Insights from Gallagher’s HR & Benefits Technology Consulting Practice

Author: Rhonda Marcucci 

Software testing is an essential part of any software implementation. When it comes to benefit administration software, however, software testing is critical because configuration errors can put employers at significant financial risk. Unfortunately, testing is also one of the more “painful” parts of implementation. It’s tedious, so corners get cut, and employers (mistakenly) assume the service provider has configured everything correctly…until some occurrence brings to light a problem. 

This is the point we typically hear from clients (or their benefits advisor)—demanding the provider cover any losses associated with the error. The fact is that, regardless of how the error came to be made (or who made it), the employer is ultimately responsible for making sure the system is properly configured. Once an employer signs off on the implementation, there is limited recourse to hold the provider accountable for problems that surface after the fact.

Possible software testing scenarios 

Employer-sponsored insurance is a contractual arrangement between the employer and the carrier. The carrier agrees to provide coverage under a defined set of conditions, and the employer agrees to facilitate coverage offers and payments based on those conditions. Neither coverage nor cost can be changed after the plan goes into effect outside of a qualifying life event. Software testing is the employer’s last line of defense before go-live to ensure everything conforms to the rules of the contract. Consider the following scenarios—all of which our team has encountered.

  1. Incorrect rates loaded (or not updated) for premiums. Rate errors create significant downstream issues, beginning with the wrong payroll deduction and under- or over-payments to the carrier in a self-bill situation. Overly high or low self-bill calculations, as compared to the prior year, should be a red flag for accounting, but many errors go undetected until a claim reveals the problem. Once known, the employer may be liable for the premium deficit (if the rate is lower than contracted) or must refund employees (if the rate was higher than contracted).

  2. Rules for amounts over guarantee issue incorrectly configured for life insurance. This error often means an employee receives coverage for which they are potentially ineligible. In addition to errors related to the life insurance policy offering rules, errors associated with evidence of insurability can result in the employee (or their beneficiary) expecting insurance coverage that exceeds the allowable benefit. Too often, it takes a claim to uncover the error and the employer must explain to a beneficiary that the insurance coverage is far less than what they believed, or even what a confirmation statement indicates.

  3. Access to insurance coverage provided to the wrong people. Most common among these types of errors are those associated with eligibility groups, e.g., fulltime time employees enrolling in disability coverage that was offered and underwritten by the carrier only at the executive level. Again, if not caught prior to a claim, the employer may find themselves in a difficult conversation with an employee. 

When a problem does come to light, the only true resolution is to wind things back, e.g., adjust the payroll deduction accordingly and lower the insurance coverage amount to the appropriate level based on the employee’s eligibility. In doing so, however, there is most certainly going to be some cost—monetary and perhaps emotional (for the affected employee who now may not receive the presumed benefit and/or see the deduction adjusted, through no fault of their own). Employers and service providers recognize the difficulty of these situations. They, sometimes, can agree on a remedy to minimize the impact on the employee. Regardless, it is rare for the insurance carrier to contribute toward a resolution. 

The fact is that, regardless of how the error came to be made (or who made it), the employer is ultimately responsible for making sure the system is properly configured.

Software testing best practices 

For any single incident, the response of the service provider can be all over the board. Some agree to cover some or all of the cost, either because they own the original error and value the client’s business, or because the client advised of the error. Still, no correction was made, and the employer failed to re-check. Regardless, service providers generally have no contractual obligation to cover costs associated with unfunded claims resulting from administrative errors. The onus is squarely on the employer to make sure the system is configured correctly, which brings us back to testing. The following are software testing best practices for employers.

With open enrollment approaching for many organizations, now is the time to take stock of any benefit changes (new plans, new rates, changes in eligibility, etc.) and commit to putting in the testing time to ensure your open enrollment goes smoothly and to avoid big (and expensive) surprises during the year resulting from benefit administrative errors. If you would like help taking a new approach to open enrollment and benefits administration technology, contact your Gallagher consultant today, or complete the form. 


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