Why I've Never Had a Perfect Benefit Reconciliation

Benefits are expensive. And if we’re being honest, they take much time and effort to manage. Of course, there’s open enrollment, in which you have to get every employee to complete tasks or fill out paperwork. But then there are all the mid-year changes due to qualifying life events, additions to your team, or terminations. How can we be sure all these changes are processed correctly? Whether it’s a manual process or you have the software or broker service to take care of this for you, can we really ever be sure it’s correct?

I have yet to begin a benefit reconciliation process with perfect results, and Skywalk Group facilitates these audits each month for many clients. But what even is a benefit reconciliation? It’s a simple process in which you compare your benefit invoices directly from the carrier to your payroll register. In other words, do the deductions and earnings from payroll match what we’re actually being billed? A benefit reconciliation reveals the actual coverage your employees have.

You may be asking yourself, “Why is all this important”? If a change such as cancelling a teammate’s health, dental, vision, and life insurance doesn’t process correctly, you (the employer) may be paying not only your portion of the premium but also the employee’s portion until the error is identified and corrected. I’ve seen these ghost costs carrying on for over a year before! Do you want to be paying for insurance for a teammate (and possibly their family) who is no longer with the organization? The answer is likely no.

Another issue we often catch occurs when new teammates are hired and are initially enrolled for health insurance. If they do not receive coverage as expected, that new employee could be calling you (or your HR team) to say, “I haven’t received my new insurance card yet”, or heaven forbid, “I took my daughter to a doctor’s appointment and our coverage was denied”. Now that is NOT a great way to start the employment relationship or build a foundation of trust, as we’ve put the employee in an unnecessarily stressful situation. Unfortunately, we’ve seen this many times, and it can be avoided.

So far, I’ve discussed the issues we catch for smaller employers (150 employees and under). For larger organizations, these additions and removals may be easier to catch, but the issue we see most are all the unqualified dependents a company is paying for and has no knowledge of. What exactly does this mean? If an employer sponsors a portion of the premium of any dependents, they’re at risk of employees adding family coverage and adding more than just their qualified dependents or children. In this case, we recommend a Dependent Audit to be sure those that are enrolled in an employer’s plan are truly eligible. For more information, see Health Insurance Assessments; the what, the why, the how article on Dependent Audits.  

If you’re following a benefit reconciliation process, you need to stay vigilant and on a regular audit schedule. We recommend you do so monthly as the benefit invoices come in, but you could get away with every other month. Why is the timing so important? In many cases, if you catch a mistake, carriers will only let you go back 90 days if you’re lucky. We’ve seen cases in which we can only backdate coverage or termination of coverage for 60 days. In the end, you’ll thank yourself for being on top of this process and assessing the situation regularly.

Ready to get started? Skywalk Group is here for a one-time consultation to get the process kicked off, can provide you the tools to do an audit in-house, or can take this whole thing off your plate! We’re an extension of your team and are ready to help in an instant! Contact us today at hr@skywalkgroup.com. 

By Samantha Rogers