What is a Benefit Audit and Why Does Your Business Need One?

Posted by Employer Flexible on May 8, 2018
Employer Flexible

Providing quality benefits to employees is a primary factor in retention and recruitment among companies both small and large. Being engaged with a Professional Employer Organization (PEO) can increase the quality of benefits passed along to employees. It is the PEO’s role to educate the client on the plan design of their benefits and on how much the employer should contribute to recruit the best talent to their organization. Companies without a PEO relationship require much more internal effort to secure quality benefits and ensure that benefits run smoothly from a financial perspective. Additionally, a special service offered by Employer Flexible called the Benefit Audit is a way to objectively process all employee costs related to benefits and advise a business as to where it could best save money in the long run.

Cody Nowak is the Manager of Audits at Employer Flexible. His role is to develop and implement customer audit plans which verify the accuracy of data in payroll and benefits systems. “Most businesses are paying too much for benefits per employee without even realizing it. This is due to errors, whether internal payroll errors or carrier errors.” says Nowak. “The job of a PEO is to make sure businesses know what to look for when choosing and staying with a benefits provider.”

During Employer Flexible’s Five Point Check System, there are a number of steps taken to ensure the integrity of the data in the PEO’s system from an open-enrollment perspective.

1. All rates on healthcare and other benefits are verified and presented to the client for their decision.

2. Employer Flexible audits the rates selected by the client and implements a contribution strategy. This is when the client sits down with Employer Flexible and discusses an annual budget they are willing to spend on benefits for their employees.

3. After the budget is agreed upon, a third audit is completed at the setup time of open enrollment for the client. The enrollment system discloses the cost of all plans, compliance and other information not readily available to the client previously.

4. Once the employee makes his or her election, a member of Employer Flexible’s processing team syncs the payroll codes from the election database into the payroll system. This includes all amounts, start dates and end dates for current coverage for all employees.

5. The fifth and final audit is completed immediately following the client’s open enrollment. Employer Flexible then develops a tailor-made program where a member of the audit team is able to view all relevant data points in the carrier’s site.


“All of this to say we’re saving companies money they didn’t even know they were spending,” Nowak says.

In 2017, an oilfield service company with 350 work-site employees engaged with Employer Flexible for benefits, HR and payroll outsourcing. When Cody and his team of auditors performed the five-point check system, they found a sizable flaw in what the business was paying for benefits.

“A benefit audit is the first thing we do when a company joins Employer Flexible as a client,” Nowak says. “In this particular case, we found numerous examples of termed employees still active with the carrier and even employees enrolled in the wrong benefit plans. Overall, the client was losing $25,000 a month. We quickly corrected this issue and were even able to get refunds to the client for old employees.”

Employer Flexible’s Five Point Check System can substantially improve a business’ bottom line.

With knowledge of the Five Point Check System, Employer Flexible consultants make sure you ask the right questions to your benefits provider.

Are you paying too much for your employee's benefits? Do you know? Let's talk about how a Benefit Audit from Employer Flexible could help your bottom line.

 

Topics: PEO, Human Resources