Attracting and retaining top talent requires offering competitive benefits packages. That includes health insurance, retirement plans, and paid time off. All these benefits play a critical role in boosting the overall employee experience.
However, managing employee wellness benefits is a complex and evolving process that requires precision, compliance, and adaptability.
In this article, we’ll explore what benefits administration involves and its challenges. We will also discuss the advantages of leveraging technology and how to strategically outsource benefits administration.
What Is Employee Benefits Administration?
Employee benefits administration simply means managing the various benefits programs an organization offers to its employees.
It forms an essential part of your employee benefits strategy in relation to how you design, implement, and measure program effectiveness.
Reasons employee benefits administration is essential include:
- Attracting Top Talent: Competitive benefits packages incentivize employees to stay with you, while also helping you poach top talent from competitors.
- Boosting Productivity: Employee productivity often drops whenever members feel overworked. However, benefits like paid time off can boost employee morale and job satisfaction, which in turn contribute positively to their productivity.
- Brand Reputation: An efficiently managed benefits program has a direct influence on your organization's reputation. Satisfied employees will boost the company profile by talking about the benefits they receive, which in turn helps your company attract highly sought-after professionals.
- Cost Management: Although benefits programs help employees, they can be a substantial expense for organizations. A well-managed system will find ways to cut costs while maintaining value to employees, for example, by identifying underutilized benefits and regularly renegotiating rates with benefits brokers.
- Determining Employee Needs: A benefits program is not just about giving appreciation tokens; it's also about understanding the unique needs of each employee. You might be providing a benefit that does not appeal to your employees. An employee benefits administration will help identify your employees' needs and incorporate them into an attractive benefits package.
- Staying Compliant: Federal, state, and local authorities subject employers to several human resource regulations. Failure to comply with these regulations could result in fines and other penalties. Having an efficient employee benefits administration ensures you stay compliant with all necessary laws.
How the Benefits Administration Process Works
The benefits administration process encompasses evaluating employee needs, budgeting for, implementing, managing, and evaluating employee benefits.
The administration process should be systematic to maximize the program’s effectiveness:
1. Assess Employee Needs
The first step to effective benefits administration is understanding what employees want. Determine your employees’ wellness needs by asking them to complete questionnaires or surveys, or by holding consultative meetings.
Use employee feedback to personalize wellness benefits that complement your team’s lifestyle goals.
2. Hire a Benefits Broker
Although it is optional to work with a benefits broker, you should consider it, as they can bring substantial knowledge to the table. For example, wellness brokers help you align the wellness goals with your company's objectives.
Additionally, the broker will help you personalize the wellness benefits to your employees’ lifestyle needs for better ROI.
3. Prepare a Budget
Once you have an idea of the benefits you want to provide, calculate the wellness program cost, including creating a plan of how you’ll finance the initiatives.
Typically, the cost depends on the type of benefits offered, the number of employees, and pay packages for in-house or outsourced wellness program administrators.
4. Design the Benefits Packages
Based on the employee assessment in step 1, you should be able to design wellness product packages that address each member’s unique wellness needs.
Typical employee expectations include paid time off, health insurance and dental coverage, and retirement plans. However, the packages you offer should be within your budget.
5. Choose a Benefits Administration Software
The software should integrate seamlessly with your existing systems and streamline HR tasks, such as enrollment and performance measurement.
Also, the software should provide real-time data tracking and, if possible, allow employees to monitor their participation rates.
6. Check Regulatory Compliance
Compare the benefits you wish to provide against all federal, state, and local employment laws, like the Affordable Care Act (ACA).
Ensure that the wellness benefits comply with the stipulated regulations and make necessary adjustments if they do not, to avoid penalties. For example, most health-focused wellness benefits must comply with HIPAA guidelines regarding handling employees’ personal information.
7. Inform the Employees
When the packages are ready, communicate the available options to the employees.
