Benefits Administration

What is Benefits Administration?

Benefits administration, also called benefits management, is the process of creating a benefits program and the ongoing management of the 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 includes all the non-wage rewards an employer provides to their employees. It 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 the second most important consideration after wage or salary.

What are onboarding and open enrollment?

Two important 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. Note that some employers require new hires to work at the organization for a period of time–generally from three to six months–before the employee is eligible for things like insurance and 401K matching.

Open enrollment is a specified duration of time employees can renew or choose another health insurance plan for the upcoming year. Most employers limit open enrollment to two to four weeks.

How can employers effectively administer employee benefits?

Employers can manage benefits in-house or outsource some or all of the tasks involved. If they choose to manage benefits in-house, they can use software specifically designed for benefits administration.

What is employee benefits administration software?

Employee benefits administration software automates and streamlines onboarding, open enrollment, and employee benefits changes. Employees can manage enrollment and updates with self-service portals and mobile apps. A benefits management solution is most effective when it is a component of a digital onboarding process.

How does employee benefits administration software work?

Centralized digital document management is a bedrock feature of all good HR software. For benefits enrollment software specifically, the administrator uploads digital documents to an HRMS (Human Resources Management System) or HCM (Human Capital Management) system. (An HRMS is an integrated suite of HR software that automates hundreds of HR 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)

The benefits administrator can personalize the digital new hire packet for the job position. For example, at some companies, new hires aren’t 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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