Administering benefits isn’t an optional expense. Companies who do not pay adequate attention to administering benefits open themselves up to lawsuits and civil fines. These will greatly exceed the cost of hiring an HR manager or benefits administrator. Err on the side of caution and get yourself a qualified benefits administrator before trouble comes knocking on your door.
What Employee Benefits Administrators Do
You might think that you can administer employee benefits yourself. However, your attentions are best focused on running your business. Much like payroll you can often contract this out without hiring a full-time benefits manager. Among the tasks that a benefits administrator, contract or otherwise, can take off your hands includes:
- Monitoring eligibility. Once an employee meets stated company policies for eligibility, you are obligated by most state and federal laws to provide that employee with benefits. Failure to do so could open you up to a discrimination lawsuit.
- The benefits administrator also determines, in conjunction with the business owner, who is eligible. A benefits administrator can pay for himself by helping you come up with a cost-effective way of determining who eligible for certain programs and who is not.
- Administrators can track multiple benefits from multiple providers, no easy task.
- Your administrator will make sure that people who are on administrative or maternity leave still keep their benefits. This is another area where there is no room for mistake. Depriving a woman on maternity leave of her benefits is basically an invitation for a lawsuit.
- A benefits administrator can create custom enrollment forms for your employees.
- Conversely, a benefits administrator will help to keep track of which employees are not enrolled in group benefits. For example, employees who are insured by a spouse’s health insurance provider or employees who don’t wish to enroll in company retirement plans.
- Administrators keep track of beneficiaries and dependents for all relevant benefit programs.
- Your benefits administrator will ensure compliance with relevant federal laws such as COBRA and ERISA, as well as any court-ordered garnishments.
- Most importantly, a benefits administrator will ensure compliance with all relevant federal law. They will also help you to prepare taxes at the end of the year as they relate to tax credits and payments for all benefit programs.
Alternatives to Benefits Administrators
Many small business owners might wonder why they need a benefits administrator still. Particularly those with only a couple employees will think that they can handle it all themselves. This is advised against, for the reasons stated above. However, if you do decide to do it yourself, you should get a benefits administration application that can handle all company benefits. You should also have a working knowledge of programs like COBRA and ERISA, as well as benefit law in general. As stated above, the cost of failing to administer benefits in a legal and consistent manner is great. The cost of a benefits administrator seems quite inexpensive in comparison.
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