In a world of nearly instantaneous money transfers, digitized enrollment data, and complex insurer core admin systems, it’s surprising that benefits billing causes significant headaches to both insurers and employers. But inaccurate billing and the time it takes to reconcile bills often prove to be a significant drain on employer and insurer resources and productivity.
Here’s why benefits administrators and employers hate group benefit billing and a potential solution that improves billing accuracy and eliminates manual reconciliation.
What is List Billing?
Most insurers use list billing to generate a bill for group insurance plans. A list bill is just that — a list of individuals enrolled when the insurer generates the bill. The list bill will usually also include the coverage the individual has enrolled in, the rate or premium due for that individual, and the total premium due by the employer.
Why Can List Billing Be Problematic?
That seems very straightforward, right? Unfortunately, list bills can be problematic. To eliminate overbilling, companies will typically reconcile that insurance list bill by comparing it to their internal enrollment data. For large employers, that typically means extracting enrollment information from their benefits administration platform. And, unfortunately, in many cases, reconciliation is also manual.
That reconciliation is generally going to find more issues the longer it takes to perform. Why? Because both systems storing enrollment data — the health insurer’s billing platform and the benefits administration vendor’s enrollment platform — may be point-in-time systems. The further away from the list bill that the reconciliation occurs, the more likely the data will be different. That also likely increases the amount of time it will take to reconcile the information.
For example, retroactive adjustments can be problematic for list billing. Say the insurer runs the bill on the fifth of the month. The employer has a termination effective the 1st of the month. The employer doesn’t get sent to the insurer until the 6th of the month. The insurer bills the employer for that employee, but that list bill is inaccurate. The employer would likely discover that discrepancy in a manual reconciliation.
Manual Reconciliation Wastes Time
Let’s face it, manual reconciliation wastes time and resources that employers can better spend on strategic initiatives. As a result, many employers have asked their benefits administrators for a solution. Some have developed solutions that ingest list bill data and compare it to enrollment data automatically. That’s a better solution, but it costs employers money and still doesn’t solve the real issue — that there’s no source of truth for benefits financials.
Is Self-billing Better?
Unlike list bills, self-bills are generated by the employer. Leveraging their enrollment data, employers generate a bill with backup data similar to a list bill detailing employees, rates, and premiums. Then, they remit the total amount due to the insurer.
Self-bills can be better, but insurers can be a hurdle. They may not trust employers to provide accurate enrollment and premium data. Plus, they may require a specific format so they can ingest the self-bill data to update their enrollment platform. Creating a self-bill may also be difficult for employers because most benefit administration solutions are great at managing enrollment data, but lack the sophistication necessary to manage benefit financials. Complex rate setups and billing rules are not typically items that benefit administration solutions handle well.
OK, Genius, How Would You Fix Group Benefit Billing?
That’s the crux of the issue — there is no source of truth for benefits financials. Insurers use billing software specifically designed to generate list bills. But that software is not designed for the retroactive adjustments and reconciliation that integrating multiple enrollment systems requires. Employers typically use benefits administration platforms that are designed to streamline enrollment and benefits management.
So why not place a modular solution in the middle that can generate an accurate bill without the need for reconciliation? This solution would take the employer’s enrollment data — the source of truth of enrollment — and apply the insurer’s rate calculations and billing rules to generate an accurate bill. It’s even better if the system can automate retroactivity calculations or adjustments and include those on future bills, eliminating manual reconciliation. And then take it one step further. Because all benefits financials reside in one system, debits and credits can be coupled to streamline other billing-related calculations, like commissions to brokers. You can see the impact this modular billing solution may have.
The result would be a single source of truth for enrollment information (the employer’s benefits administration platform) and a single source of truth for financial data. That leads to:
- Greater billing accuracy
- No need to reconcile list bills against employer enrollment data
- Time saved by both insurers and employers
- Better financial reporting thanks to a single source of truth for benefits financials.
William Can Solve the Group Benefit Billing Problem.
Think such a solution is too good to be true? That’s ultimately what our William billing platform accomplishes for many employers and benefits administrators throughout the US. By maintaining a benefits financials source of truth, employers and insurers gain better group benefit billing accuracy – without the wasted time.
Certifi’s William is automated premium billing and payment software that streamlines benefits billing and payment solutions for employers and benefits administrators.