When Employee Benefits Become a Burden
Today’s employers have unprecedented access to a wide array of benefits options. To be consultative partners, brokers and general health insurance agencies need to pay attention to microtrends in the benefits segment as well as bigger trends in the world at large. With states consistently evaluating changes in insurance mandates and regulations, it can be a constant challenge to stay aware of the latest national and state specifics to best inform employers and maintain a competitive portfolio – which is easier said than done.
General health insurance agencies and brokers are no strangers to the day-to-day struggles of manual employee benefit administration. But many firms often underestimate the true costs of these traditional approaches, relying on manual processes for critical tasks like spreadsheeting plan designs and quotes, eligibility processing, benefit administration case builds, or data audits.
The Ripple Effects of Manual Benefit Administration
A recent analysis shows that account managers can spend up to 60% of their time on manual processes that could be automated during the busy season. The hidden costs of manual benefits administration extend far beyond basic time investment. Here’s how manual process compound throughout each phase of the benefits lifecycle and create cascading inefficiencies that impact both agencies and the employers served.
Pre-Renewal
Pre-renewal requires careful analysis and thoughtful preparation, but account managers often face strategic planning challenges that shape the entire benefits year ahead. Indeed, over 52% of the 375 employers interviewed in Zywave’s 2024 Broker Services Survey indicated they wanted trusted advisors – not “insurance salespeople” – to help keep them abreast on compliance trends, understand various forms of insurance, and risk transfer strategies. Despite employers’ wishes, many account managers spend countless hours on administrative tasks during the pre-renewal phase:
- Market analysis and benchmarking become time-consuming exercises in data gathering
- Claims analysis requires manual compilation and review of multiple data sources
- Delayed plan design recommendations due to time spent on administrative tasks
- Funding arrangement evaluations lack the depth of analysis needed due to time constraints
- Compliance reviews may miss critical details due to manual oversight
It’s no surprise account managers find themselves playing catch-up before the cycle even begins, compromising their ability to develop strategic solutions. This often leads to missed opportunities for plan optimization and cost savings that could have benefited both employers and their employees.
Renewal
Time is the most precious and scarce resource during the renewal phase. Account managers must balance the detailed analysis required for renewals with the pressing demands of current employer needs, often leading to compromises in both areas.
- Account managers struggle to pull renewals while managing current workload
- Alternative carrier marketing gets rushed due to administrative backlog
- Quote comparisons take longer, potentially missing optimal solutions for clients
- Cost projections require extensive manual calculations, increasing error risk
- Executive presentations are delayed due to time spent on manual tasks
These renewal phase bottlenecks often force account managers to make rushed decisions or settle for suboptimal solutions. The pressure to complete renewals on time while maintaining accuracy creates a stressful environment where strategic thinking takes a back seat to administrative necessity.
Open Enrollment
Open enrollment is the most visible and critical period in the benefits cycle. It’s a crucial time for employees to make decisions about their benefits. Manual burdens create a cascade of operational challenges during open enrollment. The overwhelming workload leads to delayed response times for urgent employer needs, while time pressure increases error rates across all processes. These are just a few manual administrative tasks that make it difficult for account managers to provide stellar service:
- A typical case build for a mid-sized employer with multiple plan offerings can consume up to 20 hours.
- Benefits administration system setup faces delay due to having to track down necessary documents and information to complete a build.
- EDI connectivity issues take longer to resolve.
- Employee communication materials can get rushed or simplified.
- Decision support tools may not be fully utilized due to setup time constraints.
The consequences of these open enrollment challenges extend far beyond the enrollment period itself. Poor experiences during this phase can damage employer relationships, create ongoing administrative headaches, and generate waves of employee dissatisfaction that persist throughout the year. These impacts especially felt at small and mid-sized businesses (SMBs), where Human Resource (HR) employees often handle multiple responsibilities. According to The Hartford’s Future of Benefits Study, HR leaders in SMBs manage an average of eight different job functions, from recruiting and benefits administration to compliance and technology integration. With so many responsibilities, strategic benefits planning can sometimes take a backseat to daily operations. This is where trusted brokers become essential partners. Benefit decision-makers at SMBs rely on their brokers to help them create and implement competitive benefits programs.
