Benefits management software: a complete buyers' guide
Benefits administration can be time-consuming and intricate.
Not that it’s difficult to manage, only that the details are important and there are so many of them. Also, just like anything compensation-related, it’s one of those HR functions that results in loud complaints if it goes wrong. Bearing that in mind, benefits administration is an ideal area of HR to automate.
The following text looks at the key issues associated with benefits administration software, including:
- What is benefits administration software?
- To outsource or not to outsource?
- Identifying your benefits management requirements
- Benefits management integration with HRMS
- Key benefits management features
- Recommended benefits management solutions
Benefits administration is all about managing employee choices. And as benefits packages are often one of the key attractors for new hires (and retention factors for existing staff) it’s important to be accurate. Benefits software commonly does the following:
- Streamline the open enrollment process
- Provide complex information to employees regarding available plans using a variety of media, allowing them to understand the options and choose the best one for their personal and family circumstances.
- Offer a comparison function, allowing employees to directly compare different plans.
- Give full breakdowns of costs and contributions so employees know the financial commitment they are making.
- Provide reporting functionality for employers, allowing you to keep track of the wider benefits picture for your workforce.
Due to its intricate nature, benefits administration is a prime candidate for outsourcing, either to a third-party specialist provider, or to a PEO (professional employer organization) that includes benefits on its list of services. Whether outsourcing is right for you depends on the balance of pros and cons in light of your particular needs and circumstances:
Pros of outsourcing
|Cons of outsourcing
Identifying organizational requirements for benefits management software and/or services involve the usual process of stakeholder consultation within the context of your business’s strategic goals. However, while gathering those requirements, consider the following factors which are particularly relevant to benefits management…
Ease of use by employees
Given the volume and detail of information being presented to employees, an easy and friendly user experience is essential. Look for an intuitive step-by-step enrollment process, together with features such as: easy plan comparison, “anytime save & return” (i.e. if interrupted, the employee can pick up where he/she left off), on-screen user tips and help on each page, and no need for specialized user training.
Ease of use by managers
In benefits enrollment, managers need to monitoring their team members’ status, keep track of enrollment deadlines, and be able to access data and reports relating to the total benefits costs for current and future employees, overall costs, and legal compliance with legislation, including ACA and COBRA.
Whether you’re outsourcing or managing the process with an internal team, your benefits software should be updated alongside the relevant legislation – put simply, it should look after compliance for you.
Flexible and customizable
Benefits packages and options differ from organization to organization and your benefits management module should be customizable enough to handle your specific workforce needs. Establish your needs regarding customized offers, workflows and support based on employee eligibility for each plan.
A key benefit of any HR technology is access to real-time information. Common questions organizations often want the software to answer include How much have you spent on employee healthcare this month? and How much is your life insurance costing your employees? Check into the specific questions you need the answers to.
Location of data
We’re at the point where the majority of HR data is being stored in the cloud. Like payroll, benefits data includes sensitive information and you need to know what your requirements for storage are.
Policies and procedures
You’ll have your own and while the purchase of new software is a good time to review them, if there are any you don’t want to change, you need to know that before your start looking for the right solution.
As with any HR software, you can opt for a stand-alone solution or one that is integrated with the rest of your HRMS functionality.
The main advantage of integration is that your benefits data is then in the ‘same pot’ as all your other people-related information, allowing for easier inclusion in analytics and reports.
On the other hand, you need to be sure that integration isn’t going to cause any technical issues; especially if you are using an outsourced service provider. If you do foresee problems, one option is a limited integration, connecting your benefits administration setup to your payroll module, thus creating a ‘total reward’ database and avoiding both the need for multiple data entry and any information mismatches in employee records.
The following are the main features you should be looking for in a benefits management package:
- Event management: the benefits life cycle includes a number of key events, the main one being open enrollment. Other events include childbirth, terminations, retirements, etc. Your benefits software should allow you to customize and configure the events in your lifecycle.
- Onboarding and offboarding: arrival and departure are the two key events in any employee’s tenure with you which involve the most ‘paperwork’. Good benefits software offers significant automation and streamlining at these stages, reducing the administrative burden.
- Employee self-service: really, the essence of the two previous points is an intuitive, user-friendly self-service experience. Given that benefits options have an impact on employees’ families, it’s helpful to have 24/7 remote access. Being able to log in via a Benefits or HR portal from and have the information to hand makes family discussions easier.
- Reporting: data in, data out… and ‘out’ is best in the form of useful reports. Look for systems that come with a genuinely useful set of standard reports.
- Compliance: the following are the key pieces of US legislation driving benefits compliance:
- Affordable Care Act (ACA) – ACA requirements vary depending on the size of your organization. If you have more than 50 employees, health insurance must be offered to employees and dependent children, and you are required to provide cost details on the employee’s W-2 form for tax purposes. Furthermore, the filling of 6055 and 6056 reports are to confirm you are meeting coverage obligations under the legislation.
- Family and Medical Leave Act (FMLA) – Under the FMLA, an employee can take family or medical leave while retaining their job and health insurance. Administration can be complicated and depends on detailed knowledge of when and how it applies.
- Health Insurance Portability and Accountability Act (HIPAA) – HIPAA allows employees to transfer their health plans from one employer to another as they change jobs. There are stringent recordkeeping responsibilities imposed on employers regarding proof of coverage.
- Consolidated Omnibus Budget Reconciliation Act (COBRA) – Under certain circumstances (e.g. termination, retirement or a reduction in working hours) COBRA allows employees to continue their healthcare coverage even though they are no longer eligible. It includes employees who are in hours. It is the employer’s responsibility to notify the employee of their COBRA rights.
Though individual organizations’ needs and requirements will of course vary, what follows is a short list of well-established vendors providing benefits administration software to start you on your search:
- Benefitfocus: a dedicated suite of benefits-related features, including customized marketplaces for employees, preselected third party benefits providers, and a library of informational sources.
- Paycor: a combined payroll and benefits package, including a fully paperless enrollment process, direct communication with plan providers including ongoing changes to employee details.
- BambooHR: fully integrated, the BambooHR HRMS includes benefits in its employee database and notifications schedule.
- bswift: a stand-alone benefits management option, including an employee benefits portal, ACA assistance, and a mobile app for 24/7 access.
- TRI-AD: aimed at medium to large employers, TRI-AD is focused solely on benefits administration, including web-based enrollment, health savings accounts, and 401(k) and SnapIRA administration.
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