What Is Benefits Administration? (2024 Guide) (2024)

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Kimberlee LeonardSmall Business Expert Writer

Kimberlee Leonard has 22 years of experience as a freelance writer. Her work has been featured on US News and World Report, Business.com and Fit Small Business. She brings practical experience as a business owner and insurance agent to her role as a small business writer.

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Kimberlee Leonard

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Kimberlee LeonardSmall Business Expert Writer

Kimberlee Leonard has 22 years of experience as a freelance writer. Her work has been featured on US News and World Report, Business.com and Fit Small Business. She brings practical experience as a business owner and insurance agent to her role as a small business writer.

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Small Business Expert Writer

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Kelly MainStaff Reviewer

Kelly Main is a Marketing Editor and Writer specializing in digital marketing, online advertising and web design and development. Before joining the team, she was a Content Producer at Fit Small Business where she served as an editor and strategist covering small business marketing content. She is a former Google Tech Entrepreneur and she holds an MSc in International Marketing from Edinburgh Napier University. Additionally, she is a Columnist at Inc. Magazine.

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Kelly Main

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Kelly MainStaff Reviewer

Kelly Main is a Marketing Editor and Writer specializing in digital marketing, online advertising and web design and development. Before joining the team, she was a Content Producer at Fit Small Business where she served as an editor and strategist covering small business marketing content. She is a former Google Tech Entrepreneur and she holds an MSc in International Marketing from Edinburgh Napier University. Additionally, she is a Columnist at Inc. Magazine.

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Staff Reviewer

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Updated: Apr 17, 2024, 11:50am

Editorial Note: We earn a commission from partner links on Forbes Advisor. Commissions do not affect our editors' opinions or evaluations.

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Table of Contents

  • What Is Benefits Administration?
  • Benefits of Benefits Administration
  • Steps in Benefits Administration
  • Benefits Administration Technology
  • Frequently Asked Questions (FAQs)

Show more

Companies that offer benefits attract and retain better and more loyal employees. This is because benefits show your employees that you care about them and their goals and well-being on top of their performance. If you have a benefits package for employees, you’ll need benefits administration to ensure that it is maintained properly and used appropriately.

What Is Benefits Administration?

Benefits administration is how a company manages and implements the employee benefits program. Benefits administration usually falls under the responsibility of the human resources (HR) department or a hired professional employer organization (PEO) company. Benefits include things, such as health insurance, retirement plans, vacation time and paid time off (PTO).

The benefits administrator will roll out benefits to employees, often during hiring periods and enrollment periods. Additionally, the benefits administrator manages these programs. For example, the benefits administrator will track vacation time accumulated and used by employees. A benefits administrator must have a good eye for details and be extremely organized, too, especially for larger companies with more than 50 employees.

Benefits of Benefits Administration

United Insurance reports that 78% of employees are more likely to remain with their employers because of their benefits plan. This is a critical benefit of having an employee benefits plan. Less turnover means fewer interruptions to business operations, fewer costs of hiring, onboarding and training new people and a consistent staff for consumers.

On top of loyalty, employers are able to find better employees because they offer a benefits program. Prospective employees consider the benefits package to see if it meets their needs. In some cases, prospects will take a position with a slightly lower wage if it has a better benefits package compared to other companies.

Because health insurance is fundamental to most benefits programs, employers also benefit from healthier employees. Employees will go to the doctor more frequently and be able to better care for themselves, reducing the number of sick days taken that can disrupt operations.

Steps in Benefits Administration

Benefits administrators spend their time getting employees enrolled in benefits packages, shopping for better plans and managing the accounts. Here’s what you need to know about the steps involved in benefits administration:

  1. Shop for plans: Benefits administrators must look to the market for health insurance plans, retirement plans, and more to find the plans that meet employees’ needs for a cost that the company (and employees) can bear.
  2. Roll out the plan: New plans are usually rolled out in a comprehensive enrollment period. Benefits, such as health insurance, will also have an annual enrollment period. Rolling out the plan involves letting employees know about the benefits and sharing how to sign up with them.
  3. Manage the plan: Once you have a plan in place, the benefits administrator will manage it. This means that they answer questions that employees may have regarding enrollment in benefits and track things, such as PTO. Benefits administrators may use software to manage this plan. In the management of benefits, each payroll processed would make the proper deductions and credits to the appropriate benefits accounts.
  4. Maintain compliance tasks: Benefits administrators will help keep the company in compliance with various regulations, whether this is maintaining an appropriate health insurance plan or limiting contributions to retirement plans.

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Benefits Administration Technology

Benefits administration software can significantly assist a benefits administrator in the daily tasks required to manage the benefits program. This is especially true if the benefits plan is for more than 25 employees. There are different ways to access software. Administrators may get solutions from major software companies, such as Oracle or SAP, or they may have platforms offered by the benefits technology companies, such as Benefitfocus or Zenefits.

The benefits software platform provides a benefits administrator with a resource that tracks each employee and where they are at with enrollment, contribution and use of benefits. Some solutions actually help to match employees with certain benefits selections by assessing their usage of benefits. This is a powerful tool to help benefits administrators help employees get the most out of their benefits packages and keep employees happy.

Frequently Asked Questions (FAQs)

What are the four types of benefits?

The four major types of benefits are medical, life, disability and retirement packages.

Is it hard to be a benefits specialist?

A benefits specialist is a person who handles compensation benefits packages, such as health and retirement accounts. Though paying attention to details is essential, this is not considered a difficult position.

What are the top three most sought-after employee benefits?

The top three employee benefits are healthcare, PTO and a retirement savings plan.

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