Benefits Administration Outsourcing: How to Find the Right Path for Your Business
Is benefits administration outsourcing right for you? Whether you are considering outsourcing for the first time, or are a seasoned outsourcer searching for a better-fitting solution, make sure you know what points to consider before making your next move.
As health care and employee benefit programs become increasingly more complex, time consuming, and subject to regulatory compliance requirements, employers must accurately assess their team’s capacity when managing this important aspect of their success. Empyrean’s new At-A-Glance Guide takes you through common considerations and best practices to find the right path for your business and help you make benefits matter every day. Download the guide now and discover what outsourcing can mean for HR, your strategy, and your workforce.
Here’s a quick primer of the three approaches companies apply to their benefits administration , and a just a few reasons why more organizations are choosing to partner with a best-in-class outsourcing provider to meet their needs.
Often, Human Resource teams insource their benefits administration because they do not feel comfortable relying on a third-party to manage and automate such crucial functions. This discomfort is understandable: Employee benefits – especially health benefits – remain high-visibility stakes all year round, and any errors in your benefits data and execution can spell disaster for employees and quickly diminish confidence in your HR team.
Given this perspective, it’s no surprise that currently insourced organizations include those that have never-before outsourced their benefits administration, as well as those that suffered with a previous outsourcing experience due to a subpar solution or ill-fitting technology platform and vendor.
However, insourcing presents its own costs, risks, and inefficiencies that may not be immediately apparent – while the right outsourcing partner will minimize risks, eliminate inefficiencies, enhance the employee experience, and provide solutions that drive high returns on your investment.
In fact, one report found that HR teams spend 25% less and utilize 30% less labor than their peers when aided by the right processes and technology.1
Co-sourcing is a collaborative approach to benefits administration, where select processes remain in-house (most commonly, call center services), while the remaining responsibilities are outsourced to a trusted provider.
This approach enables organizations to minimize the impact of burdensome administrative tasks – such as enrollment and regulatory compliance – while maintaining control over more employee-facing services. Co-sourced clients may have reservations about how outsourcing might affect employees’ perceptions of their company culture and their HR department’s effectiveness.
While protecting your company culture is a valid concern, you should know that outsourcing does not have to mean relinquishing control of your culture or lowering your service standards. In fact, a proven outsourcing partner will actually enrich the way employees view their benefits and your company’s commitment to their wellbeing.
While you may have the resources to manage certain aspects of your benefits administration in-house, ask yourself if those resources would be put to more meaningful use if directed towards other priorities? Don’t let common misconceptions about outsourcing limit the impact you can have on your workforce and business.
As health care and employee benefits continue to become more complex, and employee expectations of benefits value and diversity continues to rise; as such, more businesses are choosing to fully outsource their benefits administration. In fact, 80% of today’s employers utilize outsourcing to manage at least one benefits-related task, and 38% consider outsourcing to be a critical part of their benefits strategy (a 41% increase since 2014).2
Full-service outsourcing lets HR leaders tackle the minutiae of benefits administration and enrollment, and take control of their strategy, without worrying that something has been left behind.
Today the movement towards benefits administration outsourcing remains prevalent, with 40% of employers now utilizing HR technology to manage their benefits administration. 78% of employers use third-party benefits administration technology, and over half of those employers choose to fully outsource their administration.2
The right partner will provide more than a benefits administration system: You’ll also gain the expertise of a knowledgeable and dedicated team, which can provide invaluable insights and best practice recommendations that measurably improve outcomes and drive greater ROI. In some cases, an outsourcing service team will gain the most complete understanding of their client’s benefit offering (even when compared to the client’s own HR team).
HR and benefits executives across every company size and industry are realizing the advantages that outsourcing brings to their businesses. Leveraging a modern benefits administration vendor can provide the technology and expertise to help you eliminate compromises, mitigate risks, and stay prepared for future changes.
So, how can you decide if outsourcing your benefits administration is right for your organization?
A good place to start is by asking your internal staff and business partners the following questions:
- Do we have the appropriate resources and infrastructure to handle all aspects of our benefits administration in-house?
- Do we have the financial support to develop and maintain the skill sets and technology needed to most effectively manage our benefits administration?
- Do we have the in-house expertise to understand and keep up with complex regulatory compliance requirements?
- Can we continue to support the strategic initiatives necessary for our company’s growth while also internally managing all of our daily administrative functions?
- Are we providing the personalized support employees need to make smarter benefit choices, efficiently utilize their benefits, and live healthier, happier lives?
If you answered “no” to any of these questions, now may be a smart time to discuss how a best-in-class benefits administration outsourcing partner can positively impact your company.
Whether outsourcing your benefits administration for the first time or making the move to a new vendor, the ultimate goal is to make the most of your investment and ensure long-term success. When you consider the benefits, outsourcing can be a cost-effective solution that greatly increase your team’s productivity, increase employee engagement and retention, and lower costly errors and risks. However, the benefits administration partner you choose must be capable of tailoring to your unique strategy and goals, and adapt and scale to changes within your organization and industry over time.
As you read, we’d love to hear your thoughts. Feel free to contact us with questions or comments at firstname.lastname@example.org.
- “Raising the World-Class Bar in HR Through Digital Transformation.” The Hackett Group, Inc. Miami, Florida. June 2017.
- “Game Changer: The Digitalization of Employee Benefits Delivery.” The Guardian Life Insurance Company of America. New York, New York. May 2018.