The coronavirus pandemic introduced many of us to new terminology, from furlough and continuation coverage to COBRA and direct billing. We’ve discussed COBRA and furlough in the past. Today we are going to take a closer look at direct billing. And more specifically, the retiree billing aspect of direct billing.
What is direct billing?
Direct billing is when an employer collects premiums directly from an employee in situations where payroll deductions cannot be used. Examples include when employees are out on approved leave, such as FMLA or worker’s compensation. However, the most common scenario in which direct billing is used is retiree billing.
Retiree billing is when premiums are collected from retired workers who still have access to benefits or coverage from their company. This often occurs with employees who are enrolled in a health reimbursement account (HRA) or HRA VEBA.
Related reading: Navigating Direct Billing Services
What makes retiree billing different?
- Greater leniency. This type of direct billing is often handled a little more carefully due to the existing employer-employee relationship.
- More accommodating. It is not uncommon for employers and administrators offering retiree billing to be slightly more accommodating with grace periods. This is in stark contrast to COBRA.
- Customization options. Employers can adapt and customize retiree billing to reflect the needs of their former employees.
The tools of the trade
Platforms for managing direct billing are becoming more user-friendly. A good platform should assist employers in working smarter by:
- streamlining processes
- providing reporting
- managing custom needs
First, any platform worth its salt will reduce the number of steps employers need to take to access files. By replacing an email with the click of a button, employers can keep important documents together, leading to an easier implementation process down the line.
Second, platforms for retiree billing should include reporting functionality. The reports should be scalable, adjusting up or down based on the employers’ employee population. This can be especially useful for smaller employers, who might not have a designated human resources or benefits team and need fast, efficient ways to automate tasks.
Managing custom needs
Finally, a good platform will put employers in the driver’s seat when it comes to customization. In certain industries like retail and real estate, an employee might not have worked enough hours to claim deductions. In these situations, the employer would be able to create a workaround in the system, allowing the former plan participant to claim those deductions.
Work smarter, not harder
By leveraging the systems in place, employers can make the retiree billing process smoother for everyone: internal teams, third parties, and the retiree.
Learn about Direct Billing Services from Benefit Resource.