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What you’ll learn
Increase productivity
Benefits make a difference
Attracting and retaining talent is crucial for the growth of many businesses. But it often takes more than just a competitive salary to keep the best employees from moving to another company. Consequently, many businesses offer employee benefits — such as group health insurance and retirement savings plans — when recruiting job seekers or to keep top performing employees happy.
Attract and retain top talent
Why do employers offer benefits?
The Bureau of Labor Statistics’ March 2023 survey indicates that a significant majority of nonunion workers in the private sector have access to standard benefits, including medical care, retirement plans, paid sick leave, and life insurance. Employers who fail to provide these and other in-demand benefits risk losing top talent to competitors. The bottom line is that qualified employees expect competitive benefits and a step-up in salary. Now that we better understand why an employer might consider benefits as part of their overall hiring and retention outreach, let’s talk more about how this gets managed.
Offering employee perks can be powerful
This data is consistent with some of our own findings. According to our 2020 State of Small Business Survey, slightly more than half of all small businesses provide health insurance to their employees, while a similar number offer vacation or paid time off. Additionally, 72% of employers who participated believe the benefits they provide are making a difference to their employees.
Benefits administration explained
What is benefits administration?
Benefits administration is what employers use to manage, implement, and deliver benefit packages to their workforce. Most use a benefit administration system to make sure employees receive agreed-to perks such as PTO, health insurance, HSAs, or access to retirement savings such as a 401(k). This is typically managed with a system or BenAdmin software to streamline the onboarding process for new hires and communicate any policy changes to existing team members. Also, BenAdmin tools save companies time and overhead costs that come with manually tracking benefits.
Fast facts about benefits administration systems
- A benefits administration system is software that employers use to manage their employee benefits responsibilities
- The system is often integrated with related functions like time and labor and payroll
- Staying current with regulations is one of the top reasons employers invest in this software
- The types of employee benefits that can be processed include health insurance, retirement savings plans, paid sick leave, life insurance, disability insurance, flexible spending accounts, workers’ compensation, and more
Entire team access
Employee self-service should be standard
Tools can streamline the onboarding process for new hires, and employees are usually able to see what they are eligible for through a self-service portal. For example, they may be able to see their health coverage or request PTO. HR can also communicate any policy changes to existing team members through this type of administrative solution.
Benefits software summed up
What is a benefit administration system?
Simply put, a benefits administration system, also known as benefits administration software, is used by employers to create, administer, and manage what’s included in employee benefits packages, like health insurance, 401(k) plans, and paid time off.
Efficient operations
Benefit offerings stay under control
A benefits administration tool is built to simplify the above benefits activities and more, making the process more efficient for stakeholders. To understand how this system operates, it might help to visualize steps in the benefits administration process, as illustrated in the example below.
Benefits administration process
Hassle-free compliance
Stay compliant
Most tools automatically calculate pre-tax and post-tax benefits, aligning payroll deductions with relevant federal, state, or local tax laws. Legal compliance is one of the primary reasons that employers use benefit administration software, because manual administration increases the risk of errors, and employee dissatisfaction, and can even lead to penalties. Many platforms operate as part of a larger HR suite, instead of as a standalone unit. They also integrate with related processes, such as time, labor, and payroll. This integration streamlines the workflows for each interrelated function.
Finding OnPay was like taking a big weight off our shoulders. It was a challenge to be were handling payroll correctly we were not positive the best way to offer benefits to our associates. Their team helped us to easily migrate, set everything up, and made us feel confident about processes. Also, they introduced us to ways to easily provide benefits to our employees.
– Patrick Sage, GPA Innova America Corp
Staff members who typically take this on
Who uses benefit administration systems?
A benefits administrator typically takes the reins. Without a designated benefits administrator, these back office tasks usually end up on the plate of the HR department. Small business owners might administer benefits themselves, but it is often more practical to entrust this role to internal or external experts. Most handle tasks such as:
- Finding benefit plans suitable for the company and its employees
- Negotiating rates with carriers
- Ensuring legal compliance
- Helping employees understand their benefits choices and responsibilities, during both hiring and open enrollment periods
Top Payroll
Service
Forbes
Best for Up to
100 Employees
PCMag
Best for Small
Businesses
CNBC
Best for Small
Businesses
The Ascent by Motley Fool
Administration opportunity
Which benefits do they manage?
While not all systems have the same capabilities, most are designed to handle the benefits that employers typically provide. As indicated earlier, the most frequently offered benefits to private nonunion workers include:
- Medical care benefits
- Retirement savings plan
- Paid sick leave
- Life insurance
Note: An OnPay survey found that health insurance is the most desired benefit among most employees. Although employers usually offer coverage through group health insurance, those seeking other options may want to consider a Health Reimbursement Arrangement (HRA).
More perks that benefits administration software can assist with
- Disability insurance
- Flexible spending accounts
- Dental and vision insurance
- Health savings accounts
- Unemployment benefits
- Social security and Medicare tax benefits
- Leave (vacation, sick, personal, FMLA, bereavement, parental, voting, etc.)
- Employee assistance programs (EAPs)
- Health and wellness program
- Educational assistance
More benefits
Positive employee impact
What’s more, the system creates intangible benefits to foster employee fulfillment and wellbeing, such as:
- Flexible work schedules
- Career advancement opportunities
- Healthy work environment
- Training and development
- Work-life balance
Understanding the types of benefits these systems manage and key features is essential for investing in the right system for your organization.
What to look for
Features of benefits administration systems
- Simplifies benefits administration by automating the process, including plan design, program implementation, member enrollment, eligibility tracking, communication, plan review, and program changes.
- Integrates benefits administration with interconnected functions like time and labor, onboarding, payroll, and performance management.
- Allows employees to manage their benefits, such as adding or dropping dependents, through a mobile-friendly, self-service platform.
- Facilitates regulatory compliance and adherence to laws like ERISA, Affordable Care Act, COBRA, Internal Revenue Code, as well as privacy and anti-discrimination regulations.
- Provides reporting and analytics tools to assess benefits performance and identify areas for improvement, including administrative aspects.
Offering perks has pluses for everyone
Benefits administration helps both employers and employees
Most employers that offer benefits use some type of software to minimize the administrative challenges. This system is beneficial not only for employers but also for employees engaged in the benefits programs. Ultimately, it simplifies the process, saving time and reducing stress for both HR practitioners and employees. If you have any questions about benefits administration and how it can assist your company, we are available to help.
Take your team up a notch
Employee benefits empower your organization
Building a top-performing team takes time, but offering a mix of perks can help. When job hunting or considering a new company, most job seekers and longtime employees evaluate benefits packages, from retirement plans to health insurance. Ready to learn more about offering benefits and how they can help reel in top talent? Explore more resources below.