Spring 2008 / No. 75
Variable Deduction Loads
We’ve seen an impressive evolution in voluntary billing capabilities by carriers and TPAs over the last ten years. Today, single slot systems and combined billing processes (with common remitter services) are widely available and are becoming table stakes for the voluntary game.
What’s next? For years, we’ve been discussing the evolution of benefit plan designs and the opening up of those plans to new types of products. To date, most of those products are insured, discount, or fee-based products. Our current capabilities handle these well, eliminating payroll limitations (through a single slot system) and complexity resulting from having ever-larger numbers of vendors (handled by combined billing). But as an industry, we still aren’t ready to handle the next type of product: the variable deduction product. For most employers, a payroll deducted product whose deduction amount changed often (maybe even with each payroll) sounds like a nightmare. But the technology to automate the deduction loading is available today. Third-party billing companies can interface with payroll administrators or with the employer’s payroll system itself to automate the deduction loading process and set up business rules for deduction amounts, uses, etc.
Once set up, the process is fully automated and requires no HR or IT intervention. Each deduction is set, based on the business rules, and is documented through a paper stub and/or through a dedicated, secure web portal.
With this capability, think of the products and services that can be offered: reimbursement for out-of-pocket medical expenses, variable savings plans, credit card payments, automatic bill payment for recurring expenses, etc.
This next phase in billing evolution will take the final shackles off our ability to develop innovative products and better serve the needs of our employer and employee clients.
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