The Future of Benefits Administration Technology for HR Professionals

By Kisha Moliere

For almost two decades, Application Programming Interface (API) has been simplifying the lives of consumers. The convenience we take for granted in the online and mobile experiences of Amazon, Expedia and Uber, for example, exists only because of the two-way, real-time communication between disparate systems made possible by API.

Even the banking industry recognized the value of API and created the near instant transfer of funds between parties through services such as Zelle. And while they have been resistant in the past, benefits administration (ben admin) technology vendors, payroll providers – and most recently, insurance carriers – are now also finally embracing API. This will have a significant impact on the ben admin technology experience of HR professionals in the near future. Below are just a few practical areas where the impacts will be felt.

Implementation of Ben Admin Platforms

Anyone who has ever “endured” the implementation process of a typical, standalone ben admin technology platform knows the pain of pre-populating the new platform with employee and dependent census information, as well as their existing benefit elections. It usually requires gathering this information via reports from their payroll/HRIS systems, in addition to their carrier benefit reports – and then manipulating these reports into a specific format the new benefit platform can import.

This process not only requires sufficient levels of technical sophistication on the part of the HR person submitting the data, but is also time consuming and ripe with risk for data errors and discrepancies which need to be researched and resolved.  Establishing API connectivity between these previously segregated systems will transform the implementation experience by:

• Eliminating the need for HR to manually manipulate employee census data from a prior ben admin, payroll, or HRIS system for import into the new one, since the systems will communicate electronically in real time.
• Reducing the number of discrepancies, since the data will be delivered timely and directly between the systems themselves.
• Introducing automated data validation via two-way communication of the disparate systems and API middleware.
• Condensing the overall implementation timeline as a result of the above.

Data Synchronization of Segregated Systems

The current standard of one-way, weekly EDI (Electronic Data Interchange) file feeds flowing from payroll, ben admin technology and insurance carrier systems typically creates at least a seven-day lag of data updates between them. That means, in reality, these systems are never truly synchronized on any given day. However, when an API integration is built between a payroll and ben admin platform:

• New hires, demographic changes, status changes and payroll deductions in both systems will be synched daily. 
• Duplicative data entry by HR into the two systems will eliminated.

Similarly, when an eligibility API is established between ben admin and carrier systems:

• The “access to care” issues that arise due to the EDI file delay will be in large part eradicated.    
• Qualifying life events (QLEs) will be processed much quicker.

Billing Reconciliation

The above mentioned data synchronization lag between payroll, ben admin technology and carrier systems is also responsible for the burden of billing reconciliation and calculating/collecting retro premiums. Introducing API will mean, for example, when employee terminations are entered in payroll, they will simultaneously appear in the ben admin and carrier systems. Similarly, when benefit elections are added or changed in the ben admin platform, updates to eligibility in carrier systems and deductions in the payroll system will also process same day. This will lead to a precipitous decline in the need for reconciliation and retro deductions.

EOI Management

Benefits such as group life and disability are attractive to employees, especially since employer-provided options often come with lower premiums and simpler underwriting. However, when employees choose amounts in excess of the Guaranteed Issue (GI) amount, they may still need to complete Evidence of Insurability (EOI) documentation. The management of the EOI process by HR professionals is a time drain that includes chasing down employees to complete paper forms that have to be forwarded to the carrier, awaiting underwriting decisions, manually updating the ben admin and payroll systems, etc. 

An EOI API between a carrier and ben admin system means the EOI submission is handled in real time by the employee during their online enrollment experience, and underwriting decisions and coverage changes from the carrier are electronically fed back into the ben admin and payroll systems – removing HR from this task almost completely. There are many more implications of this technology for HR and benefits, such as real-time flexible spending account balances in the ben admin portal, automated claims initiation, and employee access badge termination triggered simply by a status change in a ben admin system. API’s ability to allow segregated systems to communicate with each other in real time will allow HR professionals to integrate their best-in-class HRIS, payroll, ben admin and insurance provider systems into an automated ecosystem that is more efficient than ever before.