A Guide to Employee Benefits Administration

In today’s competitive business environment, benefits administration encompasses the entire construct of employee benefit planning, from design, pricing, and compliance, to communication, implementation, and everyday management. Strategic employee benefits administration reflects a company’s culture and values, differentiates employers in the recruiting marketplace, supports the delivery of sustainable financial performance, and a proven driver of business success.

What Is Employee Benefits Administration?

At its most basic, employee benefits administration is the efficient management of monetary and non-monetary employee benefits, which is categorized as a traditional HR function. Benefits administration in this context involves employee onboarding and offboarding, benefits communication and training, tracking employees’ use of benefits, and directing the annual open enrollment process. Employers often use software or the services of a third-party benefits broker to perform these core functions on the company’s behalf.

However, benefits administration encompasses a panoply of strategies and tasks that go far beyond helping an employee navigate a family health crisis or tracking everyone’s holiday and bereavement leave. Successful benefits administration must incorporate a careful strategy that both supports a company’s goals while serving its employees’ needs. This means a comprehensive approach that comprises the crafting of an attractive and affordable benefits package, budgeting benefit costs and extracting maximum value from the company’s investment in benefits, efficient daily administrative operations, keeping an eagle eye on compliance, and fine-tuning based upon measured results. Visit HUB’s website to learn more about employee benefits.

Employee Benefits Administrators

An employee benefits administrator is responsible for the planning and administration of a company’s employee benefit programs. The administrator collaborates with HR departments to coordinate the daily monitoring coordinating of daily benefits processing such as enrollments, terminations, and claims.

Some companies hire benefits administrators to work in-house. These individuals often operate within a company’s human resources department. An internal benefits administrator wears many hats though, and may also be in charge of the following:

  • Researching benefit plans
  • Negotiating with vendors
  • Communicating with and training employees
  • Evaluating program efficiency and value
  • Recommending program improvements
  • Creating and keeping records, reports, and documentation to accordance with federal, state, and provider regulations
  • Resolving a host of benefit-related issues

However, a single person, or even a team of in-house benefits administrators cannot be expected to navigate the complexities of the incredibly confusing benefits wheelhouse. For this reason, companies often use a benefits software platform and/or choose to partner with a third-party benefits broker to handle or assist with the administration of employee benefits. In addition to the tasks that internal benefit administrators traditionally perform, outsourced benefits administrators specialize in:

  • Helping businesses with benefit plans and HR solutions
  • Assistance with providing the correct mix of benefits
  • Assessing available financing options
  • Tracking
  • Ensuring compliance
  • Reassessment and fine-tuning

Employee Benefits Administration Process

Administration of employee benefits is an all-encompassing process that must be dynamic, multigenerational, streamlined, and affordable. Organizations usually start by determining the kinds of benefits the company should provide and creating a benefit package. Employers are turning to unique offerings — Google treats its workforce to free haircuts and spa treatments — to attract and retain top talent. This initial step may incorporate differentiator benchmarking, researching the local competition and careful consideration of demographics.

The challenge of figuring out how to pay for the selected benefits program then follows. This part of the process is best handled with careful forecasting, detailed budgeting, dogged pursuit of ways to reduce benefit costs (think telemedicine, high-deductible plans, and HSAs), consideration of non-monetary benefits (such as telecommuting and flex schedules), plus the help of a tax advisor. Once a benefit program is in place, the benefit administrators enroll new employees and educate existing employees about options.

Perhaps the trickiest part of benefits administration are the details and efficiencies that go into the handling of daily tasks. Appropriate software, simplification, and collaboration with outsourced third-parties often help keep these root functions manageable. The employee benefit process also includes a compliance mechanism. This portion of the process is where the rubber meets the road, since one lawsuit or a single citation from a regulatory agency can unwind years of careful benefits budgeting and planning. In addition to knowing the law, knowing when those laws apply, and meeting workplace posting requirements, benefits administrators can access free government resources and seek professional advice from lawyers and brokers to withstand the rigors of compliance. During the last phase of the process, benefits administrators measure results and modify benefit offerings.

What is benefits administration software?

Benefits administration software is a solution that HR and employees use to manage and navigate workplace benefits. These systems bypass paperwork and automate the eligibility, election, and enrollment in traditional benefits and other options, optimize employee benefit packages, identify cost-saving opportunities, and ensure regulatory compliance. Benefits administration software work by providing a portal that centralizes benefits access. These digital one-stop-shops streamline many of the major pain points of the administration process by putting everything in one place. This lets individuals log on to access details about the benefits that are available, cost alternatives, and other plan specifics. These systems also allow comparison between options along with other decision support tools that can recommend a customized plan for an employee’s particular situation.