Post-Enrollment
Post-enrollment and ongoing administration might seem less intense than open enrollment, but this phase requires consistent attention to detail and prompt response to various administrative needs. Consumers, in general, expect prompt customer service from companies, and this industry is no different. When employers have questions or concerns, they turn to their brokers for answers and guidance. 57% of employers surveyed by Zywave indicated that prompt, effective service and timely answers to questions as the most important criteria for selecting a broker. Nearly 83% of employers wanted to hear from their brokers weekly (38.83%) or monthly (44.15%) for information on certain insurance topics. But manual administrative burdens during post-enrollment create a constant drain on agency resources:
- COBRA administration faces delays and potential compliance issues
- Dependent verification becomes a bottleneck
- Billing reconciliation consumes excessive time
- Claims advocacy gets delayed due to administrative overload
In the case of one California-based general health insurance agency, account managers struggled with eligibility processing, particularly mid-year changes.
“Account managers spent about 50% of their day pulling forms from our benefits administration platform, verifying the correct information, submitting to health insurance carriers and following up,” said a senior vice president of benefits consulting at the agency. The agency’s efficiency challenges increased when the COVID-19 pandemic forced employers to reduce staff headcounts.
Real-World Impacts: A Case Study in Numbers
To truly understand the impact of manual processes on agency operations, let’s examine a typical scenario faced by a mid-sized agency with five account managers, each handling 3-4 case builds per month during peak season:
- 20 hours per case build
- 60-80 hours monthly per account manager
- 300-400 total monthly hours across the team
- Approximately $15,000-20,000 in labor costs per month
When we dig deeper into these numbers, the full impact becomes clear. Beyond the direct labor costs, agencies face additional expenses from error correction, overtime, temporary staff, and lost business opportunities. One agency found that their account managers spent nearly 75% of their time on administrative tasks during peak seasons, leaving little room for strategic employer engagement or business development.
“I spent so much time on case builds that I couldn’t focus on addressing my clients’ strategic needs,” said an agency account manager. “It felt like I was always playing catch-up instead of being proactive with my accounts.”
Transformation Through Outsourcing
Outsourcing case builds is more than task delegation – it allows agencies to achieve:
- Freedom for account managers to focus entirely on employer relationships
- Elimination of a time-consuming process
- Relief from peak season pressure and overtime demands
- Consistent, reliable case build completion
- Predictable costs through straightforward pricing
Removing the case build burden from internal teams, agencies create space for strategic growth and enhanced client service. Account managers report that outsourcing case builds allows them to spend more time understanding employers’ needs, developing strategic solutions, and strengthening relationships. The impact is particularly significant during busy seasons when internal resources are stretched thin. Instead of juggling administrative tasks with employer demands, teams can maintain their focus on what matters most – providing outstanding service to employers.
Measuring ROI: The Business Case for Change
The return on investment from implementing tech-enabled solutions extends far beyond direct cost savings. While the immediate financial benefits are significant, the true value lies in the fundamental transformation of agency operations and service delivery capabilities.
Immediate Benefits
- 65% reduction in time spent on administrative tasks
- 90% decrease in setup errors
- Fixed, predictable pricing model
Strategic Advantages
- Improved employer satisfaction through faster turnaround times
- Enhanced competitive position in the market
- Better staff retention through reduced burnout
- Scalable operations without proportional cost increases
When evaluating ROI, brokers and general agencies must consider both quantitative and qualitative factors. The reduction in administrative time alone often justifies the investment, but the strategic benefits – improved employer relationships, enhanced market positioning, and increased staff satisfaction – often prove even more valuable in the long term.
Looking Ahead: The Benefits of Technology Adoption
The future of benefits administration belongs to agencies that embrace technology and outsourcing as a strategic advantage. Forward-thinking agencies are discovering that technology adoption opens new opportunities for growth and service enhancement that weren’t previously possible. By freeing account managers from administrative burden, they can:
- Develop deeper relationships with employers
- Identify new revenue opportunities
- Respond more quickly to market changes
- Scale operations efficiently
- Attract and retain top talent
This strategic shift enables agencies to position themselves as consultative, rather than just service providers. Early adopters report that enhanced capabilities have led to increased employer retention, more referrals, and the ability to pursue larger, more complex accounts previously out of reach. The most successful agencies will be those taking action to modernize benefit administration operations now.
Survival of the Strategic
It’s crucial for brokers and general agencies to meet employers’ evolving needs and desires – while also keeping pace with technological advancements and legislative changes. Agencies can no longer afford the inefficiencies and limitations of manual processes in today’s competitive market. Technology adoption is a secure, scalable way for general health insurance agencies and brokers to gain the extra agility needed to deliver high-touch service to carriers and employers amid a dynamic, complex market. Modernizing benefit administration processes agencies can transform their operations, improve service to employers, and position themselves for sustainable growth.
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