What is employee benefits management?
Employee benefits management is the ongoing work of overseeing your benefits program once it is in place. Your plan is designed at one point in time, but vendors, costs, laws and your workforce keep changing. Management is how an employer notices those changes and responds to them on a schedule, rather than all at once in the weeks before renewal.
In practice it has six parts:
- Vendor monitoring. Measuring carriers, TPAs, PBMs and other vendors against their contracts, service level agreements and performance guarantees.
- The renewal cycle. Starting early enough that you have real options, then deciding with data.
- The compliance calendar. Tracking every filing, notice and attestation the plan owes, with an owner and a date for each.
- Employee communication and advocacy. Helping employees understand and use their benefits, and resolving problems when a claim or a vendor goes wrong.
- Data review. Reading claims, pharmacy and utilization reports to see where money goes and what is changing.
- Committee meetings. Bringing decisions to a benefits committee and recording what was decided and why.
How is management different from strategy and administration?
Strategy decides what the plan should be, administration processes the plan every day, and management sits between them, checking that the plan does what the strategy intended. The three terms get used interchangeably, but they describe different jobs.
| Strategy | Management | Administration | |
|---|---|---|---|
| Question it answers | What should our benefits do, and what will we spend? | Is the plan performing as intended? | Is every transaction processed correctly? |
| Time frame | Multi-year | Year-round, on a calendar | Daily and weekly |
| Typical work | Plan design, funding model, contribution strategy, vendor model | Vendor scorecards, renewal planning, compliance tracking, data review, committee meetings | Enrollment, eligibility changes, billing reconciliation, payroll deductions, COBRA |
| Who usually owns it | Leadership and the benefits committee | HR and finance, with the committee | HR or benefits staff, a TPA or a benefits administration system |
| Learn more | Employee benefits strategy | This page | Employee benefits administration |
A plan can have a sound strategy and accurate administration and still drift. A vendor misses its service levels, pharmacy spend climbs, a notice goes out late. Management is what catches that drift.
How do you monitor vendors and service levels?
Vendor monitoring means comparing what each vendor promised in its contract with what it actually delivered. Most benefits contracts include service level agreements (response times, claims accuracy, reporting and data delivery) and some include performance guarantees with money at risk. Those terms only matter if someone measures them.
A workable approach:
- Keep a scorecard for each vendor with the measures from its contract.
- Ask for the reports the contract requires, on the schedule it requires, and note when they arrive late or incomplete.
- Reconcile performance guarantees every year. Vendors rarely volunteer a guarantee payment.
- Review one vendor in depth each quarter with your committee, so every major vendor gets a full review over the year.
- Check your data access. Your plan has a right to its own claims data, and your contracts should not block it. The yearly gag clause attestation, due to CMS by December 31, confirms this.
Ethos Benefits runs this work for clients through vendor management.
When should the renewal cycle start?
Start four to six months before the renewal date, because the renewal is where most of next year’s cost is set. If the renewal arrives a few weeks before open enrollment, the only choices left are to accept it or cut benefits. Starting that early leaves time to gather claims data, market the plan to other carriers or vendors, compare options and get a committee decision before enrollment materials go out.
A good renewal review answers a few questions:
- What drove the increase: claims, large claims, pharmacy, demographics or the carrier’s assumptions?
- How does the plan compare with similar employers on cost and design?
- Would a different vendor, network or funding arrangement change the result?
- What will the change cost employees, not only the company?
What goes on a compliance calendar?
A compliance calendar lists every filing, notice and attestation your plan owes, with a due date and an owner. Group health plans have deadlines spread across the year, and missing one usually happens because nobody owned it, not because nobody knew it existed. Your ERISA compliance checklist covers each item in detail. The calendar below shows how they fit into a year.
A yearly benefits management calendar.
