Three Benefits Administration Myths
Many organizations and their leaders would like to reduce the amount of time and money they spend on benefits management. However, they may be less enthusiastic about changing how they run their benefits management program. The option to change is a delicate one for employers. Let’s review some myths about changing your benefits program that may be costing you in time, money, and the retention of employees.
Myth One: Technology to run benefits programs is expensive.
An attractive benefits package is essential to bringing top talent to an organization. Of course, you could manage an impressive benefits package using pencil and paper or even a spreadsheet, but that could be time-consuming and open the possibility of incorrect data or other mistakes. This strategy may also be difficult to expand as your organization grows and almost always costs more money than using an online benefits administration software program.
Using technology for benefits management can streamline processes and sync with other essential back-office functions, like payroll and attendance. Having this technology can mean:
- Improved accuracy and real-time reporting
- Increased savings on paper, printing, and postage
- Reduced billing errors, leading to lower employer administrative costs
Benefits management is an essential function of HR that affects employee satisfaction in attracting top talent and preventing turnover. Streamlining this process with technology is an excellent way to manage benefits cost-effectively rather than tracking your benefits program manually. When you look at the whole picture, it's clear that having comprehensive technology to manage benefits could save your organization time, errors and paper, thus saving money in the long run.
Myth Two: Compliance rules are optional.
In the public and private sectors, non-compliance is not only frowned upon but costly. The Employee Retirement Income Security Act of 1974 (ERISA) is a federal law that sets minimum standards for most employer sponsored retirement and health plans to protect individuals in these plans. Violations of ERISA regulations can be costly, and repeated offenses will add up.
For example, violations can range from $31 per affected participant and beneficiary for failure to furnish reports to former participants and beneficiaries or maintain records and to up to $2,259 per day for failure or refusal to properly file Form 5500 annually. 1
Even if some rules are optional, the risk of not knowing which ones are and which aren’t is huge. Additionally, compliance changes within an organization may not always be communicated between departments, making compliance management even more challenging. Creating automated compliance processes could help ease the communication burden and ensure your organization follows the rules.
Myth Three: Investing in benefits education isn’t worth it.
To stay competitive, employers should fully understand their employee benefits packages and educate their employees on the various options. And by learning what current employees value most, employers can create a well-rounded package that will attract top talent.
According to a survey conducted by the Association of School Business Officials International (ASBO), 48% of school business professionals responded that getting out updates about existing, new, or changes to benefits was one of the biggest challenges to educating employees about their health, retirement, and supplemental benefits.2
Employers who have difficulty providing benefits education for employees should consider partnering with a benefits education provider that offers multiple ways for employees to learn about their benefits.
This blog is up to date as of February 2022 and has not been updated for changes in the law, administration or current events.