Benefits administration software also facilitates actual enrollment and tracks data on benefit choices. This functionality gives companies a sense of what employees really want while helping them avoid costly and perhaps underutilized offerings. Software also gives a direct connection to insurance carriers, thereby permitting the direct sending and receiving of data between the benefits platform and benefit providers. The software can also manage employee communications and education about benefits. Benefits administration software also works to provide dedicated risk assessment protocols that focus on cybersecurity and protect the reams of sensitive and confidential information collected in the benefits administration process from identity theft and hacking.

Employee Benefits Administration FAQs

What is an employee benefits guide?

An employee benefits guide is a handbook that summarizes the benefits that a company offers to its employees and their families. It includes details about benefits like insurance and flexible spending accounts as well as information about other benefits like work-from-home options and company-issued equipment. Suggested best practices for creating an optimal employee benefits guide are to:

  • Digitize it, perhaps as a PDF with an interactive landing page
  • Structure information in an ‘inverted pyramid’ with urgent matters first, supporting details next, and background information last
  • Be repetitive about crucial items like enrollment period dates and deadlines, changes to benefit programs, and software engagement tools
  • Personalize it with real world examples and highlighted employee stories
  • Focus on transparency by visualizing the trade-offs and savings between benefit alternatives
  • Make it a part of the company’s larger benefits communication strategy

What are the 4 major types of employee benefits?

The four major types of benefits that companies offer to employees are:

  • Insurance, including medical, dental, vision, life, disability, long-term care (LTC), and critical illness coverage
  • Retirement plans (such as (401(k) contribution or pension plans)
  • Additional compensation: bonuses, commissions, stock options, and profit-sharing
  • Time off, comprised of vacation, sickness, and holiday paid time off, bereavement compensation

Other benefits that employers are providing to address the needs of a multigenerational workforce include nontraditional offerings like professional development programs, remote work and flexible schedules, paid paternity life, on-site cafeterias, child care and gym facilities, commuter expenses, relocation assistance, and even pet insurance.

How do you implement employee benefits?

To implement employee benefits, a company must create and follow policies that reflect its culture and values and craft guidelines that explain and begin the actual operation of various benefit options, from insurance coverage to flexible work arrangements. Experts recommend a number of implementation best practices, the most important of which is ensuring that all stakeholders and decision-makers are on board with all benefits decisions. This should include buy in to the setting of goals, development of an implementation timeline, and establishment of success metrics.

Companies should also confirm implementation details with attorneys and financial advisors to ensure regulatory compliance and consider tax implications. Benefits implementation must also be aligned with other company policies and procedures, which may require updating to achieve across-the-board consistency. Successful implementation also depends upon a good communications plan via online, in-person, and printed mediums to explain advantages and avoid misinformation. Finally, a post-implementation debriefing that explores what went well and what should be done differently next time will put the employee benefit process into perspective and help with future implementations.

What are the best employee benefits?

The best employee benefits are those designed with the expectations and priorities of a diverse workforce in mind. The “silent generation” born between 1928 and 1945 wants financial, retirement, and recognition programs. To keep a company’s loyal and experienced baby boomers, preferred benefits are life and supplemental insurance and retirement planning services. Optimal benefits for Gen X-ers who are more focused on career advancement include professional development programs, remote and flexible work options, paid paternity leave (it’s not just for the moms anymore) and on-site childcare.

Millennials and Gen-Z employees may care more about work-life balance and types of non-traditional benefits never contemplated by older counterparts. In addition to traditional benefits, younger employees want things like a casual dress code, on-site gyms, company training, tuition assistance, parking passes, housing assistance, free food, office amenities like breastfeeding rooms and quiet spaces, entertainment benefits such as parties, trips, retreats, and game nights and even pets-at-work policies.

What should be included in a benefits package?

An exhaustive list of what should be included in a benefits package would be impractical, but generally such a package should include items of both a tangible and intangible nature that meet the desires and needs of a company’s workforce. The package should have competitive offerings that are affordable for both the company and its employees that include at a minimum insurance, retirement plans, supplemental compensation, and time off.

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HUB International

HUB International is a leading North American insurance brokerage that provides employee benefits, business, and personal insurance products and services.