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Pros and Cons of Using Benefits Administration Software

Contributor: Jessica Turner, HR Specialist

October 20th, 2023 | 5 min. read

By Tony Calavitta

Did you know that employees who clearly understand their benefits are 101% more inclined to trust company leadership? Yet, according to a recent MetLife survey, only 65% of employees find the benefits information that their employer provides understandable.

Do your employees understand their benefits? Or could your approach to benefits administration use improvement?

If you aren’t sure, this article is for you!

In this article, benefits administration will be the topic in question – We will discuss the pros and cons of technology-driven, software systems designed to assist with benefits management.

By the end of it, you’ll know exactly what benefits administration entails and will understand the pros and cons of electronic administration. With these insights, you’ll be equipped to decide whether a software system is the right solution for you and your business.

What is benefits administration?

Before we dive into a strategy for benefits administration, let’s discuss what effective benefits administration requires.

In many ways, benefits administration is like a theater production – For the show to win over critics and fans alike, it needs to be executed smoothly. And, for that to happen, there are many moving parts to consider.

Handling employee benefits might seem easy, but it's actually a pretty detailed job! From juggling a variety of tasks that oversee your employee's perks like health plans, retirement accounts, and time off for that sunny vacation, to making sure it is all running smoothly, every step is an important part of creating a smooth process to keep everyone happy.

Here are a few of the major steps that make up the task of benefits administration:

  • Enrollment: Enrollment is like the opening act. It is scheduled at a specific time and date. During this designated period, employees can select their benefits and administrators have to guide them through this process, giving clear direction along the way.

  • Required Communications: Required communications parallel the stage directions that keep a show organized. Given the complex nature of benefits, employees need to be updated on deadlines, carriers, plan coverage limitations, changes to available plans, and more.
  • Qualifying Life Events: These are the unexpected plot twists during the year. Given life event changes, like marriage, birth, or adoption, modifications to existing benefits have to be made and processed.

  • Legal Compliance: As one of the most important aspects of benefits administration, making sure all benefits align with federal and state regulations is like the show script – it must be followed to the letter. This includes monitoring document distribution, plan details, and even record-keeping.

With these being a small representation of the process for benefits administration, you can see how it becomes a complicated task to perform in its entirety. And, this is where benefits administration software comes in as a valuable solution.

What is benefits administration software?

Electronic platforms for benefits enrollment are designed to simplify and organize the entire benefits management process.

These platforms offer administrators and employees an online portal to review, select, and manage benefits. Benefits administration software serves as a one-stop-shop, combining all jobs related to benefits administration on one interface, to make it easier to accomplish.

Key features often include:

  • System Integration – The ability to sync with other HR software for a unified experience.
  • Eligibility Verification – Instant checks to confirm an employee's eligibility for specific benefits.
  • Cost Calculators – Tools to help employees gauge the cost implications of their choices.
  • Enrollment Assistance – Guided support to simplify the benefits selection process for employees.
  • Data Protection – Robust security protocols to safeguard sensitive information.

Pros and cons of benefits administration software  

In this section, we'll dive into the various advantages and disadvantages of using an electronic system for benefits administration. Understanding these pros and cons can help you make an informed decision that aligns with your organizational goals.

Pros of using a benefits administration system

Versatile, adaptable design

One size doesn't fit all, especially when it comes to benefits administration. Some electronic systems, however, can be customized to the specific needs of your organization. They can be configured to guide employees interactively through the enrollment process, ensuring that no mistakes are made and no information is omitted.

For instance, some systems can be set up to highlight all available carriers in one place, perform cost comparisons, and even include compliance documentation, thereby eliminating the risk of violations for lack of distribution.

Efficient, time-saving capability

Especially for HR, time is money.

Automated features built into digital systems can handle repetitive tasks like eligibility checks and benefits calculations, allowing HR professionals to focus on addressing employees’ specific questions and concerns.

