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Employers struggle with handling benefits packages in-house or out

By LISA MONTI

With employees come benefits packages and with benefits come ever-changing layers of regulations handed down by government agencies. Does a business owner tap an employee to deal with administering the programs or look to hire someone outside the organization to handle it?

That’s where third party administrators come to the rescue in various scenarios.

Scott Moak, vice president of Ross & Yerger Insurance Inc. in Jackson, said a growing number of companies are moving toward third parties.

“Many are considering a partially self-funded model to insure their employee group medical insurance plan,” Moak said. “A company at or above 150 or more employees in Mississippi should at a minimum be considering this as a funding arrangement.”

Large employers would be wise to consider a self-insured model for the flexibility that these plans offer, Moak said.

“Being able to create your own plan designs within the scope of the Affordable Care Act, having access to very specific claims data and claims trends allows the employer to more transparently manage their company’s group health insurance risks,” Moak said.

That type of control is what many employers are seeking, he said. “An employer has to be prepared for a different cash flow from month to month since they now become the claims payer up to a specific and aggregate reinsurance limit,” Moak said. “This flow of month to month claims can put pressure on cash flow in a bad year. However, this funding arrangement is an attractive solution in both the long and short term for those that have the proper consulting and risk tolerance.”

Ken Lewis of his family-owned People Lease in Ridgeland handles the administration of existing benefits packages for companies, among other services ranging from payroll to retirement plans.

“We’re in the payroll industry so obviously employee benefits such as employer insurance directly relates to the payroll function,” he said. “Employers come to us and we handle all of their payroll and benefits administration.”

Third parties often are hired by small employers, who make up the bulk of the state’s business owners, Lewis said. “The typical employer is not going to have someone on staff to handle (the tasks). They can be time consuming so they outsource that function or hire companies like ours to take the payroll and benefits administration off of the individuals on their existing staff.”

Lewis said People Lease can handle everything from premium collections to reconciling monthly insurance bills and changing coverage for employees. “It’s all we do all day,” he said. “We would get everything taken care of for them.”

Headquartered in Ridgeland, People Lease has been in business for 34 years and has clients in 16 states. “Our growth outside of the state has been from our customer base within Mississippi,” he said. The staff of 16 includes CPAs and accountants and a small sales force.

Lewis said everything related to employee benefits is getting more complicated and with the Affordable Care Act’s reporting requirements kicking in at the end of the year, employers will feel the impact.

“There is not a lot of clear guidance coming down for employers on how to do this so companies like ours obviously are being leaned on to help the larger clients with the ACA reporting requirements.”

And it’s not just the new ACA that has complicated employers’ lives. “Every area of having employees has gotten more complex as they keep playing with the tax code and employee related matters,” Lewis said. “It’s becoming harder and harder to have employees. It’s a lot more than just issuing a paycheck. That’s actually the easy part. The hard part is actually having employees as far as hiring them and putting together benefits packages that will retain them and attract new talent to your organization.”

“Nobody got into business to have employees,” Lewis said. “We all got into business to make money. But we spend an inordinate amount of time dealing employee related matters. You can give all that to someone else and focus on what you set out to do, whatever your company product or service is.”

About Lisa Monti

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