Offering your employees enticing benefits can go a long way in recruiting top talent and retaining top performers.
When you present your team with the right combination of compensation and benefits programs, you can set your company apart from competitors, making your organization more enticing to work for. But only if you do it right; that’s where benefits administration comes in.
What is benefits administration?
Benefits administration is the process of updating, managing, and developing benefits for employees. Typically, HR professionals perform these duties for their organization as they enroll employees in various programs.
As a human resources professional, it’s essential that you understand the ins and outs of creating a program that offers the benefits employees want most, and that your company is utilizing the right benefits administration software to make it all possible. Let’s dive in.
What does a benefits administrator do?
If you’re a benefits administrator, then you’re responsible for directing and planning all of the day-to-day operations that coexist within your company’s benefit programs.
This entails asking any questions employees may have regarding benefits programs and what they offer, designing the plans, onboarding new employees within the appropriate plans, and investigating new benefits. It’s also up to you to improve any existing programs and understand the ins and outs of all of the software being used.
Want to learn more about Benefits Administration Software? Explore Benefits Administration products.
6 essential steps in benefits administration
There’s a lot that goes into benefits administration, no matter the size of your company. In order to conduct benefits administration successfully, follow these six steps.
1. Choose which benefits to offer
The compensation and benefit plan your company offers provides advantages and flexibility to your employees that salary doesn’t. There’s a long list of employee benefits that your organization can offer, from popular and traditional to voluntary.
Some benefits are required by law for your company to offer. These employee benefits are a set standard across states and industries, and every employer must offer them to stay compliant with laws created by the U.S. Department of Labor. These include:
- Social security and medicare
- Workers’ compensation insurance
- Minimum wage and overtime pay
- Unemployment compensation contributions
In addition to this list, there are also employee benefits that are considered the industry standard, like health insurance, family and medical leave, disability insurance, paid time off, life insurance, and stock options.
Some voluntary benefits, or perks, you can also offer employees include: wellness programs, flexible working hours, holiday parties, and more.
2. Stay on top of benefit costs
Benefits administration is done right when it can motivate employees while remaining cost-effective for employers.
Usually, an employer will cover 70% of medical, dental, and vision costs in the benefits plan. A bundled payment plan with a negotiated price can save your organization on some of these costs.
Your company can also choose to offer a variety of voluntary benefits, as these are less expensive but can still help meet the needs of your employees.
3. Determine eligibility
As an HR professional, you won’t be able to enroll employees who aren’t eligible, and you also can’t refuse benefits to those who are. It all comes down to the eligibility rules within your plan document. It also depends on each employee’s regular working schedule.
According to the Affordable Care Act, “applicable large employers,” which are current employers with 50 full-time employees and full-time equivalents, must cover employees working 30 or more hours per week or pay a penalty.
3. Efficiently administer employee benefits
It’s a big task to manage employee benefits, and it requires HR professionals to keep tabs on many items and tasks.
There must be proper communication with employees and C-suite executives, compliance must be met during open enrollment periods, and so much more. Doing everything manually can considerably stifle workflows and leave room for errors.
Thankfully, utilizing benefits administration software helps simplify all tasks at hand for both HR professionals and end-users alike. The right software can effectively streamline the benefits process, while also:
- Reducing payroll errors
- Helping to keep detailed records
- Ensuring your company remains compliant
- Scaling as your organization grows and offers more to its employees
4. Remain compliant
As stated, it’s entirely crucial that your company remain compliant as you administer benefits to employees. This is easier said than done, as there are numerous rules and regulations set by the federal government, including, HIPAA, ACA, FMLA, and COBRA, which encompass medical authorization, labor laws, and financial stipulations.
The Health Insurance Portability and Accountability Act (HIPAA) aims to protect workers with additional opportunities to enroll in group health benefits coverage if they were to lose their health coverage, get married, or add a dependent onto their plan. HIPAA also prohibits employers from changing enrollment or premiums due to the health factors of their employees.
It’s required by all businesses with 50 or more full-time employees to offer some kind of group health insurance plan to their team. If not, they’ll be hit with a tax penalty. Businesses also need to maintain compliance with the Affordable Care Act (ACA). This includes determining which employees are eligible for coverage, sending them 1095-C documents, and filing 1094-C forms directly with the IRS.
The Family and Medical Leave Act (FMLA) makes it possible for eligible employees of covered employees to take unpaid leave for specific family and medical reasons. It covers private sector employers with 50 or more employees, as well as public and private elementary schools and public agencies.
Finally, COBRA is for employers with more than 20 employees, as it protects employees, former employees, spouses, former spouses, and any dependent children from losing health coverage in the event of death, termination, or a reduction in hours.
5. Make sure benefits align with employee needs
At the end of the day, the benefits that your organization provides need to make sense for the people being employed. It won’t be one-size-fits-all, and you should be able to make adjustments as the demographic of your employees changes.
If you have a bunch of recent college grads on staff, it’s a good idea to offer student loan payments. Similarly, while older employees may be more interested in retirement benefits, younger staff will have their eye on what is being offered in terms of paid leave for new parents.
Look at the current benefits offered and see how much they’re being used to see if it’s time for a change. You can also get direct feedback by sending out employee benefits surveys to find out what your employees have to say, what they like, and what they’d like to see added.
29%
of employees report having left a job or rejecting a job offer due to the benefits offered.
Source: Benefitfocus
Top benefits administration software
Benefits administration software helps businesses of all shapes and sizes plan and administer employee benefits packages while also ensuring compliance with all government regulations.
These tools are used by HR professionals to manage employee benefits, such as various stock options and insurance plans, while also facilitating open enrollment periods. You’ll also find that many options also incorporate employee self service features, which allow employees to view, update, and manage their personal information and documents.
