Benefits administration systems streamline perks to attract and retain top talent

Most businesses enroll, manage and, administer their benefits process with a cloud-based tool.

What you’ll learn

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
  • Employee benefits that can be processed include health insurance, retirement savings plans, paid sick leave, life insurance, disability insurance, flexible spending accounts, and workers’ compensation

Attract and retain top talent

Why do employers offer benefits?

The Bureau of Labor Statistics’ March 2023 survey found that a many 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

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. It’s why 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. Now that we better understand why an employer might consider benefits as part of their overall hiring and retention strategy, 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. Our 2020 State of Small Business Survey, found that 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 a process that 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 like PTO, health insurance, or access to retirement savings such as a 401(k).

Benefits software summed up

What is a benefit administration system?

Benefits administration systems, 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.

Entire team access

Employee self-service should be standard

A system or BenAdmin software can speed up the onboarding process for new hires and communicate any policy changes to current team members. Also, BenAdmin tools save companies time and overhead costs that come with manually tracking benefits. 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 team members through this type of administrative solution.

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 and reduce errors

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 main 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 tool. 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 one on staff, 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:

  • Helping employees understand their benefits choices and responsibilities, during both hiring and open enrollment periods
  • Finding benefit plans suitable for the company and its employees
  • Negotiating rates with carriers
  • Ensuring legal compliance

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

Benefits that employees want most

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 helps with

  • Disability insurance
  • Flexible spending accounts
  • Dental and vision insurance
  • Health savings accounts
  • Unemployment benefits
  • Leave (vacation, sick, personal, FMLA, bereavement, parental, voting, etc.)
  • Employee assistance programs (EAPs)
  • Health and wellness program
  • Educational assistance
  • Social security and Medicare tax benefits

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

Ben admin features

  • Automates 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.
  • Helps with regulatory compliance and staying up-to-date with laws like ERISA, the 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.

System for savings

Nearly 40% of small businesses have thought about offering team members the opportunity to build their savings through an employer-sponsored retirement plan.

Source: OnPay’s 2024 small business market survey

Offering perks has pluses for everyone

Employees and employers benefit

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.

LET’S DO THIS

It’s easy to get started

Try OnPay out yourself to see how easy payroll and HR can be. To get started, just share a few basic details about your business. Our team of pros will set everything up and import your employees’ information for you.

Benefits adminstration systems frequently asked questions

  • What does benefit administration involve?

    Benefits administration is how employers provide their employees access to perks like retirement accounts, health insurance, paid time off, commuter benefits, and other plans. Typically, this is the responsibility of human resources and includes communicating eligibility details, open enrollment periods, employee costs, and similar information.

  • What is a Ben admin system?

    A ben admin system helps employers manage enrollment in benefits plans, coordinate eligibility with insurance carriers, keep plans compliant, consolidate billing, and enable customization of offerings.

  • What are the duties of a benefits administrator?

    In most cases, 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 plan administration questions and details.