Benefits Administration

by | Feb 9, 2022

What is Benefits Administration?

Benefits administration (also called benefits management) is the process of creating and managing a benefits program. It requires researching types of benefits and providers, defining eligibility, working with providers and putting systems in place for employees to enroll and manage their benefits.

What are employee benefits?

A benefits package is a set of non-wage bonuses or rewards an employer offers to employees. A benefits package may include health insurance, life insurance, retirement plans and paid time off (PTO). When evaluating prospective employers, many job seekers rate the benefits package as one of the top considerations after wage or salary.

What are onboarding and open enrollment?

Two key components of benefits administration are employee onboarding and open enrollment. When a new employee is hired, they can enroll in an insurance or retirement plan for which they are eligible under company policies. Some employers require new hires to work at the organization for a period of time–generally from three to six months–before they are eligible for things like insurance and 401K matching.

An open-enrollment period is a certain duration of time in which employees can choose another health insurance plan for the upcoming year. Most employers limit the open-enrollment period to two to four weeks.

How can employers effectively administer employee benefits?

Employers can choose to manage benefits-related tasks in-house or outsource some or all of them. If they manage the benefits themselves, they may use software specifically designed for that purpose.

What is employee benefits administration software?

Employee benefits administration software allows employees to get signed up for insurance and other benefits through an automated process. With a benefits management solution, employees can manage their own enrollment and benefit changes using self-service portals and mobile apps. A digital onboarding solution is most effective when it includes benefits management software.

How does employee benefits administration software work?

Centralized digital document management is a cornerstone feature of all good HR software. For benefits enrollment specifically, the administrator uploads digital documents to an HRMS or HCM system. (An HRMS is a suite of HR software that automates hundreds of processes.)

These may include necessary documents for the following benefits:

  • Health insurance
  • Disability insurance
  • Retirement plans
  • Health Savings Account (HSA) (also called Flexible Spending Account or FSA)
  • Health reimbursement arrangement (HRA)

Benefits administrators can use employee benefits software to customize the new hire packet. For example, at some companies, employees are not eligible for all benefits until their three-month hiring anniversary. The HR team can upload documents for the initial benefits and leave the others for open enrollment when appropriate. Likewise, many companies have different benefits for part-time vs. full-time employees. With benefits administration software, the HR team can create as many versions of the new hire packet as necessary.

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