This calendar assumes a calendar-year plan that renews January 1. If your plan year starts on another date, shift the renewal and enrollment steps to match. Federal filing deadlines tied to the calendar year, such as the RxDC report and the gag clause attestation, stay where they are.
| Month | Vendors and data | Renewal and communication | Compliance | Committee |
|---|---|---|---|---|
| January | Confirm new elections loaded correctly with every vendor | Answer new plan year questions from employees | ||
| February | Fourth-quarter claims and pharmacy report | Medicare Part D disclosure to CMS, within 60 days of the plan year start | Q1 meeting: prior year results, vendor review | |
| March | Annual reconciliation of performance guarantees | ACA forms 1095-C furnished, or furnish-on-request notice posted, and returns filed with the IRS (applicable large employers) | ||
| April | ||||
| May | First-quarter claims and pharmacy report | Q2 meeting: vendor review, early renewal planning | ||
| June | Gather census and claims data for the renewal | RxDC report for the prior calendar year, by June 1 | ||
| July | Market the plan to carriers and vendors if it is going out to bid | Form 5500 by July 31 (or Form 5558 extension); PCORI fee on Form 720 by July 31 (self-funded plans) | ||
| August | Second-quarter claims and pharmacy report | Renewal and bids arrive | Q3 meeting: renewal options and decisions | |
| September | Finalize plan design and contributions; build enrollment materials | Summary annual report, within 9 months after the plan year ends if Form 5500 was not extended | ||
| October | Open enrollment communication begins | Medicare Part D creditable coverage notice before October 15; extended Form 5500 by October 15 | ||
| November | Third-quarter claims and pharmacy report | Open enrollment; employee meetings and one-on-one help | SBCs with enrollment materials; annual notices such as CHIP and WHCRA | Q4 meeting: enrollment results, next year’s priorities |
| December | Send enrollment files to vendors and test them | Confirm ID cards and elections before January 1 | Gag clause attestation to CMS by December 31; summary annual report by December 15 if Form 5500 was extended |
When a federal deadline falls on a weekend or holiday, the due date may move. Confirm each year’s exact dates against the agency’s own guidance.
Why do communication and advocacy matter?
A benefit employees don’t understand is a benefit they don’t use, or use in the most expensive way. Communication is a year-round job, not an open enrollment event. Employees need to know what they have, how to use it and where to go when something goes wrong.
- Before enrollment, explain what changed and what it costs, in plain language and in more than one channel, such as email, meetings and your benefits portal.
- During the year, remind employees of the pieces they forget: telehealth, pharmacy options, the employee assistance program and how to find in-network care.
- When something breaks, give employees a person to call. Advocacy means someone helps resolve a denied claim, a billing error or a vendor that won’t respond, and reports patterns back to you.
The questions employees bring to an advocate are also data. Repeated problems with one vendor belong on that vendor’s scorecard.
How should the committee review plan data?
Data review is how a benefits committee makes decisions from evidence. Claims, pharmacy and utilization reports show where the plan’s money goes, which costs are rising, and whether programs you pay for are being used. Quarterly reports, read the same way each time, make trends visible long before renewal.
Most mid-size and large employers run their plan through a benefits committee. For an ERISA plan, the people making decisions about the plan are expected to act solely in the interest of participants and beneficiaries and with the care and diligence of a prudent person familiar with such matters. In practice that means meeting on a schedule, reviewing information before deciding, and keeping minutes that record what was considered and why.
A typical quarterly agenda:
- Claims and pharmacy results against budget.
- One vendor reviewed in depth against its scorecard.
- Compliance items due in the next quarter.
- Employee issues raised through advocacy or surveys.
- Decisions needed, and the information behind each one.
Ethos builds this rhythm with each client through the Ethos Method.
What are the common management challenges?
Most benefits management problems come from a few recurring gaps:
- Rising costs. Health care and pharmacy costs keep pressing on the budget, and without regular data review the first warning is the renewal.
- Limited HR time. Benefits are one of many jobs for most HR teams, so oversight slips behind daily administration.
- Compliance spread across the year. Federal, state and local rules each have their own deadlines and formats.
- Diverse employee needs. A workforce with different ages, families and locations needs benefits, and communication, that work for all of them. Employee benefits survey questions can show where the gaps are.
- Systems that don’t connect. Enrollment platforms, payroll and vendor files have to match, and errors usually surface as claims problems months later.
Does funding change what you manage?
Yes. How your plan is funded changes how much there is to manage. In a fully insured plan, you pay a fixed premium and the carrier takes on the claims risk and most of the administration. In a self-funded plan, the employer pays claims as they occur, usually with a third-party administrator processing them and stop-loss insurance limiting large losses.
Self-funding gives an employer more control over plan design and more access to claims data, but it also adds more vendors to monitor and more compliance items to own. See self-funded vs. fully insured for a full comparison.