2017-12-05 00:00:00 Managing People English Discover the pros and cons of outsourcing benefits administration for your small business. Should you hire an HR person or delegate to a... https://quickbooks.intuit.com/ca/resources/ca_qrc/uploads/2017/12/small-business-owner-reviews-outsourced-benefits-information.jpg https://quickbooks.intuit.com/ca/resources/managing-people/outsource-benefits-administration/ Should You Outsource Benefits Administration?

Should You Outsource Benefits Administration?

3 min read

Offering your employees benefits is a wonderful way to attract top-quality workers. But managing those benefits is a big-time commitment due to each program’s complexities. You can choose to handle benefit administration in-house or outsource it to a third-party benefits administration company. Ultimately, your choice depends on what method best fits with your operational goals and budget.

What Is Benefits Administration?

Benefits administration involves benefits program planning, program set up, and ongoing program management. Once you choose what benefits to offer employees, you must then decide how you want those programs to operate. Some resources should also be devoted to educating employees about benefit packages. You can expect employees to have questions about the intricacies of each program, and they may need guidance on how to sign up, make changes, and opt out.

If this sounds like a lot of work, then you’d be right. Someone knowledgeable about benefits should be in charge of oversight and management. You can choose to hire a dedicated human resources person to run your program within the company or go the outsourcing route. So, what are the pros and cons of outsourcing?

Pro – Benefit Program Expertise

Professionals who only focus on benefits administration are going to have a wealth of knowledge at their fingertips. You can turn to these experts for valuable advice when choosing benefit packages. They stay on top of benefit program trends that you’re too busy to learn about.

Pro – Efficient Management

Third-party benefit administrators know how to streamline the entire process, and they’ll research and recommend the best programs for your entire workforce. Employees are given easy instructions for benefit package sign up, and they receive guidance on how to fill out claims.

Pro – Cost Savings

Outsourcing benefit management can lead to affordable packages that suit your business budget. Administrators have the inside track on the most affordable plans, and they have negotiating power that your company may lack. Eliminating the need to hire additional personnel to run your programs is also a good reason to consider outsourcing.

Pro – Liability Protection

HR people sometimes make mistakes, and when they do, your company is on the hook for whatever liability arises from the error. Reduce this liability threat by outsourcing the whole enchilada. This shields you from direct legal responsibility for mistakes made by a third party.

Con – Lack of Control

Be sure you are ready to give up total control of how your benefit programs are run. If you’re used to being hands-on with every aspect of your business, delegating all the decision-making duties for an important piece of your human resources pie to another company may seem awkward or maybe a bit uncomfortable. Here’s a common scenario. The benefits administrator decides to switch your employees from one policy to another without your approval. While this move saves you money, some of your employees may be annoyed by the change. Are you prepared to deal with such bold moves by an outsider?

Con – Not Personal Enough

There’s no doubt that a professional company can offer efficient benefit services. The trade-off is that employees often communicate with impersonal call centre service personnel who take care of their needs, but it’s not the same as speaking to a fellow co-worker.

Finding a Good Service Provider

Finding the right benefits administration company is essential to having a positive outsourcing experience. Start your search by visiting the Third Party Administrators Association of Canada (TPAAC) website. You’ll see a listing of member companies to contact.

Consider all the positive reasons for outsourcing benefits administration to third-party professionals. Look at the downside, and then choose what works best for your small business.

Information may be abridged and therefore incomplete. This document/information does not constitute, and should not be considered a substitute for, legal or financial advice. Each financial situation is different, the advice provided is intended to be general. Please contact your financial or legal advisors for information specific to your situation.

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