So, you’ve already established a small group health insurance plan for your employees—congrats! That’s a huge step, especially if you have fewer than 50 employees and aren’t legally mandated to do so.
If you’re new to offering group health insurance, gear up. Even after open enrollment is over, you still need to be able to support your team, answer their questions, and handle the inevitable changes and responsibilities that present themselves throughout the year.
The good news is that the right benefits administration solution can help you manage all that—while contributing to employee satisfaction and retention.
But where to start? The health insurance industry can seem daunting—even archaic—and finding the right partner can feel impossible. But it doesn’t have to be. Here are the main areas to consider when choosing your employee benefits administrator (or broker).
First, do you need a broker?
Many small business owners assume you need to get health insurance through a broker, but this isn’t necessarily true. You can get benefits through a broker, through a benefits administrator, or a hybrid of the two. Here’s a quick breakdown of what each of these look like:
|Description||The liaison between a company and their insurance carrier||Cloud-based platform to access all group policies in one place||A benefits administration platform that employs brokers in-house|
|Common services||– Setting up and renewing policies|
– Processing enrollments
– Answering employee questions
– Benefits compliance support (sometimes a la carte)
|– Facilitating online enrollments|
– Providing online access to plan details
– A la carte benefits compliance support
|– Setting up and renewing policies|
– Facilitating and processing online enrollments
– Answering employee questions and providing online access to their policies
– Benefits compliance support
|Example||Local Broker, Alliant||Ease, PlanSource||Gusto, Rippling|
Because they offer different services, you can choose to work with both a broker AND a benefits administrator—but I’ll let you in on a little secret: You don’t need to worry about comparing premium rates as a small business from broker to broker. Per the Affordable Care Act (ACA) and state laws, rates are based on your employees’ ages and your company’s zip code. While there may be some variances based on certain state rules, the rates are the same for all companies using the small group market. That means no broker can negotiate a better rate than another.
So what should you look for in a broker? Keep in mind that some full-service brokers will include almost all levels of support and service that we’re about to dive into. If you’re not sure if you have a full-service broker, you can use the services we’ll discuss as a checklist to help you uncover how much (or how little) a broker is really doing for you.
Whether you use a broker or not, below is what we believe are the most important factors to consider. In the spirit of streamlining processes and keeping everything under one roof, it’s typically strategic to implement a benefits solution that is provided by, or facilitated through, your broker.
Easy enrollment and updates
The most common occurrences you can expect throughout the year are new hire enrollments and qualifying life events. Having a seamless process in place for future enrollments will help mitigate these road bumps while saving time and money. That’s a duo that’s hard to argue against.
Paper forms and PDF documents still dominate the health insurance industry, with many business owners still doing enrollments via paperwork, fax, and email. This can be a time-consuming method—and it typically leads to a greater number of employee questions and confusion.
At a time when remote work has become ubiquitous, finding an online benefits administrator that can both process your enrollments and square away all information with insurance carriers is a necessity. While it may seem tedious to shift your employees from paperwork to online, this process can save you time in the long run.
Consider evaluating online benefits management platforms that will provide an online portal for your employees to complete new hire enrollments, qualifying life events, and review plan documents and insurance cards. If your team has the right resources, they are better equipped to self-serve and find answers.
And don’t forget, it doesn’t end with new hire enrollments. For a fully streamlined solution, make sure your benefits management plan allows employees to easily make updates and log their qualifying life events (like a marriage or birth of a child) to enroll dependents as well.
Plan for payroll and accounting
If your employees are contributing to their premiums for either themselves or their dependents, your company’s benefits will inevitably be tied to your payroll. There are a few factors to consider here that your benefits solution can either make quite complicated, or super simple:
- Calculating your deductions: If you’re required to manually update your payroll deductions, you’ll need to consult a broker or insurance carrier for the premium rates. This allows you to understand the cost of new hires, calculate your total cost for the year, apply that to your pay schedule, and update the deduction to payroll. There are many benefits administration systems and payroll providers that are able to automatically calculate this cost for you. Why waste time doing it yourself if you don’t have to?
- Waiting periods: The majority of businesses impose a waiting period on new hires before their benefits become active. A great benefits or payroll solution will track this for you, so you don’t risk missing the window to update your deductions on time and incurring unnecessary payroll errors.
