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If you are researching what benefits administrators do, it’s likely that you’re thinking about setting up an employee benefits program. Or perhaps you already offer perks and need someone to manage it all. In many cases, adding a benefits specialist to the mix can make this process easier. In addition to keeping up with ever-changing state and federal rules, they can help strategize a compelling mix of benefits to get the attention of job seekers (and encourage your top performers to stick around).
Fast facts about benefit administrators
- Benefits administrators manage employee benefit programs including health insurance, retirement plans, and paid time off
- Most use software systems to track enrollments, process claims, and stay compliant with state and federal regulations
- Often, they are the point of contact for employees with questions about their benefits packages
- Help organizations make informed decisions about their benefits offerings, analyze those costs, and usage data
If you are considering outsourcing this responsibility or hiring a new employee to handle it all, this article will provide some guidance on what to look for.
What is a benefits administrator?
Simply put, a benefits administrator is responsible for setting up and managing employee benefits for an organization. This includes staples like group health insurance and retirement plans — such as a 401(k) — but can extend to a wider range of perks. Think vision and dental coverage, life insurance, short-term and long-term disability plans, and even nontraditional amenities such as wellness programs or tuition reimbursement.
Benefits broaden businesses
In a small business market survey conducted by OnPay, just under 50% of small businesses that participated shared that they offer health benefits to their employees.
What does a benefits administrator do?
These professionals don’t just set up benefits and call it a day. They handle everything from helping employees understand their options during open enrollment to troubleshooting any issues with claims.
Here’s more about what these professionals take care of:
Planning
A benefits administrator negotiates plan pricing and options with vendors, assists employees in understanding how to enroll, communicates plan updates, explains how contributions work, and serves as the point of contact for all questions and details.
They also tackle compliance must-haves like workers’ compensation. (Fun fact: this insurance coverage is required in just about every state except Texas and South Dakota, although it’s still recommended even there.)
Because most employers use perks to attract job seekers (and keep their top performers), administrators usually have a strategy that goes beyond piecing together a cookie-cutter plan like every other company.
For example, recognizing that a well-crafted benefits package can impact recruitment efforts and company culture, administrators often recommend including nontraditional perks as part of a strategy. These may include:
- Flexible schedules and remote work opportunities
- Financial wellness resources and tools
- Tickets, discounts, or special offers for local events and attractions
- Mental health programs, such as EAPs and family planning assistance
Tools
These pros research and choose the benefits administration software that houses data from open enrollment to employees adding eligible family members.
Education
Benefits administrators ensure that employees receive the benefits they are entitled to and assist with any questions or issues. They typically create benefits sections for employee handbooks, turning complex information into content that’s easy for everyone on staff to understand.
Ongoing administration management
Behind the scenes, they maintain accurate records and documentation related to benefits administration. From employee deductions to dependents, there is a lot to keep track of.
When workers move on, these specialists handle the termination of benefits such as health insurance, retirement plans, and paid time off, ensuring a smooth transition for both the company and the departing employee.
The takeaway is that a benefits administrator does more than pick out perks. They’re negotiators, educators, problem-solvers, and strategists — and often the bridge between your business, your employees, and the various benefits providers you work with.
Now that we better understand what tasks these professionals typically handle, let’s find out if employers perform this role themselves or outsource it.
Does a benefits administrator have to be an employee?
For businesses looking for assistance with this to-do, there are options.
Internal in-house expert
Some companies hire a full-time employee (often called an employee benefits specialist) to keep up with all that’s involved. You’ll typically find this pro in the human resources department or as part of the people and culture team. Why this department? Many oversee employee onboarding, such as back-office tasks like getting a new hire to complete their I-9 form. In addition, when they begin a new job, benefits setup is usually part of an employee’s housekeeping list.
What does this in-house expert do?
- Negotiate rates with carriers
- Familiarize themselves and employees with all the ins and outs of how plans work (so you don’t have to)
- Help team members get better acquainted with what’s available to them
In most cases, this person is a full-time W-2 employee and tasked with making your program run smoothly.
External: The PEO path
On the flip side, some businesses use a professional employer organization, or PEO.
What’s in a PEO’s toolkit?
- Negotiates directly with insurance carriers on your behalf and leverages size for better rates
- Handles employee enrollment
- Deducts benefits contributions from employees’ wages
- Remits benefits payments to third parties
- Manages the claims process and reporting
The PEO option can be particularly attractive for smaller businesses that want big-company benefits without the big-company HR department.
Hybrid approach
Some companies opt for a hybrid model. They might have an in-house point person who coordinates with a PEO or benefits consulting firm. This combines the personal touch of an internal expert with the resources and expertise of an external partner.
Ultimately, the choice between internal, external, or hybrid depends on your company’s size, budget, and specific needs.
Fun fact
In a recent OnPay small business survey, over half of SMBs shared that they independently handle HR-related tasks.
Compliance considerations
Any administrator worth their salt should be your compass in the complex arena of federal and state requirements. Let’s break it down:
The Basics: ACA and Beyond
Did you know that if you have 50 or more employees on your payroll, you’re considered an ALE (Applicable Large Employer)? This isn’t just a fancy acronym — it likely means that you’re required by law to provide group health insurance. Your benefits administrator should be able to help navigate the intricacies of the Affordable Care Act and any local compliance rules where you do business.
Staying up on retirement savings
A growing number of state-sponsored retirement plans require employers to provide their employees with a way to save for retirement.
For example,
- On the West Coast, if they don’t already have a plan CalSavers is California’s program that all eligible employers must offer
- Heading east, MyCtSaves is Connecticut’s state plan that eligible employers with five or more employees need to offer, unless they already have one
Your benefits administrator should be able to help you navigate your state’s rules, or set up a private one that keeps you compliant and your employees happy.
PFML
Though paid family medical leave (PFML) isn’t part of benefits plans, it can have a lot of value for staffers. That is because it provides employees with paid time off for various reasons, such as bonding with a new child, caring for a family member with a serious health condition, or dealing with certain military-related events. In a growing number of states, it is required. For example, California, New York, and New Jersey have plans in place, and Illinois launched theirs in 2024. States like Minnesota and Maryland have programs coming soon.
Each state has different rules and regulations (and at times, posters must be placed in conspicuous locations in a workplace). If you need guidance, your group benefits administrator should be able to make sense of it all.
Benefits administrators take care of a lot
There are many moving parts when it comes to setting up employee benefits. In addition to planning perks that get the attention of potential new hires (and long-standing employees), there are many state and federal laws to keep up with. In addition, educating employees and helping them onboard also comes with the territory. For business owners, getting help from a benefits administrator means delegating the heavy lifting of plan administration. In many cases, this can be a difference-maker when setting up a program that attracts and retains top talent while keeping your bottom line in check. Good luck with your planning, and learn about how OnPay can help you set up small business benefits.
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Jon Davis is the Sr. Content Marketing Manager at OnPay. He has over 15 years of experience writing for small and growing businesses. Jon lives and works in Atlanta.