Benefit Enrollment Cost and Outsource Savings

Actions	Action Break-Down	Time Cost	Dollar Cost	Outsource Savings at 50% of Cost
Education	Educating employees and supervisors on benefits, eligibility, premium cost, enrollment, claims, cobra , add, deleting dependents, and ERISA	(BLS) 2 hours per employee per year	$60	$30
Training	Supervisors and managers benefits, eligibility, cost, and enrollment in order to assist employees	2 hours per supervisor per year	$60	$30
Open Enrollment	HR and Benefit staff time to learn new benefits, communication, materials, consulting, receiving applications, premium allocation, report payroll deductions to payroll department, carrier's submission, answer insurance company underwriter questions, and wavier forms.	(SHRM) 2 hour per employee per year	$60	$30
Eligibility	Track new hire, terminations, billing and enrollment of new eligible employees	15 minutes per employee per year	$7.50	$3.75
Billing	Reconcile all insurance billing, premium, adjustment and payment	15 minutes per employee per year	$7.50	$3.75
Customer Service	Answering all employees and dependents questions. Provide materials and other services	(SHRM) 17 hrs per employee per year	$510	$255
Paper Work Filing and Retrieval	Copying, physical filing of all enrollment forms, physical storage, file folders and information availability and retrieval	30 minutes per employee per year	$15	$7.50
Cobra	Initial notice, qualifing events, notice to all current cobra enrollees and billing	15 minutes per employee per year	$7.50	$3.75
SPD	Update, print, distribute and document compliance of ERISA SPD requirements	(DOL) 1 hour per employee per year	$30	$15
Consultant and Legal Fees	Review and revise SPD, Plan design etc	15 minutes per employee per year average	$50	$0
Compliance, Analysis, Bidding and Benefit Design	Gathering census information, analysis of new benefit design and cost. Prepare request for proposal, and decide on final plan design and enrollment preparation. Notify cobra enrollees,	1 hour per employee per year	$30	$15
Logistics	Printing, Mailing, Copying, Coordinate with Carriers, Brokers and Consultants, Arranging open enrollment meeting	1/2 hour per employee per year	$15	$7.50
Executives and Management Times	Meeting with various managers, consultants, analysis of benefits and cost.	1/2 hour per employee per year	$150	$0
Average cost and savings per employee:			$1,002	$401.25
A study that was conducted by the Aberdeen Group shows that: "Benefits cost the American employers approximately $2 trillion yearly. Companies characteristically spend between $1,000 and $1,700 per employee, per year for HR administration alone" A 1999 survey by The International Technology Group reported the following: "Among the organizations surveyed, the six most commonly reported self service applications were benefits administration, compensation changes, recruiting and staffing, training administration, employment verification, and maintenance of basic employee data. These represented an average three-year savings of $123,507 per 1,000 employees for organizations employing multiple technologies. Additional savings were realized in some organizations through electronic pay-stub distribution and computer-based time and attendance reporting (respectively, $17,973 and $67,026 per 1,000 employees over a three-year period)." The Hunter Group 2000 Human Resource Service Survey, which included 342 companies representing 6 million employees found: "Organizations continue to report success with their deployment of Human Resources self service capabilities. Over 90% report success in meeting their objectives. The results are compelling: 100% return on investment within a year; reduced headcount, transaction costs, and cycle time; and improved employee satisfaction." According to Hewitt Associates L.L.C. research, the percentage of employees enrolling online nearly doubled in the last two years. Among employers that in 2001 offered employees the choice of enrolling in benefit plans through the Internet, call centers or IVRs, 70% of employees enrolled through the Internet, up from 51% in 2000 and 36% in 1999. Correspondingly, enrollment through call centers plunged to 22% last year, down from 33% in 2000 and 34% in 1999, while enrollment via IVRs declined even more dramatically, falling to 8% last year from 15% in 2000 and 30% in 1999. Simply put, the Internet is "a better, faster and cheaper way for both employers and employees in terms of their annual health and welfare enrollment," said Maureen Kincaid, health and welfare outsourcing practice leader for Hewitt in Lincolnshire, Ill...