Electronic data interchange (EDI) is the transmittal of data from one system to another. EDI in the benefits world, generally, transmits data from your system of record (benefit administration system, payroll, etc) to another system, specifically, an insurance carrier or provider. This will improve the overall efficiency of the benefits administration staff in several ways including reducing time spent on data entry, eliminating discrepancies and improving the accuracy of premium payments.
EDI can greatly reduce the amount of time spent inputting data into systems. Before EDI integration, employers are often required to enter the same data into several different systems. With the correct integration, data will flow from one system to the next seamlessly.
Here’s a common example.
Acme company has a payroll system where the administrator inputs employee demographic information. Following that, the administrator also needs to input the employee demographic data into the benefit administration system. Once an employee makes their benefit elections, the administrator then needs to update all of the different carrier websites and input the employee and dependent demographics data and benefit elections onto their sites. Acme company has three different carriers where this must be done. At this point, the administrator has typed in the same demographics information five different times, benefit elections four different times, and any dependent demographics and elections three times. EDI can streamline all of this for the company. Let’s look at how the data would flow with EDI integration.
Acme company administrator types all employee demographic information into their payroll platform. That data is then translated, transformed, and mapped to the required import format of the benefit administration system. After the employee elections are made, that data is again translated, transformed, and mapped into the unique import format of each carrier. To complete the data loop, all election information flows back to the payroll system ensuring payroll deductions are updated in a timely fashion. EDI integration cuts down all the data entry to one point of entry into a system of record, which in this example is the payroll system.
One of the most dreaded calls a human resources employee can receive is the call from an employee at the doctor’s office upset because they have been paying for medical insurance but are being told they are not covered. EDI can ensure the timely receipt of enrollment information by the carrier to limit this situation from occurring. Because the manual data entry has been eliminated, the information flows timely and accurately from one system to the next. With most carriers, an automatic audit is performed each time that data is received by the carrier’s system. A feedback report is then sent to a designated individual which allows for any errors between the system to be caught and corrected reducing the possibility an employee may try and access coverage before the carrier has processed the enrollment.
One of the final ways that EDI can help your administration is the c-level executives favorite; the accuracy of premium payments. We’ve established that data is now more accurate and timely. This allows for all bills received from the carriers to also be more accurate and timely. When manual processes are relied on, changes are inevitably missed: terminations, benefit elections, life events, etc. If an employee termination is not communicated a carrier, the company will continue to be billed for that premium. If this is missed over a significant period of time, the company may not be able to recover all of the overpaid premium. By implementing EDI and bringing all the different HR systems in sync, this removes the element of human error. The company will no longer overpay premium due to errors. This keeps excess money out of the carrier’s bank account and in the company’s.
Choosing the correct EDI team to implement the files is an important decision. The success and accuracy of these data files depends on the experience of the EDI team implementing the files. Reach out to Providence Technology Solutions to see how we can help streamline your HR and benefit processes and give your HR administration staff time to spend on more important things than on data entry.
Author: Matt Shull