If you’ve seen our recent press release, you already know that the North Carolina State Health Plan Board of Trustees recently awarded benefits administration contracts to five companies, including COBRAGuard. The state provides benefits for approximately 664,000 people. With this decision, it expects to save $22.4 million, roughly 19 percent, compared to last year.

How did the state achieve such a large percentage of savings? By UNBUNDLING its benefits administration services. While it seems counter-intuitive, it works. Like many public entities, the state used to have all of its administration contracts bundled with one vendor. Like the rest of us, they probably heard the “bundle and save” insurance commercials. However, while bundling may work with personal lines insurance, it doesn’t always pay off with large HR or benefit administration contracts. In fact, in this case, the state was able to uncover substantial savings by choosing five highly specialized niche vendors – COBRAGuard being a prime example. Because we focus exclusively on COBRA and direct billing administration, and because we specialize in COBRA administration for public entities, we are able to provide the service more cost effectively than many of our generalist competitors.

If you’d like to UNBUNDLE and save, here are a few things to keep in mind:

• With an unbundled approach, all partners must be willing to work together and play well in the sandbox. It’s a good idea to require all vendors involved to commit to one another, and to you, so that you can achieve your service objectives, this is critical. Therefore, it’s important to choose providers who are agile, service-oriented and solution-focused.
• Customized data feeds can help gather and disperse information across the entities involved. Look for vendors with IT expertise who can close data gaps and improve reporting capabilities so that your service objectives are met.
• As with any change, participant and employee communication is paramount. Ensure that the vendors you choose can provide a seamless transition with co-branded communications.

With tight budgets, public entities and businesses are challenged to achieve more with less – today more than ever before. One proven way to save money is by outsourcing COBRA administration and other routine, highly methodical HR functions. But public entities and businesses should not assume that they have to place all contracts with one vendor. As the state of North Carolina has just proven, unbundling can yield big savings.

Want to learn more about COBRAGuard’s COBRA administration services for public entities? Download our e-brochure now. Curious about outsourcing? Download our free report “In Search of ROO – Return on Outsourcing.”