The information posted on PayrollTalk is for informational purposes only and is not intended to substitute for obtaining accounting, payroll, tax, or financial advice from a professional accountant.

Health insurance payments reconciliation?

How does your company reconcile your health insurance payments?
Our HR reconciles the invoice with the current employee deduction setting records, and then sends the payment to insurance company each month. Also, our accounting does the reconciliation once per month to compare our payroll deductions line by line with the hard copy invoice that insurance company sends to us (time consuming). Of cause, there are differences between these two because if an employee did not have a check for this pay period, he/she would not have the deduction for the period. But, if he/she is still eligible for the health insurance, HR pays it anyway. It seems like our accounting doing the duplicated work. I would like to hear from you what is an efficient way to do the reconciliation?
Any idea and suggestion are welcome.
Thank you in advance!


  • I have a big spreadsheet. The first few columns are the employee's name, effective date, coverage, and premium. Then the columns are paired up with each month's "Due" and "Invoiced", with totals and the difference all the way at the end (So I can see YTD Due and Invoiced, plus see any difference between the two). I also track how much I pay each month. It's a small enough company that I know when someone needs to be added, terminated, or changed on the sheet, but at my last company I kept notes that I could refer to.

    I report any discrepancy that isn't the result of additions/changes/terminations not catching up with billing, and 2 months before the end of the plan year I send a copy of my spreadsheet to my billing contact at the insurance company with a note that I will add/deduct $X from my next bill to bring everything to true.

    I don't have issues with people not having enough pay to meet deductions, but if it did happen, that's just a note in the payroll file for adjustments next time.
  • Thank you for all of your responses.
    Our system keeps tracing the payroll deductions and year to date totals for both employee and employer payment. These deduction’s payments are interfaced to GL every pay period. My question is only concern the employer portion of the payments. Our coverage plans are Family, Employee only, and Employee + one dependent (say $600, $500, and $550). HR benefits person run a report every time before she pays to insurance company and GL books the difference between the actual paid and payroll deduction based on HR payments. Some times, we pay $ 5,000 to $10,000 more than payroll deductions for a month (one month, we pay $20,000 more). Before, HR reconciled the payments once per month and when the year end, Accounting wrote off the difference. Now Accounting wants to reconcile every month beside HR reconciliation.
    How do you do with GL each month when you pay more than the payroll deductions for employeer portions.
  • Unless you have a lot of activity on your plan (hiring, firing, etc.), you shouldn't be out by much at the end of the month. If you pay semi-monthly, the only difference should be in additions and deletions from coverage.
  • Mnementh wrote:
    Unless you have a lot of activity on your plan (hiring, firing, etc.), you shouldn't be out by much at the end of the month. If you pay semi-monthly, the only difference should be in additions and deletions from coverage.
    Thank you for your response.
    We pay once per month. In average, we have about 15- 20 new hires, 15-20 retired and 15 - 20 terminated employees. I am IT person to support HR/Payroll application and I would like to know how other company to do their payment. Does your accountant do the monthly reconciliation line by line each month? It helps me to determine if IT needs to design an automatically reconciliation procedure for our accountant.
    By the way, Mnementh, are you a HR person or Accountant?
    Thank you!
  • Actually, I'm both. We're a small company, so I'm HR, Payroll, Accounting, and a few other things as well.

    Are you getting (or able to get) the insurance bills electronically? At my last job I could download the bills and import a report from our payroll provider, and the compare them side-by-side to be sure everyone on the bill had deductions, everyone with deductions was on the bill, and we had the right coverage level in the system (or on the bill).
  • fwu888
    edited May 2006
    We requested billing company to give us an electronic invoice.
    In my previous company, HR does the procedure as the same as you do and then Accounting reconciles the total payment once per year. There were not many differences between the payment and the invoice each month.
  • You have two different things happening. Lets say the company has a very simple health care plan where one of the following situations must be true.
    - Employee has Single coverage. Employer pays $300/month to the vendor and charges the employee $100/month.
    - Employee has Family coverage. Employer pays $500/month to the vendor and charges the employee $150/month.

    Most payroll/HRIS systems have user defined fields and good payroll/HRIS systems have report writers. Let's say that we define one of these fields as medical coverage, and the valid field values are "blank" (no coverage), "S" (Single), and "F" (Family). It should be easy to once the correct values are entered to create a monthly report which projects what the vendor's bill should be and also what the employee's deductions should be. The big problem with the vendors invoice (in my experience) is over billing, particularlly when more then one carrier is involved. Most good payroll systems automatically keep track of under deductions - some will even automatically make the recoveries as wages become available. The real money is in the vendor payments, and there is (IMO) a real need to audit these costs.

    Would you descript how does your company do your health insurance payment and reconciliation?
    Thank you in advance.
  • It's an old post - but for anyone still looking for responses, there is an automated tool that reconciles benefits for you.