Outline how they can enroll for different benefits and explain factors that can influence their eligibility or entitle them to specific benefits. Proper communication helps secure employee buy-in, which often translates to higher participation rates.
8. Offer Training Services
Once you introduce the new benefits packages, create a regular schedule of training services to help ensure employees stay up-to-date with the available offerings.
Most businesses offer annual training, but you can opt for biannual or quarterly training exercises for effective education.
9. Evaluate Employee Impressions
Conduct a follow-up survey to gather employee feedback on the new benefits.
For example, use pulse surveys to assess employee sentiments about newly introduced corporate health and wellness benefits. Do they find them relevant? Which improvements would they suggest? Leverage the collected feedback to refine the benefits so that they align more closely with employee expectations.
Many companies implement well-thought-out benefits packages, but fail at the administration point. For example, they may lack the bandwidth to monitor employee participation rates, missing out on opportunities to improve the packages.
At SoHookd, we provide dedicated support services to help HR teams effectively manage wellness benefits programs. Part of our hands-on benefits administration services includes employee enrollment and managing the wellness incentives program to boost participation rates.
Schedule a call today and discover how effective employee benefits administration can drive employee engagement for your company.
Top Challenges in Employee Benefits Administration
Efficient benefits administration is crucial to maintaining a supportive work environment.
However, the administration process can be complicated, especially when managing multiple benefits, each with its unique compliance requirements.
The complex nature of the process brings about challenges such as:
- Cost Management: Hiring and training personnel, as well as purchasing or licensing benefits administration software, can be a significant financial burden, especially for small businesses.
- Complex Regulatory Demands: Compliance requirements are constantly evolving, with laws, such as the ACA, being revised regularly. Each new regulation often comes with more stipulations, which can be confusing for some HR teams.
- Overwhelming Administrative Workload: Benefits administration tasks, such as enrollment, tracking regulations, and claims processing, are repetitive, mundane, and time-consuming for in-house teams.
- Effective Communication and Training: Some businesses struggle with effective employee onboarding, which often leads to employee confusion and disgruntlement.
- Managing Employee Needs: Every employee has unique needs and expectations regarding workplace benefits. Reconciling all their preferences into benefits packages that will satisfy a significant majority of them can be challenging and hurt participation rates.
The Role of Benefits Administration Software
By design, all forms of administrative software help people minimize and simplify administrative tasks. Benefits administration software is not any different.
It helps reduce administrative burdens in the following ways:
- Automating Repetitive Tasks: The software eliminates the need for filing paperwork and data entry, which contribute to manual inefficiencies. This, in turn, frees up a significant amount of time for administrators to focus on core business functions (such as HR tasks for the HR team).
- Reducing Human Errors: Human errors are common when handling administrative tasks, such as data entry. An administrative software system minimizes such mistakes by allowing you to export data from one platform to another.
- Smoothening Onboarding: Without a benefits administration software, the employee onboarding processes can be notoriously tedious. Imagine having to double-check each employee’s eligibility against company policies. , and other tasks. A software system makes the transition seamless. Advanced benefits administration software can pull data from the human resource information system (HRIS) and classify each member based on eligibility.
- Improving Compliance: A benefits administration software helps streamline compliance across multiple jurisdictions, tracks changes, and enforces regulations with minimal to no human input.
- Tracking Program Effectiveness: Manually tracking a benefits program can be tedious, as it may require scheduling meetings or requesting employees to complete questionnaires. On the other hand, a benefits administration software will have built-in performance analytics tools to monitor employee engagement and generate on-demand reports.
Effective Benefits Administration Best Practices
You must have already realized that benefits administration involves more than just enrolling employees in the launched wellness initiatives. You must ensure that the wellness benefits meet the individual needs of members and support the company's goals.
Use our cheat sheet below to streamline your benefits administration process:
- Effective Communication: Assist employees in understanding how to access and utilize their benefits. Regular and reliable communication also cultivates a culture of transparency, thereby bolstering employee engagement.
