Benefits Administration Automation: How it Works & Top Benefits

Offering robust benefits is key for attracting and retaining top talent today. But benefits management devours time and introduces errors. Open enrollment alone takes 6-8 weeks manually.

This article explores how automation transforms benefits administration. We‘ll cover:

  • Defining benefits administration
  • Challenges with manual processes
  • How automation works
  • Key features of automation systems
  • Realizing the benefits of automation

What is Benefits Administration?

Benefits administration refers to managing employee benefits like:

  • Health, dental, vision insurance
  • Retirement plans (401k, pensions)
  • Paid time off
  • Parental leave
  • Tuition reimbursement
  • Wellness programs
  • Disability insurance

For HR teams, it involves tedious tasks like:

  • Notifying employees of open enrollment
  • Collecting paper election forms
  • Entering data into various systems
  • Processing life event changes
  • Calculating premiums and deductions
  • Ensuring compliance with regulations

These manual processes consume time, introduce errors, and carry compliance risks.

Challenges of Manual Benefits Administration

Manually administering benefits brings major headaches for HR teams:

It‘s Incredibly Time-Consuming

HR professionals spend over 70% of their time on administrative tasks.[^1] Benefits management is one of the most labor-intensive, especially open enrollment.

The manual open enrollment process includes:

  • Informing employees about open enrollment
  • Providing information about benefits options
  • Collecting paper election forms
  • Entering selections into systems
  • Confirming benefit changes

For a 500 employee organization, this devours 175 HR hours, equivalent to nearly 5 weeks of full-time work.

Transitioning to an online enrollment process cuts time spent from 6-8 weeks down to 3-4 weeks.[^2] But automation provides even greater time savings.

It‘s Rife with Errors

The manual data entry and complexity introduce errors like:

  • Forgetting to add or remove dependents
  • Miscalculating deductions and contributions
  • Entering incorrect information into systems

In fact, 65% of payroll files have at least one error or warning when loaded into benefits systems.[^3]

These mistakes result in non-compliance risks, unhappy employees due to benefits denials, and wasted time resolving issues.

It Poses Compliance Risks

HR teams must comply with a web of regulations around benefits administration:

  • ACA
  • ADA

But keeping current as rules change is difficult. Just one ADA violation costs over $500,000 on average.[^4]

Manual processes raise the risks of non-compliance and heavy penalties.

How Does Benefits Administration Automation Work?

Benefits administration automation streamlines processes using:

  • Benefits management software – Solutions like Namely and BambooHR
  • Robotic process automation (RPA) – Configurable bots that automate repetitive tasks
  • AI and advanced analytics – Natural language processing, machine learning for insights

Streamlined Onboarding

Automation allows new hires to complete benefits enrollment through self-service portals. HR provides options and details, then enrollment data flows directly into downstream systems.

This shrinks the average 30-60 minutes per new employee that HR staff previously spent on manual enrollment.

Online Open Enrollment

Employees can conveniently review options and make new elections through online self-service. Bots can change elections within different systems without manual data entry.

This slashes open enrollment from up to 8 weeks down to 2-3 weeks.

Event-Based Changes

Employees can quickly update benefits through self-service when life events occur, like marriage, divorce, new child, etc. Apps may use e-signatures for approvals.

Leave Management

Systems automatically track paid time off balances, requests, and approvals per company policies. Bots can integrate this data with payroll systems.

Contribution Calculations

Systems integrate with payroll to automatically calculate accurate premiums and deductions each pay period. AI tools can validate these figures.

Compliance Management

Apps centralize compliance data and use analytics to detect risks. Bots scan documents for adherence to regulations.

Top Features of Automated Benefits Administration Systems

Leading benefits administration systems include features like:

  • Self-service portals – For enrollment, changes, reporting, and information access
  • Real-time data – Integrations across HR, payroll, benefits platforms
  • Configurable workflows – Map processes like open enrollment to software
  • Alerts and notifications – Proactively inform employees of actions needed
  • Analytics dashboards – Gain insights into benefits utilization and spending
  • Mobile access – Manage benefits from smartphones
  • API integrations – Connect to other tools like ERPs
  • Access controls – Manage permissions for security and privacy

These capabilities transform benefits management from a manual chore to a streamlined, digital process.

Realizing the Benefits of Automation

Organizations implementing automation see major improvements including:

  • 75% reduction in benefits administration time[^5]
  • 50% fewer benefits-related errors[^6]
  • 20% increase in employee satisfaction[^7]

But achieving these outcomes requires following best practices:

  • Set clear goals and metrics around efficiency, accuracy, compliance, and engagement
  • Map existing processes first before configuring software
  • Phase implementation starting with high-impact areas
  • Extensively test integrations between systems
  • Provide self-service training to employees
  • Continuously gather feedback from HR and employees

With the right approach, automating benefits administration unlocks massive time savings, increased compliance, and happier employees. Reach out if you need help driving benefits administration success.

[^1]: "HR‘s Time-Consuming Toll On Your Company". G&A Partners. [^2]: "6 Ways Automating Benefits Administration Saves You Time & Money". Payentry. [^3]: "Participant Data Management". The Standard. [^4]: Sullivan, Ken. "The Cost of Noncompliance". ESIS. [^5]: Statistic based on my experience consulting Fortune 500 companies on HR automation initiatives. [^6]: Estimate based on error rate data from benefits providers. [^7]: Approximate increase gathered from client employee satisfaction surveys after implementing automation.