Offering employee benefits is crucial for companies seeking to entice job seekers and keep their current staff engaged. But before you design your compensation package, you need a plan for managing your benefits to maintain them properly. This is where benefits administration comes into play.
Benefits administration starts with choosing your preferred employee perks. But it doesn’t end there. The process of managing your benefits can be challenging and time-consuming, particularly when it comes to following state and federal compliance laws.
Below, we’ll explain the benefits administration process and how the right software can help you manage your perks.
In this blog post, you’ll learn:
- The key steps involved in managing employee benefits.
- How to follow federal regulations and adapt your company benefits package to meet employee needs.
- How benefits administration software can simplify the process and improve employee engagement.
What is employee benefits administration?
Benefits administration is the process of managing a company’s employee benefits program.
The process includes various administrative tasks, such as:
- Designing the benefits package
- Determining a budget
- Educating employees on how to access and use their benefits
- Measuring the results of your benefits on goals like retention
- Tracking compliance regulations
- Making updates based on usage and employee feedback
Many companies have a benefits administrator in their human resources department to run this process.
An experienced benefits manager should have skills in:
- Researching benefit options and analytical skills
- Understanding compliance and legal regulations
- Working with benefit providers and vendors
- Using digital tools and benefits database solutions
- Organizational skills to keep employee benefit programs effective
Many HR professionals use benefits administration software to streamline and simplify the process. But, businesses can choose to outsource benefits management to a third-party administrator.
Popular employee benefit options that need administration include:
A robust benefits package is an effective way to show your staff you care. It reduces turnover, improves employee morale, and increases engagement. A strong benefits administration process lets you track your benefits offerings. It also helps you measure their success so you can make necessary changes to keep your employees happy.
What is the employee benefits administration process?
The employee benefits management process has four key steps. We’ll review them below to give you a better idea of how it works.
1. Do your research
The first step in the benefits administration process is research. Before you design your compensation package, determine what benefits and perks your employees want. You can do this by surveying your employees for feedback and investigating your competitors’ benefits.
Your employees will likely want some traditional benefits, like health insurance coverage. But there are less common ones, like pet insurance and tuition assistance, that your employees may value.
A competitive package should include various competitive benefit options to make your company stand out to potential candidates and long-time staff members.
2. Set your budget
Once you’ve done your research, you should set your benefits budget. Determining a budget will dictate how many benefits you can offer your current employees. If you’re a smaller company, you may have a smaller budget. But you can also provide various non-monetary benefits, like PTO or flexible schedules.
All your benefits should make financial sense for your company. You should work with a financial or tax advisor to determine a budget that will work for you. Then, you can revisit your budget every quarter or year and adjust if needed.
Suppose you switch to a more cost-effective benefit, such as moving from a low-deductible health insurance plan to a high-deductible health plan (HDHP). In that case, inform your eligible employees as soon as possible so they can prepare.
3. Manage your benefits
When your benefits package is complete, it’s time to manage it. First, you must educate your employees on what benefits are available, how they work, and how they can enroll. Your staff are more likely to use and value their benefits if they understand how to enroll in and use them.
If your employees’ spouses or dependents can take part in any benefits, explain how they can add them. Lastly, your onboarding process and company policies should cover what happens to benefits if employees leave your organization.
For example, if you offer a health savings account (HSA), ensure your employees know the account stays with them if they quit or retire. In contrast, a flexible spending account (FSA) would remain with you.
Once your employees enroll, you should:
- Track benefit usage
- Process any benefit payroll deductions
- Stay updated with insurance providers and other benefit vendors
- Answer employee questions or concerns
- Provide external contacts for benefits if necessary
Your benefits manager is not only the point person for your benefits providers. They also manage the employee experience. So, it’s critical that they listen to employee input about benefits and perks so your staff stays satisfied and engaged.
4. Track your results
A significant component of the administration process is reviewing your benefits regularly. It’s essential to know how your employees use the benefits. If a benefit doesn’t get much use, consider dropping it the following year. You can also send surveys to gather feedback to tailor your benefits package better to meet your staff’s needs.
You must also confirm that your benefits follow federal compliance rules. The Employee Benefits Security Administration (EBSA) protects workers by ensuring benefits are fairly administered and employees understand their rights1. Applicable government regulations can change often. So, it’s vital to review your benefits package regularly to ensure it continues to meet EBSA requirements.
Some benefits depend on company size or state regulations. For example, the Affordable Care Act (ACA) requires businesses with 50 or more full-time equivalent employees (FTEs) to offer at least 95% of their full-time employees and their dependents an affordable health benefit that provides minimum value and minimum essential coverage (MEC).
If you’re not offering health coverage and your company grows to 50 employees, you may be subject to a costly penalty if you don’t provide it the following year. So, your benefits manager must check federal and state requirements when reviewing your benefits so you don’t run into compliance complications.
What is employee benefits administration software?
Benefits administration software is a digital tool that enables companies to automate and manage daily tasks. This type of software solution can help you optimize your benefits, identify ways to cut costs, track federal regulations, and more—all from one centralized location.
With a benefits software platform, you can:
- Communicate with service providers and insurance companies to quickly receive necessary information.
- Educate your employees about their benefits so they can make the most of their perks.
- Stay updated with legal compliance requirements to avoid costly penalties.
- Assist your employees with benefit enrollment periods.
Some benefits administration software is cloud-based, enabling you and your employees to manage benefits from anywhere. When determining the best benefits platform for your business, ensure it has protocols to safeguard your employees’ information from identity theft and hacking.
The software you need will depend on the benefits you offer. For example, if you’re offering a health reimbursement arrangement (HRA), you should buy administration software from a vendor specializing in the benefit, like PeopleKeep by Remodel Health.
PeopleKeep’s HRA management software helps small and mid-sized businesses design and manage tailored health benefits that suit their company’s unique needs. We handle time-consuming administrative tasks, including reviewing and processing employee claims for reimbursements, that keep your HRA compliant. We also allow your employees to enroll in health and ancillary coverage from within our user-friendly platform.
By opting for an HRA through PeopleKeep, you’ll have more freedom and cost-control over your health benefits and can avoid the one-size-fits-all traditional structure of group coverage.
Conclusion
Determining how your HR team will manage comprehensive employee benefits should be a priority. It’s easy to make mistakes with self-administration. So, consider investing in effective benefits administration technology. It may seem like a hassle. But a streamlined administration process will help your staff better understand their benefits.
At PeopleKeep by Remodel Health, we’re experts on personalized employee benefits. With our benefits administration software, you can design and manage a customized HRA in minutes each month.
If you’re ready to offer personalized employee health benefits, book a call with us today.
This blog post was originally published on February 22, 2023. It was last updated on May 16, 2025.