- Simplified Enrollment: Make the enrollment process straightforward to encourage employees to sign up and participate in the wellness benefits. Seamless enrollment also enhances the accuracy of the collected data for effective performance monitoring.
- Leverage Relevant Technology: Procure a benefits administration software to automate repetitive tasks and reduce administrative burdens and costs. The technology also enhances accuracy by minimizing human interventions that can lead to errors.
- Gather Employee Feedback: Encourage employees to provide feedback so that you can tailor the benefits packages to meet their needs more accurately. Their feedback can also boost cost-efficiencies by allowing employers to eliminate unnecessary benefits.
- Outsource: Partnering with specialized providers gives you access to expertise that you may not have in-house. Additionally, outsourcing frees up HR staff to focus on other pertinent organizational matters.
When to Consider Outsourcing Benefits Administration
Some companies are reluctant to outsource benefits administration for various reasons, including the desire to keep employee data in-house. However, outsourcing can be a lifeline for companies that lack the required bandwidth for in-house benefits administration.
Here are clear signs to outsource benefits administration:
- Overwhelmed HR Employees: Your HR team may be out of its depth when handling benefits administration. This could be because they lack the expertise to carry out the work effectively, or the workload is simply too much for them to handle. Outsourcing could relieve the pressure they face.
- Compliance Challenges: Compliance regulations are dynamic, meaning your HR team may struggle to keep up with the constant changes. Outsourcing ensures that you retain the services of a provider who keeps you compliant, regardless of regulatory changes, thereby reducing risks to the company.
- Cost Cutting: Maintaining a dedicated staff for employee benefits administration can increase administrative overhead beyond a threshold that you can sustain. Outsourcing allows you to transfer such costs to the benefits administration service provider.
- Outdated Technology: Like other technologies, benefits administration software is quickly evolving, and you might find it time and capital-intensive to procure new systems every few years. If so, outsource to a benefits administration company to access specialized technology and platforms at a fraction of the cost of running the software in-house.
Frequently Asked Questions (FAQs)
Some of our clients asked the following questions about employee benefits administration.
What Is the Employee Benefits Security Administration?
The Employee Benefits Security Administration (EBSA) is an agency within the U.S. Department of Labor responsible for enforcing laws related to employee benefit plans, particularly in the private sector.
The agency ensures compliance with the Employee Retirement Income Security Act (ERISA), which protects members’ health benefits and retirement plans.
What’s the Difference Between a Broker and a TPA (Third-Party Administrator)?
A broker assists employers in selecting employee benefit plans, negotiating with health insurance providers, and designing customized benefit packages tailored to their employees.
On the other hand, a TPA handles routine administrative tasks, like employee enrollment and claims processing.
How Do I Choose a Benefits Administration Platform?
Here’s a checklist to help you pick the best-fit benefits administration software:
- Affordability: It should be within your budget.
- User-friendliness: The platform should be easy to use and have a welcoming user interface.
- Integration: It should seamlessly blend into your existing HR management systems without requiring an overhaul of your current systems.
- Support Services: It should have compliance tools, data analysis capabilities, and reporting features.
Conclusion
Effective employee benefits administration enhances employee satisfaction, boosts retention, and drives organizational success. As such, benefits administration requires long-term planning and ongoing adaptation.
However, the reality is that many companies struggle with employee benefits administration because of regulatory hurdles and mounting costs. Outsourcing enables you to access specialized benefits administration services, ensuring you create a seamless, compliant, and engaging experience for your employees.
At SoHookd, we have nearly a decade of experience helping companies manage their employee benefits. We offer flexible wellness benefits programs that you can quickly personalize to your employees’ needs and launch within 2 weeks. Also, we provide ongoing support to help you onboard employees into the benefits programs and monitor program effectiveness.
Book a one-on-one call to learn how our benefits administration services can drive real results for your company.
