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A Nightmare of Paperwork

The average temp at Parker changes enrollment status three to four times a year.

November 9, 2001
Related Topics: Benefit Design and Communication
Reflecting on his job as the sole benefits administrator at Parker Services Inc.,Rob Cochran declares: "My life was miserable." In 1997, the firm wasone of the first companies in Seattle to offer health benefits to temporary employees.It was a competitive strategy in a tough labor market, but the resulting paperworkand claims errors made Cochran's job a nightmare. "It was like trying tountangle five miles of Christmas lights."

Name:ParkerServices, Inc.
Business:Temporaryservices provider

    To be eligible for benefits, Parker temps must fulfill several requirements,including working a minimum of 500 hours and working 30 hours per week for fiveconsecutive weeks. Because of the nature of temp work, he says, the problemis that an employee's eligibility is constantly changing. A person might worka six-month project, and then have no work for six weeks. She would have tocancel her benefits and go on COBRA for those six weeks, then re-enroll aftershe begins the next project. The average temp at Parker changes enrollment statusthree to four times a year. "It was really difficult to process billingand to get current enrollment status to the carrier," Cochran says.

    The problems were compounded by the carrier's slow and error-prone, paper-basedprocesses. Paperwork was sent by mail or fax, and it took four to six weeksfor the insurer to process claims and enrollment, he says. Employees had topay for medical expenses out of pocket during that time, and apply for reimbursementwhen their enrollment kicked in. Or they benefited from insurance that shouldhave been canceled, and had to reimburse the insurance company when their statuswas finally readjusted.

    Cochran spent 60 percent of his day calling carriers, processing claims, reconcilinginvoices, and updating eligibility. Because there were so many status changes,at least 50 percent of every invoice was inaccurate, which further delayed theprocessing, he says. And because employee information was stored in three separatedatabases -- permanent employees, active temps, and COBRA users -- there wasno way to pull a comprehensive report to reconcile claims. "It took hoursto gather that data."

    The company considered investing in an HRMS for benefits administration orbringing the process completely in-house, but both options were too expensive."We were beginning to panic," Cochran says.

    Then in 2000, the association through which Parker gets its benefits rolledout Employease, a Web-based hosted HR application. The new system gave employeesaccess to an online database of their benefits information and let them interfacewith the insurance carrier directly. The cost averages between five and sixdollars per employee per month.

    On his own in just one week, Cochran uploaded the enrollment information forall employees and set up the plans. Employee data now resides in a single onlinedatabase, and claims information and reports can be pulled up instantly. And,because the carrier also interfaces with Employease, invoicing is automated."I just pull up my invoice report, compare it to the invoice from the carrier,and send the payment," Cochran says. Invoicing errors have dropped by 90percent since transactions were moved online.

    Parker employees now change their eligibility status online and then e-mailit to Cochran for approval. With his authorization, it automatically goes intothe database, which the carrier downloads daily.

    Because of the complexities of their eligibility process, employees still doinitial enrollments on paper, he says. But he enters the information electronically,and the carrier has it in the database by the next day.

    "I can't tell you how it's changed my life," Cochran says. He nowspends the bulk of his workday improving procedures and working on a new databaseto automate the eligibility process.

    "It saved us thousands of dollars we would have spent" on an HRMS,he says, "and it's saving money from my time no longer spent on paperwork."

    It has also made employees happier. Cochran used to get four or five callsa day from angry employees about enrollment or claims problems; now those callsare virtually nonexistent. "I have gotten a few calls from long-term employeeswho were used to the old system. They got their cards in the mail a few daysafter they signed up, and they wanted to know what was going on."

Workforce, November 2001, pp. 65-66 -- Subscribe Now!

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