The process of managing, organizing, and maintaining an organization’s employee benefit program is known as employee benefits administration. Human Resources is most commonly responsible for this role, which entails administering benefits such as:
- health insurance (medical, dental, and vision coverage)
- wellness plans and incentives
- life and disability insurance
- employee assistance programs
- 401(k) and retirement accounts
- paid time off (PTO)
- parental leave
The importance of employee benefits administration
Planning a comprehensive employee benefit strategy is key to attracting and retaining top talent. Benefits are one of the most important things people consider when accepting a job offer – both in terms of cost and coverage options. When employees have comprehensive, affordable benefits available to them they are more likely to be holistically well and thrive within their work environment.
The employee benefits administration process
The employee benefits administration process begins with deciding which benefits will be included in the package offered to employees. HR managers and executives determine the types of benefits that will be offered by considering a variety of factors including cost, historical enrollment data, employee feedback, current employee benefits trends, and state and federal regulations. Then, they work with their broker or benefits consultant to select plan designs with the coverage options and rates that best suit the needs of their organization.
Once the benefits package is finalized, it’s time for employees to enroll. This takes place for the entire company once a year during an open enrollment period (the only exception to this is for new hires when they first join the organization, or for employees that experience a qualifying life event during the year).
During enrollment, it’s vital that employees understand how to elect their benefits, the plans being offered to them, when their coverage will go into effect, and what each plan will cost them. One of the most important pieces to a successful open enrollment is a solid employee benefits administration software. Using technology to facilitate enrollment provides employees with a self-service tool to learn about, enroll in, and view their benefits – and, it gives HR a centralized hub to communicate information about benefits, monitor enrollment progress, and maintain data all throughout the year.
The four steps of employee benefits administration
The benefits administration process is made up of four steps that employers will take to successfully execute their benefits strategy. Here’s the steps:
- Shop around for benefits: Whether you’re a benefits administrator, HR manager, or an executive, the benefits administration process begins with shopping for benefits. The benefits being considered for inclusion must align with the company’s budget and employee needs.
- Open enrollment (OE): Once the benefits package is finalized, it will be rolled out during the open enrollment period. Open enrollment begins with employers announcing the roll out of their benefits package for the year. And then, of course, employees will enroll in plans.
- Managing benefits: HR or benefits administrators will manage the company’s benefits post-OE. They’ll use benefits technology to make the proper payroll deductions, send election data to carriers, and track paid time off (PTO).
- Maintaining compliance: Businesses must adhere to regulations when administering benefits. Employers must keep up with various regulations like COBRA and ACA legislation, as well as verifying dependents.
What do employee benefits administrators do?
Employee benefits administrators are usually HR staff that are responsible for planning and administering their company’s employee benefits package. Employee benefits administrators usually work closely with benefit consultants to identify best-fit plan offerings for employees. In some organizations, dedicated employee benefits administrators are hired to assist HR with administrating employee benefits programs.
Benefits of Employee Benefits Administration
Employers and employees alike benefit from employee benefits administration . Employees who are offered comprehensive benefits packages are more likely to stay at their current company because their benefits help them feel satisfied at work. Employees feel satisfied because they know that their employer is investing in their well-being. As a result, employers benefit because less turn over means less resources need to be allocated to hiring, onboarding, and training new people.
A well planned benefits package can be used to attract high quality candidates as well. A company that offers great benefits will stand out to prospects, and is often the deciding factor when choosing to accept a job offer.
How are employee benefits administered
There are multiple types of benefits that employers offer in their benefits package. Some benefits are mandatory for businesses to provide, while others are voluntary offerings that employers use to attract and retain talent.
The federal government requires businesses to include certain benefits. Mandatory benefits include:
- Health insurance
- Unemployment insurance
- Workers’ compensation insurance
- Medicare and social secruity contributions
- Family and medical leave
Companies have the option to include voluntary benefits in their benefits package. Although voluntary benefits aren’t mandatory, companies who are not offering these benefits will be at a disadvantage in recruitment and retention. Benefits packages have increased in recent years to meet the demands of job prospects, so it’s important for employers to consider expanding their own benefits package to stay competitive.
Here’s some examples of voluntary benefits:
- Life insurance
- Dental insurance
- Vision insurance
- Retirement savings accounts
- Pet insurance
You can take voluntary benefits a step further by offering:
- Unlimited paid time off
- Remote and/or hybrid work arrangements
- Wellness benefits
- Flexible working arrangements
The role of benefits technology
HR professionals and administrators use benefits technology to help navigate the complexities of employee benefits. Benefits technology is commonplace in many businesses as it automates eligibility, election, and enrollment for benefits, as well as ensures regulatory compliance. As benefits technology facilitates the enrollment process, it collects enrollment data that employers can use to see which offerings employees really want. Enrollment data helps employers determine which benefits were underutilized, helping them determine where they can avoid offering costly, un-desired benefits.
Benefits technology streamlines benefits administration by connecting with other HR technology systems of record to allow data to seamlessly flow between them. Whether it’s payroll, carrier, HRIS, or any other system of record, HR spends less time on manual labor when they don’t have to deal with duplicate data entry. What’s more, eliminating the need for duplicate data entry reduces the risk of human error – which can be costly mistakes. Through API technology, cybersecurity protocols are in place to protect confidential and sensitive information from being exposed.
Benefits technology also optimizes organizations’ benefits packages by providing employees with access to benefits information through plan comparisons, glossaries to define benefits jargon, and analytical tools to calculate out-of-pocket expenses. In addition to decision support functionality, technology that is optimized for mobile and tablet allow employees to enroll from their own homes – further enhancing their enrollment experience.