What is EDI? And Why Should HR Professionals Care?

January 27, 2020・5 mins read
What is EDI? And Why Should HR Professionals Care?

The future is paperless. Shifting your HR operations to a digital model improves efficiency, reduces cost, and helps the environment. The downside? The amount of information to be entered in a database has increased. Exponentially. This laborsome task is important because it helps organizations comply with legal requirements and provides third parties (like insurers) with proper information. Yet in an age of rapidly advancing automation, many organizations find they still enter data one character at a time. Fortunately, digitization has reached this most mundane of HR tasks with the Electronic Data Interchange (EDI).

What is EDI?

Electronic Data Interchange is the ability for computers to exchange documents in a standardized electronic format. Essentially, it’s an electronic transfer of information. Rather than manually entering information, a computer at one company is able to read a document provided by another. No entry of data is needed: the document itself is readable and understandable. For business, an eBenefits Network (eBN), streamlines the employee benefits enrollment and administration process between the employer and insurance carriers by leveraging EDI technology.

EDI saves money

Businesses can save on the cost of printing, storing, filing, and eventual destruction of the voluminous paperwork associated with benefits administration.

EDI saves resources

HR professionals aren’t spending hours married to forms. They’re able to communicate new hires, separations, coverage changes, enrollments, and eligibility automatically. Hours of paperwork and processing are reduced to minutes.

EDI speeds processes

Forms are transferred immediately, without the risk of being lost in the mail or in someone’s inbox. Enrollment and changes are effected in near real-time, assuring the process is as fast and efficient as possible.

EDI boosts accuracy

Human error in data entry is eliminated with EDI. When information is transmitted electronically, all the data entered on the form is preserved intact. No typos, errors, or omissions are possible through EDI.

EDI improves security

The more people who touch a form (or leave it on their desk), the more potential for a data breach. With EDI, data flows from one computer system to another in an encrypted environment. Eliminating human error also eliminates the possibility of human incursion of data.

EDI is HIPAA compliant

The most advanced technology available is of no use if it doesn’t comply with the law. EDI is HIPAA compliant, assuring data is secure and private. Strong encryption and authorization certificates verify the data sent meets privacy requirements set by federal law.

EDI enhances employee experience

Today’s HR department understands the scarcity of talent and the need to enhance employee experience at every touchpoint and connection. But as HR professionals improve interactions with staffers, the benefits administration function has been somewhat left behind. Employees have come to expect a frustrating level of paperwork and a lag time with benefits enrollment/updates/changes. A host of potential problems with lost forms or inaccurate data entry only adds to employee dissatisfaction. With EDI, employee experience with benefits administration can be enhanced. One form, sent to multiple carriers, reduces their investment in enrollment paperwork. Accuracy and speed become the norm, rather than lag time, mistakes and resubmission.

Digitization you can use

The best HR tech provides solutions that enhance performance and reduce repetitive tasks. EDI addresses the rote responsibilities of benefits administration that are also the most likely candidates for human error and data breach. As more responsibility weighs on HR professionals to provide enhanced services to employees, they can save valuable time eliminating these mundane tasks. For companies looking to boost employee experience, benefits admin has long been overdue for modernization: EDI provides the solution for HR and employees.

EDI and the modern HR department

Remember OCR? Optical Character Recognition promised to make the world paperless. Scanning a document meant all the data was captured to a computer system without human intervention. But OCR isn’t 100% accurate, forcing most organizations to manually scan for accuracy before finalizing data. HR professionals are always on the lookout for technology that eliminates rote tasks, allowing them to spend more time on talent management and development. With EDI, the volume of benefits administration duties can be highly reduced or even eliminated. Leveraging this tech allows HR to move on to their most important roles: acquiring, managing, and developing talent. For HR, the choice is obvious – find the best tech available to optimize your value for your company. Whether it’s EDI or other automated processes, getting HR back to the business of managing human resources, rather than paperwork resources, is a priority for every organization.

This communication is for informational purposes only; it is not legal, tax or accounting advice; and is not an offer to sell, buy or procure insurance.

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