What is Employee Benefits Administration?

First, it helps to understand the two basic models of benefits delivery.

Employee benefits are non-wage forms of compensation provided by employers in addition to regular salaries. They are often the second-highest company expenditure behind wages and salaries. They include various perks and compensations such as:

In summary, employee benefits serve to enhance the overall compensation package and support the well-being and professional growth of employees.

Bonus points if your benefits administration partner has partners! Often, the only exposure employees get to their voluntary benefits or ancillary benefits like accident coverage, pet insurance, and other financial support is during enrollment. Many benefits administration systems have “built-in” partners who can make it easier to both enroll and use those benefits when they’re needed. 

Here are five great questions to ask when you evaluate your options. 

1. What technology and services do I need?
   Any search for a benefits administration partner starts by determining what’s in-scope. First, break down your benefits administration processes into their component parts. Most organizations can identify around 20 separate tasks in health and welfare administration, in addition to ancillary benefits services. And don’t forget compliance! A partner should have a strong foundation and capabilities to monitor and administer to applicable laws.
2. Can the vendor meet my core requirements?
   We’ve all bought a pair of shoes that looked great in the store only to find out that they weren’t the right fit after all. It can be that way with HR technology, too. Today’s HR tech is incredibly robust, providing agility, expansive data analysis, mobile experiences, artificial intelligence, and more. That’s great. But your first concern should be on your core requirements.  
3. How committed is the vendor to health and welfare benefits administration? 
   In this rapidly changing world of health and welfare benefits, it’s important to understand the vendor’s level of commitment to this specialty field. If benefits administration is their primary focus, you’re probably on the right track. If, on the other hand, their attention is split among other HR functions (e.g., payroll, HRIS) or business operations (e.g., consulting), you can assume that some depth has been lost somewhere along the way.
4. What is the vendor’s bench strength and growth projection?  
   We’ve all heard of technology startups that began with a great idea but ultimately failed due to poor infrastructure or making the wrong investments in human capital. With most contracts for HR technology extending out to two, three, or even five years, these are not the partners you want. You and your leadership should be focused on the success of your own business, not worrying about the sustainability of your benefits administration partner. Find a partner who is innovating, but also has a proven track record of success.
5. Get a look under the hood.  
   We all love a good story. The mark of a good benefits administration partner is transparency. When reviewing a technology, ask them to show you how the system is configured. Give them examples of changes you need throughout the year and request they show how to make that change during your meeting. Additionally, understand if what they are showing you is current-state or if some of the features they are sharing are future- state.

HR teams who seek to manage employee benefits more effectively. This includes benefits specialists, managers, and analysts who need comprehensive tools for decision-making and employee engagement. 

The strategic focus varies: 

• Medium-sized companies often look for efficiency and automation. 
• Large companies tend to emphasize advanced communication and technology integration 

Companies and organizations often have common pain points in benefits administration, such as inefficient systems, high employee turnover, low engagement with benefits offerings, and a lack of integrated resources. A good benefits administration partner can help with all of these issues. 

If selection and activation of benefits are a goal of your organization, then you should consider the various ways to achieve that goal. Some benefits administration systems are created solely for enrollment and subsequent changes to enrollment. If that’s all you need, then be sure to understand the differences in the types of administrators you evaluate.  

From the data we’ve gathered here at Businessolver, HR decision makers have three goals:

When you’re evaluating your next steps in the benefits administration space, determine what your top priorities are, and whether the vendors you’re evaluating have mechanisms to deliver on those goals, or if you will need to add another provider to the mix. Ideally, benefits enrollment, eligibility management, carrier exchanges, data tracking, and member communications could be executed in a single platform to make life easier. 

The chief governing bodies in the U.S. for benefits administration include federal and state regulatory agencies, specifically: 

1. Department of Labor (DOL) - Regulates employee benefits under the Employee Retirement Income Security Act (ERISA). 
2. Internal Revenue Service (IRS) - Oversees tax treatment of benefits and compliance with tax laws. 
3. Department of Health and Human Services (HHS) - Manages health-related benefits, particularly those under the Affordable Care Act (ACA). 
4. State Insurance Departments - Regulate insurance and benefit-related matters at the state level. 

These agencies work together to ensure compliance with various laws governing employee benefits, including retirement and health plans. 

Ultimately, you are looking for an extension of your team that can save you time and resources to help you be available for your employees in the moments that matter. 

Benefits administration is crucial for organizations to effectively manage their employee benefits offerings, ensure compliance, enhance employee engagement, and streamline administrative tasks.