Software within this category helps HR managers pinpoint the benefits that provide the most value to their employees, while also reducing overall cost. These tools can also ensure businesses are compliant with federal and local regulations, including the Health Insurance Portability and Accountability Act (HIPAA) and the Affordable Care Act (ACA).
In order to be featured within this category, software must:
- Incorporate a centralized administrator dashboard to visualize data surrounding benefits
- Be a complete benefits portal for employers and employees to access plans, update information, and enroll in programs both within and outside the annual open enrollment period
- Allow HR admins to create complete compensation statements
- Assist HR managers in checking and reporting on employee and organizational compliance with government regulations
* Below are the top five leading benefits administration software solutions from G2’s Winter 2023 Grid® Report. Some reviews may be edited for clarity.
1. Rippling
Rippling empowers companies to run everything related to HR, IT, and Finance in one place. It streamlines processes and procedures that go into expenses, payroll, benefits, and computers, so that tasks can be automated into a single system.
What users like best:
“I like how simple Rippling is. The layout is easy to navigate through. It took me no time at all to figure out where everything was located. Registering for health insurance and making 2023 elections took me less than 10 minutes. The options were all very easy to understand, especially for someone like me who is not that computer savvy. It's nice having access to everything on one dashboard.”
- Rippling Review, Lauren M.
What users dislike:
“There's A LOT going on in the Rippling interface. It's easy to navigate, but I have occasionally had to ask,"'Hey, I looked for five minutes but no dice -- where do I find this setting / field / info?'’”
- Rippling Review, Jonathan S.
2. Paylocity
When it comes to an all-in-one software tool that streamlines payroll, benefits, talent, and workforce management, Paylocity has you covered. Because this tool is specifically tailored to HR professionals, they can focus more on daily tasks and less on challenges that may arise. Plus, it boasts best-in-class customer service.
What users like best:
“The implementation with Paylocity was quite painless. I was amazed by how quickly and accurately they loaded our data into their system. There were a few glitches (as there are with any transition) but nothing that they couldn't correct pretty quickly. The system is very easy to use, the report writer is awesome, and their customer service has been excellent!”
- Paylocity Review, Sandy B.
What users dislike:
“There are some complications to functions related to employee time-keeping, although their product team will work with you to find the best approach to match any use case you throw at them. The complexities involved with deployment did lead to some head-scratching moments on both ends, but in the end, they were both informative, open, and easy to work with to achieve the goals we were set to accomplish with deployment.”
- Paylocity Review, Jason L.
3. ADP Workforce Now
ADP Workforce Now is an easy-to-use human capital management solution for companies with over 50 employees. From payroll to benefits and even talent management, it encompasses a long list of features designed with HR professionals in mind.
What users like best:
“The functionality of the product and the customer service is top-notch! The connection from onboarding through payroll to discharging employees is seamless. I use the analytics dashboard each week to narrow our focus on areas we need to work on and share that knowledge with our executive team.”
- ADP Workforce Now Review, Jason S.
What users dislike:
“It does so much that I almost can't keep track of all the things it does. I don't like that once implementation is done, we have no contact to help us move forward. There isn't anyone that stays with you and checks in on you to see if you need assistance. Having a team assigned to your account afterward would be so helpful knowing I had a contact that could direct me in the right place without having to call customer support.”
- ADP Workforce Now Review, Karen G.
4. Vantage Circle
As a Global Employee Engagement Platform, Vantage Circle utilizes artificial intelligence (AI) and machine learning to assist HR professionals in how they manage employee engagement tasks. It can automate employee rewards and recognition programs, manage employee feedback, and help boost productivity.
What users like best:
“Converting points into gift cards within a fraction of a second is fantastic. In addition, the UI is clean, and the interface is user-friendly. The Vantage points with the leadership dashboard encourage me as an employee to work harder to receive more reward points.”
- Vantage Circle Review, Akshith N.
What users dislike:
“The number of repetitive emails for events that are not related to my field kind of annoys me. There is still an area for improvement in the website user interface. Search bar sometimes doesn't serve the purpose.”
- Vantage Circle Review, Alan G.
5. Ease
Companies looking to set up and manage benefits, remain compliant, and onboard new hires should consider Ease. Employees enjoy one destination for all HR-related information and it’s simple to run tasks related to payroll, onboarding and offboarding, and ACA reporting.
What users like best:
“I really like how easy the program is to navigate. The UI is very streamlined, and I think the employee view is very clear and clean too. The support teams are very helpful and always available to assist. I also like how open to input they are; I've seen several suggestions and requests be built into the programming.”
- Ease Review, Kelsey R.
What users dislike:
“I dislike that I'm unable to create a rate worksheet for the employees that would rather print out a copy of their benefits options. I have several groups that need paper packets as well as online enrollments, so having the option to compile everything into a PDF or printable version would be amazing. would also love to see more COBRA info available should an employer wish to send notices on their own. At least a calculator to provide them when their COBRA period would be up.”
- Ease Review, Ashley H.
A benefits program to believe in
From creating a robust benefits program to enrolling new members, and answering all the questions that come with it, there’s a lot that goes into benefits administration.
Remember to think outside the box – there are benefits that your employees need, like healthcare, and there are benefits they want, like paid time off. What will you offer your team?
There are several types of benefits you can offer your employees, one being paid paternal leave. Learn how to develop this policy and why having one is so important.
This article was originally published in 2020. It has been updated with new information.
Mara Calvello
Mara Calvello is a Content Marketing Manager at G2. She received her Bachelor of Arts degree from Elmhurst College (now Elmhurst University). Mara works on our G2 Tea newsletter, while also writing content to support categories on artificial intelligence, natural language understanding (NLU), AI code generation, synthetic data, and more. In her spare time, she's out exploring with her rescue dog Zeke or enjoying a good book.
