a live person. It is an invaluable customer service feature. The principals of Employee Benefits Administrators have over 25 years of experience in corporate benefit administration and a history of providing outstanding customer service. Throughout their careers with various employers, they have held senior benefits positions, giving them an edge over their competition.
3.3 Sales Literature
EBA has produced a brochure for their clients. This brochure outlines the services provided, as well as the benefits a company will experience by outsourcing benefits administrative functions.
EBA will publish a quarterly newsletter to be sent not only to current clients, but to prospects as well. The newsletter will include recent legal updates and summaries, definition of terms, and a brief question and answer section on basic employee benefit questions.
A Power Point presentation has been designed to deliver in a sales presentation. When presenting proposals, EBA will not only offer the proposal document, but also a folder of information. The folder will include hand-outs explaining the company, its services, and their edge over the competition.
A website is also in process. It is designed to handle general benefits questions as well as describing and marketing EBA’s services. The website will contain links to other appropriate Human Resources websites.
Once a client signs a contract for services, EBA will meet with the current benefits administrator to complete a client data sheet. The client data sheet will:
- List the current benefit providers
- List the appropriate contacts
- List the office locations or divisions of the client for reporting purposes
- Outline the current enrollment and change processes
- Outline the current provider billing schedule and processes
- Determine the types of employee communications EBA will be responsible to distribute to the client’s employees
- Determine the schedule and types of employer reports
From the client data sheet, EBA will then initiate the relationships necessary for each service. For example: if EBA is to administer the medical insurance, the insurance provider will be contacted and introduced to EBA as the new administrator. EBA then becomes the contact for these services and the benefit provider will accept and funnel information through EBA.
With the completion of the client data sheet, EBA will request the census of appropriate employee data in order to populate the HRIS. Two audits of this information will be performed. The first will audit the client’s data against EBA’s, and the second will audit EBA’s data against each benefit provider.
As of the effective date of the contract, EBA will then become the client’s Benefits Administration Department. Depending on the services the client has elected, EBA will be responsible for:
- Preparation and distribution of enrollment packets and/or other employee communications
- Employee and dependent benefit eligibility tracking
- Employee and dependent benefits enrollment
- Maintenance of a Human Resources Information System (HRIS) to track data
- Notification of enrollments, changes and terminations to appropriate benefit vendors
- Month end billing reconciliation of benefit vendor invoices to HRIS and employer databases
- COBRA administration
- HIPAA administration
- Flexible Spending Account administration (health and dependent care)
- Call center to handle certain employee questions (eligibility and certain claims issues)
EBA relies on the technology of ASP: Application Service Providers. EBA is the benefits administrator for its clients and needs immediate access to employee data. Buying this technology and hiring a professional to support it is not cost effective for a start-up company. By contracting with an ASP, EBA has access to software and support that otherwise may not be available.
EBA has purchased access licensing for the Human Resources software. This software will track all of the necessary information on employees, and offers a reporting module in order to provide clients with periodic reports. The software is set up to handle multiple companies with multiple locations and/or divisions, if necessary. Great Plains™ is also “expandable”, meaning the package can deliver more than just employee benefits information. For example: the software also offers a Payroll Module. This was a definite benefit when reviewing software packages, especially since Payroll Services may be part of EBA’s future service options.
Currently, the two principals have IBM laptop computers which are networked at the office. Each laptop can be “docked” into a dummy terminal allowing use of a full size monitor and keyboard. Internet access is handled via a DSL modem and router. The DSL service is provided by the main telephone service provider in the area.
As stated previously, high speed Internet access through DSL is extremely important. A client’s employee data needs to be accessed in a moment’s notice in order to provide the client with a basis of good customer service.
3.6 Future Services
In the future, EBA will broaden its services to include administration of payroll processing as well as other types of optional Human Resources programs. The principals of EBA will continue to watch the development in HR and follow the avenues leading to more business opportunities and ideas.
As the company and the outsourcing market grows, the Internet will become a very valuable tool. The website and the Internet can greatly automate employee enrollments and change processes. The website is planned to be able to handle multiple company and users specific to each company’s plans, with links to the company’s website and intranet.
Obtaining broker and agent licenses are also planned. In becoming brokers and agents, EBA will be able to provide more services to their clients — offering it all under “one roof”.
EBA will also expand its market to national companies as well, but will continue to focus on the small to medium size employer.