Stop ‘Eyeballing’ Your Benefits Bills: How to Save Thousands With a Real Reconciliation Process

Stop Letting Your Benefits Bleed Cash.

Employee benefits are one of the most important things we can do as employers & today, it’s considered a requirement for companies to attract & retain talent.

And they cost A LOT.

If business owners don’t offer them, it’s hard to get the right people, or the competition down the street will.

What’s interesting is that most employers I meet don’t actually reconcile them. They have their accounting person or team reconcile everything else—but not carrier invoices or payroll audits. And that’s a huge mistake.

Why?

Those invoices go to HR. What does HR do? They “eyeball” the bill.

They are smaller - less than 250 employees in most cases - sometimes less than 20- and they look for who’s hired & who’s fired. That’s typically IT.

Did Sally come off of the invoice last month since she retired? Yes. Check. Done.

Did Jack get added to the invoice when he was hired last month? Yes. Check. Done.

This is a “recon” that I see 95% of the time.

This isn’t a “recon”—this is “eyeballing the bill.”

Accounting folks typically do the same in small to medium sized companies so let’s not blame this all on HR- in most cases accountants don’t recon the internal details of the actual bill. They recon the total cost of the bill. Did the total cost get paid? Yes. Check. DEBIT done. They don’t commonly review the details that are part of the bill. They look at totals for debits and credits in your bank account, thinking HR is looking at the details. But they aren’t. HR thinks accounting is handling this. And… no one is. Or if they are: they are…. You guessed it… EYEBALLING it!

Following me?

This isn’t an insurance recon.

99% of the time, this is what you will find is going on in your business—just ask them what their process is. Look at the spreadsheet they use—is there one? Most of the time, no. If there is one, what is it showing? Probably not much—who’s coming and who’s going. 99% of the time.

A True Benefits Recon is Comparing Two Things:

Are my employees in the right benefit?

If they enrolled in the high deductible plan but are on the bill for the PPO plan that costs more- you are overpaying for the premium because it’s not the right one. The PPO costs more. Furthering that- your employee is enrolled into a benefit they didn’t want and it’s the carrier’s mistake. Your HR person may have enrolled them into the right plan, but the insurance company made the mistake—even on “feeds,” those cause errors frequently. Add enrollment mistakes to the issues when they have to go to the ER and their benefits aren’t the actual ones they enrolled in—more issues…

Getting back to costs, which is the topic of this blog… it’s very easy for that to happen. If the difference is $125 a month in the premium and that goes unchecked for more than 90 days, the insurance carrier in most cases won’t refund the employer for not catching it within that window—look at your contract with them. That 90 day window to catch mistakes is normally there as a disclaimer.

$125 x 6 months = $750—for ONE employee mistake. Ouch.

Let's Talk About "STD" (Short Term Disability) and Life Insurance Benefits:

This is done based on wages and ages. It’s a calculation that is painful, and if done manually—good luck. No one manually calculates this when they audit the monthly billing. Not HR. Not accounting. If they say they do ask them to show you their calc. If they do calculate it every month by employee down the line, I’ll buy you a coffee—or actually, the whole pot.

Benefits systems that program and automate the calculation for enrollments are the only way to get this right at time of hire or open enrollment—but that is only one part of the process. Each month, that must be compared to the bill. Otherwise, you don’t and won’t know if you are paying the right amount. And even then, systems are only as good as the humans setting them up & driving them. If they didn’t audit the setupand do recons after your open enrollment renewal pricing, this can actually get worse! It takes both. Humans AND tech. Doing only one is just half of the process—and tech is only as good as the person auditing it to make sure it is set up RIGHT from the start.

Finally & Most Importantly: Payroll Audits.

If your HR/accounting team isn’t auditing payroll deductions against the benefits system and the carrier invoices, there are errors. Just lying there the whole time you have offered them, unchecked. And typically, not in your favor. YEARS can go by before someone discovers these.

What happens when an hourly employee is out of work for 3 weeks and their payroll deduction doesn’t happen because they didn’t have any pay? Does HR “catch up” the deduction or just let it ride?

What happens when a salaried employee is out on an unpaid leave? You don’t stop their benefits, but their benefits are still charged? Do you catch those up or just let them ride?

These are the obvious ones. But in most cases, 99% of the time when one week is missed and that week costs $75 bucks due to the employee deduction being missed just once, that’s $75 lost for that one employee, for that one benefit. Compound that by multiple benefits over many weeks, with multiple employees- cash flow out the door.

Mistakes by humans and technology are inevitable—it’s what you do to catch them quickly that makes all the difference.

DON’T eyeball your insurance bills- and if you don’t have this ability in-house- give us a call- we do it to the penny, every month, for every client.