TouchPoints: The Empyrean Blog

5 Myths about Outsourcing Benefits Administration

August 14th, 2015

By Empyrean Client Advocate

Employers who may be exploring automated solutions for administering their employee benefits often let 5 common myths or misconceptions get in the way of their decision-making process:

Myth #1 – It’s going to be too expensive to outsource; we don’t have the budget to support it.

Most successful benefits administration providers have moved away from the “one size fits all” approach and have made an effort to unbundle their services to meet the financial challenges almost all employers face. As you research partners for benefits administration, look for the ones with flexibility to break down their fees to focus on those specific services that are most important to you (and fit within your budget).

Myth #2 – Our benefit plans are too complicated for automated administration.

Many employers have a long history of unique eligibility rules, extensive grandfathering of employees/retirees and various types of “accommodations” they have been forced to make to address different workforce populations. Outsourcing benefits administration presents an opportunity to examine your current administrative processes and workflows against industry best practices and streamline your benefits-related functions. The right benefits administration provider will be able to apply automated rules to organize your workforce into the appropriate buckets and tailor benefits communications to each group.

Myth #3 – Outsourcing doesn’t fit our culture.

Whether you are contemplating full outsourcing or co-sourcing (keeping some administrative tasks in-house), it’s important to make the effort to mold your outsourcing service provider into an extension of your HR/Benefits staff. Any benefits administration partner you may be considering should include a cultural immersion component in its implementation plan, such as an on-site workshop involving a cross-functional team of your colleagues. A cultural immersion exercise is a great way for you to explain your corporate individuality, what’s important to your workforce and how you expect your employees to be treated by your service providers.

Myth #4 – Outsourcing will lead to downsizing, and some of us will lose our jobs.

Outsourcing is not intended to eliminate the human element, nor is it meant to be a complete turnkey solution. On the contrary, benefits administration relationships work best as a partnership between internal HR resources and their outsourced provider team. More importantly, outsourcing will lighten the HR/Benefits workload considerably, giving your internal staff more time to focus on strategic planning and projects that have been perpetually postponed due to lack of time and resources.

Myth #5 – No outsourced call center will be able to handle our employees’ questions.

Best in class call centers have state-of-the-art call tracking systems, sophisticated decision support tools and robust resource libraries. And, if they followed the cultural immersion practice referenced in Myth #3, the best call centers will have well-trained professionals expressly familiar with your employees and your benefit plans as well as the fine art of customer service. With periodic education from you on any new corporate initiatives, your call center support staff will be able to accurately answer even complex questions from employees.

Rest assured – you’re in good company.

An estimated 43 percent of employers outsource at least one HR function*, often to address the technical and regulatory expertise they lack or to compensate for inadequate or outdated systems. There are many factors to consider when evaluating whether outsourcing is the right path for your organization to take. Trust your instincts and experience, and do your homework—but don’t let these myths and misconceptions interfere with your organization’s search for an experienced, capable and innovative outsourcing partner for benefits administration.

*Deloitte’s 2014 Global Outsourcing and Insourcing Survey Report