Benefits administration: Key components and best practices for effective employee management

In today’s modern working world, salary is not the only factor that workers take into account when deciding to accept a job offer or to stay at their current company. Companies that offer impressive benefits packages can set themselves apart from other employers while also supporting their hardworking employees. Employee benefits like paid time off, healthcare coverage, and retirement benefits, can all help your employees live happy and healthy lives — which can in turn, can help them to be more productive at work. To help make the most of the benefits you offer to employees and to ensure you remain compliant with related rules and regulations, having a plan for managing the benefits administration process is key.

Keep reading to learn more about what benefits administration is, why it matters, and what best practices you need to be aware of.

What is benefits administration?

It takes a considerable amount of care and consideration to create a thoughtful employee benefits program for your business. This is where benefits administration comes in. While there are many different types of employee benefits that you can include in your benefits program, two of the most common types are health insurance and retirement plans. Alongside making your company more attractive to potential hires, a solid benefits package can also help retain your employees, which can help save a lot of money in the long run. Every time you lose an employee, it can be quite costly to replace them and train your new hire. According to the Gallup State of the Global Workplace: 2021 Report, replacing an employee costs the business one-half to two times the employee's annual salary.

So — what is benefits administration exactly? Benefits administration involves designing, managing, and overseeing a company’s employee benefits programs. The goal of the benefits administration process is to ensure that these programs are implemented effectively while complying with regulation.

The 2024 SHRM Employee Benefits Survey offers some fascinating insights into the most valued employee benefits. Topping the list are health-related benefits (89%). This encompasses medical, dental, and vision insurance, ensuring employees have access to crucial healthcare services to support their physical and mental well-being, and 78% of employees say they would stay with a company solely because they like the benefits.

In larger companies, benefits administration is typically managed by a human resources professional, but at smaller companies, who takes on this role can vary. Being responsible for benefits administration can also involve working with any relevant service providers, such as a health insurance company or retirement plan advisory firm. On top of managing the logistics of employee benefits, an effective benefits administrator needs to be able to support employees as they navigate your benefits offerings. Doing so can help ensure employees understand how their benefits work and how to access or utilize them. Some smaller businesses may turn to a third-party professional employment organization (PEO) instead of hiring an internal benefits administrator.

Key components and best practices for managing employee benefits

If the concept of benefits administration is new to you, these best practices can help you manage your employee benefits program effectively.

• Embrace technology and software solutions. If hiring an HR expert or benefits administrator is not in your budget and you don’t find the idea of working with a PEO appealing, you can always turn to software for support. You can use benefits administration software to help maintain proper employee records and to manage the benefits process.

• Remain compliant with legal requirements. An important role a benefits administrator or a PEO plays is helping your business remain compliant with any rules, laws, or regulations relating to the benefits you offer employees.

• Have clear communication strategies with employees. Implementing a robust benefits package is an investment and you don’t want your efforts to go to waste. Spend time creating a communications plan to help your employees learn more about what benefits are available to them and how they can make the most of them.

• Take individual needs into consideration. Every workplace looks different. Your employees have their own unique needs when it comes to benefits. For example, if a large part of your workforce is in their thirties, a strong parental leave policy will be appealing. If you tend to hire a lot of recent graduates, you may find a student loan repayment assistance program enticing.

• Stay up to date. Like any industry, trends and best practices in benefits administration change over time. Benefits like flexible scheduling and remote work once were rare, but now can be the norm. You don’t want to accidentally fall behind the times.

Other employee benefits

Choosing the right employee benefits for your workforce helps both the employees and the company. According to the 2024 Employee Health & Benefits Trends: The Evolving Workforce by the Marsh McLennan Agency, 95% of employers feel that tailoring their benefits solution to center on whole-person health helps increase talent retention while also improving the employee experience.

There are many types of benefits you can offer to employees to help attract and retain top talent. The more robust your benefits offerings are, the more you increase the value of your employees’ compensation packages, alongside improving their general well-being. While common examples of employee benefits include health insurance, matching 401(k) contributions, and paid time off, other benefits worth considering adding to your roster include:

• Parental leave

• Wellness programs

• Life insurance

• Healthcare stipends

• Paid time off to volunteer

• Stock options

• Dental insurance

• Tuition reimbursement

• Professional education stipends

• Vision insurance

How Thatch can help you manage your health benefits

Finding the right support can make all the difference when navigating employee health benefits administration. Thatch is here to help. Hundreds of businesses throughout the United States, ranging from startups to large corporations, rely on Thatch to provide excellent health benefits to their employees. Thatch is an all-in-one platform that simplifies the process of offering personalized healthcare experiences through an ICHRA. You simply set a budget, and your team receives top-notch healthcare.

We can help you spend less time managing your health benefits program and find solutions for providing better, more flexible healthcare for all of your employees. Request a free demo of Thatch to find out how you can save an average of $1,620 per year while also receiving the support you need to build out an impressive benefits program.