- Section 125 (POP) document: If you’d like the employee deductions to be pre-tax, be aware that you must have a Section 125 document, often called a premium-only plan or cafeteria plan document, in place to meet IRS requirements.
A benefits solution that is integrated with payroll is able to automate all of the above, and ideally includes your Section 125 document at no additional cost. This will help lead to greater accuracy in accounting and reporting by eliminating the likelihood of human error, and support your business regarding compliance with the IRS.
Health benefits don’t reach their full potential if your employees struggle to understand them. Most employees aren’t healthcare experts, nor should they be! Implementing a benefits management solution that allows your employees to have daily access to their plan details in a simplified format, along with additional levels of support can bolster employee retention and satisfaction.
Now, beware of online benefits solutions that only function to process enrollments. Typically, employee questions tend to sporadically pop up as medical needs arise, not just during enrollment. Having policy details and medical cards in an online platform can allow your employees to easily locate their information instead of solely relying on their insurance carrier’s portal, which can be challenging to navigate.
Once you’ve solved for online accessibility, you need to plan for questions that can’t be answered online. Most insurance carriers provide member support phone lines; however, a reliable benefits administration solution will provide additional avenues of support to answer your employees’ questions with more clarity. It’s important to understand that not ALL online benefits solutions allow employees to call, email, or chat online with a representative to get their questions answered, so make sure to do your due diligence!
Don’t make the mistake of thinking your business is “too small” for group health insurance regulations to apply. The truth is, even if you’ve not yet reached the ACA’s employer mandate of 50 or greater full-time equivalents, if you’re offering insurance there are other group health regulations and carrier underwriting requirements that apply.
Compliance support can easily be overlooked, and it’s important to note that this is not always a standard broker service. It’s highly recommended when first setting up insurance that you have a conversation with a broker to determine what compliance needs they’ll take care of and what components will be an additional cost.
Some brokers or benefits administrators offer solutions but may upcharge for particular compliance services. If you’re not planning ahead, charges can rack up for various compliance requirements such as COBRA or state continuation administration, Section 125 documentation, and ACA reporting.
The majority of small business owners and managers are not compliance experts—and again, they shouldn’t feel like they need to be. Find a benefits administration solution that will oversee compliance, instead of taking on the task yourself of becoming well-versed in complex rules and regulations..
Many group health insurance laws have different requirements surrounding how information must be tracked and disseminated to employees. This is yet another reason why facilitating enrollments through paper forms can get tricky, as they’re inherently harder to keep track of. Finding an online solution that supports compliance requirements (ideally at no additional cost) will ensure that everything is tracked, stored in one place, and easily accessible. Plus, in the event of an audit, you’ll have peace of mind that you can refer back to your benefits administration platform rather than digging through paperwork or email chains.
Renewals and open enrollment
Lastly, feel confident you have a trusted benefits administrator to take you through renewals and open enrollment, arguably the most important time of year for your company’s health benefits. A baseline expectation is that you should be viewing plan options and rate updates during each annual renewal period with your broker prior to confirming a policy for your upcoming plan year.
If you find yourself being compelled to auto-renew any health plan, consider implementing a new service. Your benefits management solution should allow you to deliver professional feedback regarding your current policies, including your expected headcount changes and potential interest in expanding (or reducing) your benefits package. This feedback can be crucial in building a benefits package that meets the needs of your business and employees.
Some brokers decide to come meet in-person to delve into packets of carrier information and rate tables which may not be necessary, especially in the small group market where rates do not vary. Online health benefits administrators can present options from multiple carriers in a way that is easy to understand and highlights the areas of coverage that matter most to you and your employees. You can choose which method best suits you and your team’s needs.
Open enrollments are also traditionally paper-heavy. Many businesses have become accustomed to their broker visiting their office in-person (or if needed, by video call) to facilitate a presentation of options followed by the completion of paper-based open enrollment with employees. While this process can allow employee questions to be fielded live in real time, it may be disruptive to the work day, especially for small businesses. A cloud-based health benefits administrator can facilitate open enrollment completely online, allowing paperwork to be submitted in advance to insurance carriers, and avoiding disrupting day-to-day business tasks.
This essentials checklist can help you get going as you embark on your benefits journey, but there are many considerations unique to your business that will also be important when determining what’s right for your company and team. Gusto can also help with that. Learn more here.