It’s a common issue for smaller firms unable to outsource all employee benefits administration (or hire a full-time employee to handle it), at the same time too big to make it the responsibility of someone who already has a full-time role in the firm.
That’s the position we’ve found ourselves in at Boomer Consulting. Fortunately, outsourcing isn’t an all-or-nothing proposition. We’ve found a balance by outsourcing some aspects of the responsibility while keeping some in-house.
Today, we’re sharing the balance we discovered between cost and value gained, how it can free up your internal team’s focus, and why it might just be the turning point for enhancing your employee benefits experience.
Pros and cons of outsourcing benefits administration
Outsourcing your employee benefits administration offers several benefits.
Expertise on demand. Outsourcing gives you access to on-demand expertise and a level of specialized HR knowledge that often surpasses the capabilities of a generalist HR department.
Cost savings. While outsourcing comes at a cost, it’s often less expensive than hiring a full-time employee to oversee benefits administration—especially for firms that aren’t large enough to keep a full-time employee busy with the job’s responsibilities.
Compliance mastery. Mastering payroll and employee benefits compliance is no small feat, but it’s a critical part of benefits administration. Outsourcing to experienced professionals ensures your benefits program complies with everything from Department of Labor (DOL) rules and the Employee Retirement Income Security Act (ERISA) to the Affordable Care Act (ACA) and the Consolidated Omnibus Budget Reconciliation Act (COBRA).
Of course, there are a few drawbacks to outsourcing, such as:
Loss of control. Smaller firms may struggle with surrendering oversight and some decision-making in the administration process. However, with the right guidelines in place, you can ensure your benefits program doesn’t stray from the company’s vision.
Service quality considerations. You must navigate the transition to outsourcing with care to preserve the employee experience. While there’s potential for efficiency, resistance to change can dampen employee satisfaction.
In-house vs. outsourced benefits administration: finding the balance
At Boomer Consulting, we seek to improve the balancing act between in-house and outsourced benefits administration. Currently, we take a blended approach. We handle the manual work of choosing, distributing and communicating benefits to employees but outsource many other responsibilities, like administering our employer-sponsored retirement plan and cafeteria plans.
Having someone on the team (me!) who is familiar with our entire benefits package and all its moving parts is an essential piece of the puzzle. Because we work with multiple different companies for our payroll, insurance, and benefits, having one point person ensures nothing gets missed. Many tasks need to happen each month and annually, such as reconciling employee deductions and contributions or handling the annual worker's compensation audit.
Of course, that means my workload is heavy during high-volume times like open enrollment, shopping around for new plans, and communicating changes in benefits. However, we are committed to continuous improvement and always look to increase efficiency on how we navigate outsourcing without sacrificing service quality or employee well-being.
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As Financial and Accounting Manager for Boomer Consulting, Inc., Jenna is passionate about the administrative side of business –both internally and externally. Her primary focus is on the company’s payroll, human resources, and accounting.
Before joining Boomer Consulting, Inc.as a Solutions Advisor in 2018, Jenna owned a home health agency for three and a half years.
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