Making the Leap to HRMS Benefits Administration
One of the most complex areas of any HRMS tends to be benefits administration and management. Often, complexity in HRMS benefits administration exists due to the myriad of legislation, legacy company plans and new flexible plans that many companies offer to stay competitive. The right HRMS for your business should help you to simplify your benefits landscape, through the systemization of rules and data, allowing you to get ahead of potential maintenance efforts.
First, it is helpful to define if you are administering benefits or merely maintaining the data. HRMS benefits administration puts the responsibility with the company to ensure that new employees receive their benefit information, as well as requiring that the company store life events such as marriage or birth, as these events can change a person’s eligibility. Then, costs are associated with benefits, so that upon running HRMS payroll, benefit deductions are made automatically.
If you are keeping the benefits administration functionality in-house, your HRMS will need to be more robust and able to accommodate all the details of life events, along with keeping employee data such as dependents. As well, it will need to be configurable to ensure all of the state nuances; for example your company may offer domestic health benefits in California but not in other states. The HRMS needs to have rules in place to offer and restrict options to employees as reflected in the company plans. Making the leap to this internal HRMS benefits management is a technical challenge, but one which you should consider.
Some companies outsource the nitty-gritty details of benefits administration to third party providers and instead only keep basic data that the outsourcer sends in return, such as ‘employee X chose family coverage’. Even if you are not directly capturing and maintaining this data it can be useful to keep in your HRMS - it will allow for data reporting and analysis from one source. For those with company portals or total benefit statements, this HRMS analytics can be a useful piece of data to supply to employees.
If you are considering HRMS benefits administration, the first step would be to capture your benefits landscape, so that you have all of the plans in use (including legacy ones), and all of the rules that govern them. Then, it’s helpful to compare what outsource companies provide vs. having the data in an internal HRMS. While benefits data can be complex and detailed, it is often easy to work with once you understand it as the rules can be clearly defined within a system.
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