The Employee Benefits Blog

5 advantages of outsourcing benefits administration

Posted by Michael Motyka on Wed, Feb, 22, 2012 @ 13:02 PM

Employee benefits administration can generate significant cost savings and impOutsourced Benefits Administration rove levels of service throughout an organization, experts say.

"Outsourcing through technology can be a benefit for employees,” Dave Ulrich, professor at the Ross School of Business, University of Michigan, said in “Weighing the pros and cons of outsourcing,” a recent article in Employee Benefit Adviser. “Think of banking. Few go into banks to transact directly with tellers today and we do our banking through technology. This gives us 24/7 access to those services."


Here are five key advantages to outsourcing  benefits administration:

  • Reducing administrative HR headcount. Outsourcing benefits administration can reduce the total number of staff members a company needs to dedicate to executing administrative HR functions. This frees up those resources for other, more strategic HR functions, as well as other parts of the organization.
  • Making expertise affordable. Benefits administration experts stay up to date on the federal and state regulations that affect employee benefits, including pensions and health insurance, and working with one can make it less likely that an employer will miss an important shift in the compliance landscape. (See our recent blog post, “Keeping Up With What the PPACA Means for Employers” for examples of such changes.) But that level of expertise doesn’t come cheap -- experienced benefits administration professionals earn top pay -- and that often places them out of reach for even medium-sized businesses. A benefits outsourcing company can give you access to a superior level of talent and knowledge without taking on the burden of an in-house benefits expert’s full-time salary and benefits.
  • Boosting efficiency. A great employee benefits administration outsourcing company can help employers streamline their processes and find ways to reduce premiums for insurance plans and other programs. They can also help employers create excellent voluntary benefits packages, without having an in-house HR professional dedicate hours of time to researching and negotiating with individual carriers.
  • Shielding liability. Outsourcing benefits administration can also reduce an employers’ liability in the case of mistakes, by shifting the burden to the outsourcing company. It can even protect companies in employee lawsuits, by putting up a firewall between the employee benefits administrator and those who make decisions about terminations.
  • Upgrading technology. Working with an employee benefits outsourcing company gives organizations the opportunity to upgrade on technology without incurring big investments in their own IT infrastructure. Consumer attitudes toward technology have become far more sophisticated in recent years, and those expectations extend to how workplace benefits are administered. Today’s employees expect well-designed online benefit enrollment systems that they can access from anywhere. Building such a site yourself -- with the security headaches involved when managing people’s sensitive financial and health care data -- would be a massive undertaking. However, a benefits administration company has already done that work for you in advance. The best companies can even tailor the site with your branding and messages.
  • Improving engagement. Outsourcing benefits administration can enable the existing HR personnel to focus on more strategic activities. Freed from administrative headaches, the HR team will be able to be more responsive to employees’ other concerns, leading to higher employee engagement and retention.

    Winston Benefits has more than 25 years of experience providing employers with technology solutions and high touch human services that streamline enrollment and benefits administration for group medical and voluntary benefits programs.

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Topics: ppaca, benefits administration outsourcing, outsourced benefits administration, benefits outsourcing, lowering health care costs, outsourcing open enrollment, outsourcing HR administration