What is Employee Benefits Administration?
Employee benefits administration is all about making sure your team gets their well-deserved perks. It's critical to get this right because mistakes can leave your employees less than thrilled and can even land you in legal hot water.
So, what does benefits administration typically include? It's a mix of:
- Scouting for the best benefit plans out there, sometimes with the aid of a benefits broker.
- Rolling out these plans to your organization, usually during onboarding or during annual open enrollment periods.
- Ensuring your offerings comply with federal and state requirements.
- Being the go-to person for all benefits questions your employees might have.
- Gathering feedback from the team about the benefits you offer, and tweaking things as needed to keep everyone on board and satisfied.
What is an Employee Benefits Administrator?
Employee benefits administrators ensure staff benefits are distributed properly. Usually, the HR department fulfills this role, but some organizations decide to delegate the responsibility to a professional employer organization (PEO).
What Are the Different Types of Employee Benefits Administration?
Employee benefits fall into six different categories, and effective administration should cater to each of them.
Benefits Required by Law
Legally, U.S. organizations must supply a certain set of benefits.
Some of these benefits, such as health insurance and overtime pay, must be administered by the employer.
Other benefits, such as workers’ compensation and unemployment insurance take the form of a payroll tax and are administered by the government.
Retirement Plans
One type of administered benefit is contributing toward each employee’s retirement plans, such as contributing to a pension fund.
Today, however, fewer employers choose to contribute toward these. Instead, many offer 401(k) plans with matching contributions.
Life Insurance
Offering life insurance can be an effective way of pulling in new employees. Employers can choose from a variety of policies, each with a slightly different scope:
- Death or dismemberment. A policy that only offers a payout when the employee is killed or dismembered.
- Travel accident insurance. This covers an employee if they’re injured or killed when traveling for work purposes.
- Split-dollar life insurance. A type of insurance where an employee will split the cost of the policy with the employer.
Disability Insurance
Disability insurance is split into two groups: short-term and long-term.
- Short-term disability insurance covers employees whose ability to work is temporarily affected, such as a prolonged sickness or pregnancy.
- Long-term disability insurance is for employees whose ability to work is permanently or indefinitely impacted.
Medical Insurance
Medical insurance coverage can vary widely between employers and covers many different areas, such as paying for hospital stays and doctor fees. Some employers also offer policies for dental and vision insurance.
Fringe Benefits
Fringe benefits act as additional incentives for potential employees. They can include wellness programs, payment for tuition, commuting benefits, and more.
Employee Benefits Administration Best Practices
Staying on top of benefits administration isn’t easy, so here are some tips to steer you in the right direction.
Carefully Decide Which Benefits to Offer
Organizations are only legally required to offer certain types of benefits, but there are several other optional offerings they can explore.
Ask yourself a couple questions to help identify the best employee benefits to offer for your company.
First, think of the values of your wider organization and ask which benefits best align with those values? For example, if you run a business focusing on healthcare services, it may look odd if your staff aren’t offered vision insurance.
Second, consider the financial stability of your organization. Offering a comprehensive set of benefits can be highly expensive, so which are you financially able to cover?
By carefully considering your options, you avoid making false promises and disappointing employees down the line.
Educate Employees
Often, employees are unaware of the benefits offered by their employer, so it’s your job to educate them. After all, there’s not much point in offering benefits if your employees don’t make use of them.
Luckily, there are several steps you can take to keep employees informed:
- Updating your employee handbook with relevant benefits information
- Require a walkthrough of the benefits you offer to each new hire during their orientation or onboarding
- Hold one-on-one sessions with team leaders and encourage them to ask questions
- Build an “Ask HR” discussion board in your communication platform where employees can ask benefits-related questions
- Embed benefits education within your self-service open enrollment process
Seek Feedback
To keep employees satisfied, make sure you know what they need the most.
To that end, regularly seek their feedback to see if your offerings are still worthwhile. Are your employees happy with the benefits you offer? Do they feel they’re being administered correctly? Are there any changes or expansions that would greatly help?
It’s important that you not only listen to feedback but you also act on it. If they’re not happy, employees need to know their voices are being heard and changes are being made. This might mean demonstrating some flexibility in the benefits you provide.
Benchmark Your Offerings
Always remember to keep your offered benefits competitive within your talent market. Ultimately, the goal is to attract and retain the best employees, but you won’t accomplish this by offering benefits that are inferior to your competitors.
Frequent benchmarking will help you better position your offerings and align them with the baseline in your industry.
Modernize Your Employee Benefits Administration with Robust and Reliable Software
Ultimately, employee benefits administration is tricky, and there’s a lot of room for human error. Without the proper infrastructure, things can quickly go wrong, leading to disappointed and frustrated employees.
Luckily, there’s a simple solution to cut out the leg-work: benefits administration software.
Paylocity offers a comprehensive solution, allowing you to streamline benefits for you and your employees. The full suite includes features such as:
- Automated benefits workflows, for easily processing new-hire benefits and collecting necessary life event documentation.
- Employee Self-Service for employee-led elections, enrollments, and more.
- Flexible spending accounts, from medical, dental, and vision to transit and parking.
- Powerful reporting for accessing the data you need, like open enrollment status, contribution amounts, plan election breakdowns, and more.
Request a demo today to learn more about how Paylocity can streamline your benefits administration.
