Tuesday, August 16, 2011

The overhead of annual enrollment in the US

For folks employed in "traditional" jobs, there is a common event in the modern age that raises collective blood pressure. It's know as "annual enrollment" and it is a period of time where most employees change/adjust various benefits offered by their company. In particular, medical insurance is a common thing to adjust.

While this is normal a cost of doing business, I think many folks underestimate the real costs of switching. Sure, there's the cost for the HR department to go out to 20 different brokers and try to get the "cheapest/best" plan for their employees, but there're also a number of hidden costs. For example, every year my health plan changes, I spend at least 5-10 hours futzing around with various billing changes as well as filling out forms etc.

When I quote 10 hours, many folks say "you're crazy, it only took me 15 minutes". I think these folks, greatly underestimate the amount of time spent because they're only worrying about the time to fill out the form. Because of these hidden costs, I imagine many employers scratch their heads trying to figure out why using a "cheaper/better" plan didn't show up on the bottom line.

Examples are:
Spending 15 minutes at the front desk of their physician/dentist/othodontist changing their information.
Reading about the plan and figure out what is and isn't covered.
Figuring out if their physician is "in-network" or not.

For dual income families:
Analyzing the differences between the two plans and figuring out which one is best.
Filling out "coordination of claims" paperwork (and heaven help someone who is divorced and needs to coordinate THAT nightmare).

All these costs erode the bottom line because they take time away from performing other duties. I'm not sure a national health plan is the solution for this, but the current system certainly certainly is a recurring drain on resources for every business except insurance companies.

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