Studies show that benefits administration automation can save 15% of HR time spent on these types of tedious tasks (That's almost like adding an extra day to your workweek! Just think about redirecting that saved time towards other initiatives).

Enhanced accuracy safeguards

In the realm of benefits administration, accuracy is a non-negotiable – One small typo can have big consequences. Electronic benefits administration platforms minimize the risk of human error by automating data entry and calculations. Once the data is entered, it's propagated across all relevant platforms, ensuring consistency.

This is particularly crucial for legal compliance. A single mistake in benefits allocation can lead to legal repercussions, not to mention the administrative headache of correcting the error. Digital systems act as a safety net, catching errors before they become problems.

Built-in compliance features

Benefits administration software often comes with compliance tools to track deadlines and maintain necessary documentation. This is invaluable for staying within the complicated and ever-changing legal boundaries. Some systems even offer real-time alerts for upcoming compliance deadlines, helping you avoid costly penalties.

Convenient self-service options

In today's fast-paced world, convenience is king. Digital benefits administration allows employees to access and modify their benefits from anywhere, at any time. This is a game-changer for companies with remote or non-traditional workforces.

Imagine a sales rep being able to choose their retirement plan while waiting for a flight or a warehouse worker without a company computer having access to their health coverage information from their smart phone or home computer.

This level of flexibility accommodates varied schedules and lifestyles, making the enrollment process far less stressful.

User-friendly enrollment process

Let's face it, benefits enrollment can be overwhelming – Digital platforms simplify the process by offering user-friendly interfaces and helpful features like FAQs. This makes employees more likely to take the time to review their options and make informed choices.

The easier the process, the higher the participation rate. And higher participation rates often lead to more competitive pricing from benefits providers, creating a win-win situation for everyone involved.

Cons of using a benefits administration system

Business size limitations

These systems may not be optimal for small businesses with limited staff or lines of coverage. The time and money spent on system initiation, implementation, and staff training may not equate to the same benefits a large organization would experience using benefits administration software.

However, should a small business expect rapid expansion, using a benefits administration platform early could eliminate the growing pains of switching between manual and electronic administration.

It's crucial to weigh these costs against the long-term benefits and goals of your company to determine if the investment is justified. Remember, a system that saves time and reduces errors can also save money in the long run.

Technical issues

Technology is great—until it isn't.

Server downtimes, software glitches, and other technical issues can disrupt the benefits administration process. Imagine the chaos if the system crashes during the peak enrollment period. Not only would this cause delays, but it could also lead to a lot of frustrated employees.

Therefore, it's essential to consider the reliability of the platform and the quality of customer support when choosing a digital system.

Data security risks

The convenience of online access comes with the risk of data breaches.

Cybersecurity is a growing concern, and companies must invest in robust security measures to protect sensitive employee data. A good rule of thumb, when selecting a benefits administration system, is to make sure you partner with a company that has a HIPAA certification and a comprehensive protocol for addressing any security concerns.

Multi-language barriers

In a diverse world, language can sometimes be a barrier. Some digital platforms may not offer multi-language support, making them less accessible to a diverse employee base. If your workforce includes a significant number of employees who are not fluent in the system's primary language, this could be a significant drawback.

Technology resistance

Not everyone is comfortable with technology. If a significant portion of your workforce is not tech-savvy, a digital system may not be the best fit. Employees need to use the system to its full potential to realize its benefits. If they're only scratching the surface of what the platform can do, you won’t get your money's worth.

Find the right benefits administration strategy for your business

By reading this article, you understand what benefits administration software is and how it can help with employee benefits management.

But is it right for your business? From the above list of pros and cons, you probably have a better idea of whether (or not) electronic administration is for you!

If you still have questions or need more information, our HR and benefits teams can help.

Schedule a meeting for expert benefits guidance sure to benefit your business.


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This article is not intended to be exhaustive nor should any discussion or opinions be construed as legal advice. Readers should contact legal counsel for legal advice.