Employee benefits are a hot topic in most business circles these days. While most employers and HR managers recognize the advantage of having a great plan for their employees, about as many are also concerned with the costs of providing these plans.
In fact, you may even hear conflicting news about employee benefit plans. In some cases, the research suggests plans are declining as employers look for ways to cut costs. Other reports indicate plans are becoming more generous as employers seek to support their employees and help them with life’s changes as best they can.
What if you could combine these two trends to boost your bottom line and cut costs on your plan? You can when you prevent benefits fraud.
How Does Fraud Happen?
Relatively few employees will ever commit benefits fraud, although it has become more common in the last few years. Many people see such fraud as a way of “getting one over” on big insurance companies or even “getting their dues” from their employer.
Fraud happens in a number of different ways. An employee may submit false claims for services they never received. They may collude with an unscrupulous service provider to falsify the amounts paid or claim for uncovered services. The classic example is a spa that provides a pedicure but bills for registered massage therapy, which your employee can then claim.
Sometimes, employees make up the claims and create a fictional service provider. At times, their schemes are more sophisticated and involve other people covering for them. The end results are the same.
How It Affects Costs
When benefits fraud occurs, it can drive up the cost of your plan.
Most employers still use group benefits plans, which use an insurance model. The benefits provider assesses the policyholder for the likelihood they’ll make a claim, which the provider will then need to pay out. If it’s likely a benefit claim will need to be paid, the policyholder is considered higher risk than a policyholder who won’t submit a good claim that needs to be paid.
Those who engage in fraud submit a large number of claims, often inflating the amounts to be paid or including uncovered services or creating false claims. If the fraud is undetected, the insurer pays out. The more often the insurer pays out, the riskier your group plan becomes for them. They thus increase your premiums.
How Can You Prevent Fraud?
Preventing fraud is in everyone’s best interests, since it keeps your plan costs down. Fortunately, there are a number of methods you can use to prevent fraud in your business.
The first is to have employees select from a list of qualified providers. This way, you can be sure the providers are actually providing the services they claim. You’ll also have an easier time vetting them. Keeping a list of average service costs can also help.
Next, keep an eye on employees’ claim patterns. Is someone who never claimed much suddenly claiming high amounts frequently? You may want to investigate this changed pattern of behaviour. Other behaviour indicators can also signal fraud is taking place. Sophisticated technology can help you detect unusual patterns of use for follow-up.
Finally, be sure to educate your employees. Employees who commit fraud often think it only affects the big insurance company. When employees come to understand how fraud hurts everyone else, including their colleagues, it acts as a strong deterrent.
Take a Stand Today
Preventing benefits fraud is easier than it sounds. It’s important, as it can help you offer a more robust employee benefits package and keep a little more in your pocket—boosting the bottom line. A benefits consultant can help you curb and identify fraud in your benefits plan.