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How Does the EDI 834 Work?

EDI 834 is an important file for all employees as well as employers. It serves as a benefits enrollment and maintenance document. It enables employers to take care of everything for their employees. With the increasing number of companies and opportunities in the marketplace, every organization has become conscious of keeping employees happy. The better your employee feels about working with you, the higher the chances of you reaching new heights of success. 

What is EDI 834?

The file is used to maintain the employee records for benefits and medical insurance. The file can be simply shared with your insurance partners. Employee satisfaction has certainly become one of the crucial factors. When it comes to complying with industry-standard of delivering quality options to your employees, EDI 834 is a must.

The concept of Electronic data interchange is not new and is certainly not the most advanced. It comes in handy to establish a communication channel among business partners. It is the standard document that makes the entire process unified.

 You see, a health insurance company partners with multiple organizations to take care of employee benefits and insurance. In order to share the data required for enrollment, EDI 834 has been set as the standard file. It not only establishes the connection between an organization and its partners but also makes it easier to maintain communication. There are so many aspects of what an EDI 834 is and how it works. 

In this post, let’s try to dig deeper into the roots of EDI, its multiple standards, and why particularly 834 is important. We will also be looking at how EDI 834 works. If you are looking for a one-stop solution to all your queries related to EDI 834, then this post is a must-read for you. Without further ado, let’s begin!

What is EDI 834 Made of? Why is it the Standard Choice?

A lot of people confuse the 834 EDI file to be similar to the basic file that people exchange as data. There are a lot of things that one has to take care of while using an EDI, especially when it comes to EDI 834. Electronic data interchange allows two systems and organizations to exchange requirements and invoices without creating a paper trail while keeping it organized and smooth. 

As defined above, EDI 834 deals with employee benefits and insurance enrollment. Every company has an insurance carrier that helps it in creating a solid employee benefits plan. It is mandatory as per the HIPAA regulations. For those who are unaware, HIPAA is the health insurance portability and accountability act of 1996 which standardizes the multiple codes sets to maintain a transparent transaction of data. 

There are other code files such as EDI 270 for healthcare eligibility checks, EDI 276 for claim status, and so on which are already in use to create a smooth workflow and standardize the process in the industry.

Today, using an EDI service, especially 834 is the standard file for exchanging data between companies and insurance vendors because that file has a set of fields and methods of input for data that can be easily read through the receiving system and it instantly helps in understanding the requirements of the user. Though it is standardized by the HIPAA, there are a few pointers that we can relate to the decision of why it is the standard choice – 

  1. Multiple vendors work with multiple organizations. This means they want regular interaction with all of them and need something to differentiate. 
  2. A single EDI 834 can be used only once and with only a single vendor. This means even if two insurance carriers are providing the same plan, you need a separate file to make things work.
  3. It automates the entire process. You see, if you do not use EDI, you will have to fax the details creating a paper trail followed by manually importing the details at the provider’s end making both the organizations dedicate resources to the task.
  4. The idea behind standardizing EDI 834 was to make things digital. The details shared to get an employee enrolled for insurance are quite confidential and thus a digital transfer always makes it safer.
  5. Makes the data more credible while maintaining its integrity. Unlike hand-filled forms that may have interpretation mistakes or handwriting issues, digital forms make everything accurate and hence you do not have to worry about the nature of the forms.

These benefits along with the basic understanding of communication among the organizations makes EDI 834 a good option to replace the traditional interchange of data and hence the file was set to be the standard by HIPAA. 

How does EDI 834 Work? The 3-Step Process

So how does EDI 834 work? Well, it is easy to understand how it is implemented as the basic functioning of the 834 is similar to any other EDI file. You need to have clear basics of how an electronic data interchange file works. Just to give you an insight, there are 3 steps mentioned below – 

Step 1 – Prepare the File

  • Instead of creating a file offline, you have to prepare an electronic record of the data that you have to send. It can be done by multiple methods such as manual data entry through computers, direct data record fetching with the help of integrated EDI interfaces, or simply by using the ERP tools that have been developed with compliance to EDIs.

Step 2  – EDI Translation 

  • After preparing the file with appropriate data, you are going to need a translation tool that will convert your file into the basic EDI that will have an appropriate format. In this case, you convert your insurance carrier form into EDI 834. The tool can be bought or set up at once with the help of an EDI integration company that you can easily hire. If you have less number of transactions in a week, you can go for subscription-based EDI translators that allow somewhere around less than 100 transactions a week.

Step 3 – Establish Connection & Transfer 

  • Since EDI 834 contains confidential data, you can not send it within a mail or as an attachment. There is a proper communication channel between both the sender and the receiver to initiate and complete the electronic data interchange. You need VAN connections with specific internet protocols in place to make the transfer happen. Do not worry, as there are specific  Electronic data interchange providers to make things easy for you. Once it is established, you can consider the transfer to be complete.

Conclusion 

The above sections sum up the entire EDI 834 significance and working. EDI 834 is a must for you if you are into corporate and require a smooth benefit and medical enrollment process for employees. With the help of B2B EDI solutions, you can not only ensure compliance as per industry standards but can also save a lot of time and effort. It is more convenient. 

Not to mention, the process becomes immensely cost-effective when you calculate the ease factor.  You do not have to dedicate a resource or two to ensure that the documentation is proper. Time-saving is another virtue of using EDI 834 which makes it a perfect overall package for you. 

This brings us to the end of this post. Hope you got the answer that you were looking for. Good Luck!

Author’s Bio:  Scarlett works with the editorial team of A3logics, a leading company offering EDI Solutions. Exploring the latest technologies, reading about them, and writing her views have always been her passion. She seeks new opportunities to express her opinions, explore technological advancements, and document the details. You can always find her enjoying books or articles about varied topics or jotting down her ideas in a notebook.

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