How to keep retiree health care billing from draining time, resources

Tammy Clay, Manager, Flexible Spending Accounts and COBRA, UPMC Benefit Management Services

Tammy Clay, Manager, Flexible Spending Accounts and COBRA, UPMC Benefit Management Services

Many employers realize that their commitment to their employees doesn’t necessarily end at retirement. But wanting to deliver post-retirement health benefits and doing so in an effective and affordable manner is not always possible for all businesses.

However, employers do have several options, including outsourcing retiree billing administration to a firm that specializes in that area.

“It may make sense for many companies to outsource their retiree billing administration,” says Tammy Clay, manager for Flexible Spending Accounts and COBRA with UPMC Benefit Management Services. “It can save a company money, time and valuable resources.”

Smart Business talked with Clay about retirement billing administration and why it can work for many employers.

What is retiree billing?

Basically, it’s a Web-based service that provides coordination of enrollment and billing. For many companies, retiree billing is considered as a sort of a yolk around their necks. They need help in this area and sometimes an outside source is the best place to look for it.

What makes retiree billing difficult for some employers?

Retiree billing is generally considered to be among the most time- and paperwork-intensive assignments that a human resources department ever has to deal with.

There are a number of ‘necessary evils’ employers have to deal with where retiree billing administration is concerned. When billing the appropriate premiums and relaying timely eligibility updates to the carrier, a multi-functional billing system should be at the heart of the process.

In some cases, an employer provides credits to the retirees to apply toward Medicare supplement plans. The process used to determine if the money leaving an account matches the amount claimed, and ensuring that the correct credit is being applied for a certain time period, is account reconciliation. Account reconciliation is important because it helps with cash management and protects businesses against fraudulent activities.

Regardless of the size of the company, the retiree populations will always continue to grow. For some companies that growth might dwarf the active population. As a result, many companies find that they cannot afford to grow their HR departments to keep up with it.

What are some advantages of outsourcing retiree benefits administration?

Employers want to reduce their liability for post-retirement health benefits and can often do that by outsourcing. Retiree premium billing administered by a neutral third party can protect retiree privacy. Health and financial matters are sensitive issues that retirees may not want to share with a former employer. Moreover, there can be complications and frustrations in dealing with the complexity of retiree benefits. It is best for all involved that any frustration is not directed at the former employer.

What are some advantages for employers of outsourcing the process?

Retirees will no longer call an employer’s human resources department to ask questions that the HR department may or may not be able to answer. This can save both money and time, and increase the productivity of the HR department. When billing is outsourced, the people dealing with the retirees are specialists in this area who can answer any questions or concerns retirees might have. In many instances, retirees can access 800-number phone lines and 24/7 websites to make it easier for them to get information and answers to their questions. An employer is saved the hassle of dealing with multiple phone calls and emails to resolve these issues.

By outsourcing retiree billing to an experienced, reliable organization, employers can be confident that the service is compliant with federal, state and local laws. Employers also like the fact that by outsourcing retiree benefits administration, they have more time to focus on strategic planning that can create value for a company.

Tammy Clay is a manager, Flexible Spending Accounts and COBRA, at UPMC Benefit Management Services. Reach her at (412) 454-8739 or [email protected]

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