Process Gaps in Benefits Admin Can Cost Your Organization Money

Benefits administration is one of those operational areas where things can look “fine” on the surface. The bills are paid on time, coverage appears active, while costly inaccuracies quietly build underneath.

Recently, during a routine benefits audit for a new client, we identified several employees who had terminated employment in 2024 but were still active on employer paid life, LTD, and other ancillary insurance plans. It’s a common breakdown that happens when Accounts Payable and People Ops aren’t tightly connected in day-to-day processes.

The result? Premiums continue to be paid for individuals who should no longer be covered.

Why Timing Matters

Most insurance carriers will allow retroactive terminations and issue refunds, but typically only going back three months. Anything older than that is often unrecoverable, even when the error is clearly administrative.

What a Good Benefits Audit Looks Like

At its core, a benefits audit is about data reconciliation.

At least quarterly (and ideally monthly), organizations should:

1. Pull an active enrollment list from each carrier

   • Medical

   • Dental

   • Vision

   • Life

   • LTD / STD

   • FSA and other ancillary coverages

2. Compare that list directly to your HRIS

   • Confirm employment status

   • Verify termination dates

   • Ensure dependents align correctly

   • Check coverage tiers and plan elections

3. Investigate and correct mismatches immediately

   • Termed employees still active

   • Incorrect coverage levels

   • Missing dependents or extra enrollees

Even if you have EDI files or carrier connections in place, this step is still important. EDI significantly reduces manual work, but it doesn’t eliminate timing gaps, failed feeds, or human error upstream.

Why This Matters Beyond Cost

Yes, benefits audits can save organizations a significant amount of money. But they also:

• Improve data accuracy across payroll, HRIS, and finance

• Reduce compliance and fiduciary risk

• Prevent uncomfortable employee or carrier conversations later

• Build trust in your internal systems

When to Ask for Help

For many small and mid-sized organizations, this work falls into the “important but not urgent” category. If your internal team doesn’t have the bandwidth or expertise to regularly reconcile benefits data, outside support can make a meaningful difference.

Our team regularly assists organizations with:

• One-time benefits audits

• Ongoing quarterly reconciliation processes

• Process design to prevent future issues

• Cross-functional alignment between HR, payroll, and AP

Sometimes the most impactful improvements are the quiet ones.