As a result of 2010’s health care reform legislation, many employers will find themselves offering coverage for the first time.
Employers already providing coverage will likely see higher prices associated with benefits as they comply with the various provisions and regulations. One was Caterpillar Inc., a Peoria, Illinois-based heavy equipment manufacturer, which projected that the reforms would cost the company more than $100 million during the first year.
Employers need to brace themselves for new costs under health care reform and work with their benefits administrators. During the next decade, companies will face increased reporting requirements, new regulations, changes to their benefits plans and other legislative demands that will create new challenges for their human resources personnel.
Managing these changes without straining staff or the bottom line is a big challenge. Paper-based benefits management has become inefficient and expensive and presents a challenge to adapt to new health care reform requirements.
The new law also has numerous provisions that require HR personnel to obtain benefits data and statistics as well as communicating this information to the federal government and employees. Benefits management software allows employers to automate many administrative processes to reduce inaccuracies while using administrative time more effectively.
Companies that move their benefits management online have experienced increased efficiencies while cutting costs. Most companies don’t have the time or resources to develop and maintain a system in-house, so one solution could be to adopt software as a service, or SaaS.
An SaaS-based system can be significantly cheaper than an in-house system for many reasons, such as no licensing fees or implementation costs. SaaS also allows companies to avoid the various ongoing costs associated with maintaining a system. SaaS vendors take on all of the maintenance activities, including software upgrades, equipment replacement and troubleshooting. Through SaaS, employers can provide a centralized location for benefits enrollment and management. Employees can access and enroll in all types of benefits from one place: online, any time. This makes the process more manageable and enjoyable for employees and HR administrators alike.
SaaS systems offer increased service to employees without adding pressure to HR personnel. For example, many benefit software vendors include educational videos in their system, coupled with plan comparison and decision support tools. These resources empower employees to make their own decisions while reducing the number of questions for HR.
Adapt to the new reforms using SaaS
Beyond the aforementioned cost savings to help employers combat the rising costs associated with providing benefits, SaaS can also help employers comply with specific provisions in the law.
With health care reform increasing dependent eligibility to age 26, SaaS often provides tools to conduct an eligibility audit and ensure a company is only providing benefits to qualified individuals. Keeping track of the coverage eligibility of dependents has been challenging for employers, and this new provision will make it even more important for companies to utilize dependent eligibility audits.
In addition, as a result of health care reform, many insurers will begin moving to online enrollment in order to comply with the law’s requirement that they reduce overhead. And by 2014, most insurers will be offering plans through Web-based health insurance exchanges.
These planned changes by the insurance carriers further encourage employers to implement online benefits management systems now to realize additional efficiencies created when carriers upgrade their systems. When both parties are using the same format for their data, they can transfer the information.
The health care reform law also requires enhanced communication between employers and their employees as well as the government. Large employers will be required to report information about the health insurance coverage they offer full-time employees annually to the federal government. If a company is using a paper-based system, this would be a large undertaking. Companies that work with SaaS vendors can utilize tools to automatically pull this type of report.
Health care reform also increases the requirements for communicating benefits information to employees. The new law dictates that companies will have to inform their employees of any changes to their heath plan at least 60 days before the effective date or they will face a penalty. An online SaaS system allows employers to communicate with employees no matter where they are.
Regardless of whether a company is starting a benefits program or already has one that is well-established, it’s a good time to analyze the benefits and costs of software as a service to manage the program.
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