Benefits Fraud Prevention: Tips for Employers
September 29, 2023
SEB Marketing Team
Benefits fraud is becoming more prevalent among Canadian companies, both large and small. This unscrupulous practice not only affects a company’s bottom line but also jeopardizes the well-being of honest employees who depend on these benefits. Procedures and controls to prevent fraud can be a crucial component in the fight against benefits fraud, which leads to higher premiums and reduced coverage for everyone. Employers are often left to foot the bill, and the impact on company finances can be substantial.
So, what can employers do to safeguard their benefit programs and prevent fraud from sapping resources? Here are some tips for employers:
Regularly Monitor Claims and Benefits Usage: One of the most effective ways to combat benefits fraud is by closely monitoring claims and benefits usage. Employers can establish a robust system to track and analyze claims data for unusual patterns or red flags. Frequent reviews can help identify inconsistencies and potentially fraudulent activities.
Put it in Writing: Putting your policies in writing and making them available in multiple locations helps to bring awareness to resources available. Having written policies also sets the tone for expectations and consequences of fraud, making it clear that fraud will not be tolerated.
Educate Employees About Benefits and Fraud: Education is key in preventing benefits fraud. Ensure that your employees have a clear understanding of their benefits and how to use them legitimately. Provide training sessions or informational materials that explain the consequences of fraud, emphasizing that it’s not only illegal but also harmful to their colleagues and the company as a whole.
Implement Creative Plan Designs, Such as Health Spending Accounts: Consider implementing innovative benefit plan designs, such as Health Spending Accounts (HSAs). HSAs offer more flexibility to employees while allowing employers to set limits on eligible expenses. This can discourage fraudulent claims and promote responsible use of benefits.
Strengthen Internal Controls: Review and enhance your internal controls related to benefits administration. Assign dedicated personnel or teams to oversee benefits management and claims processing and separate duties so no one has access to everything. Establish clear procedures for handling claims, and ensure they are followed consistently. Follow up with regular and irregular reviews.
Leverage Technology: Utilize technology to your advantage. Invest in benefits administration software that can automate claims processing and flag suspicious activities. These tools can help streamline the process while enhancing fraud detection capabilities.
Regularly Review Benefits Plan Designs: Periodically assess your benefits plan design to identify potential vulnerabilities. Seek advice from benefit experts or consultants who can help you optimize your plan to minimize fraud risk.
Benefits fraud is a growing concern for Canadian employers, but with the right strategies in place, it can be effectively mitigated. Preventing benefits fraud isn’t just about saving money; it’s about ensuring that your employees receive the benefits they deserve and maintaining the integrity of your organization’s benefit programs.
SEB is Canada’s leader in providing benefits administration solutions to over 400,000 plan members from Canadian companies. You can check out the full suite of SEB’s solutions including a customized personal spending account solution here