Even at the smallest of business, administering employee benefits can be quite complex and time-consuming. Understanding the considerations involved in administering benefits will assist you in deciding whether you should handle administration on your own, or outsource all or part of it. This "101" guide helps you walk through how to administer benefits at your small business.
First - What Type of Benefits?
Before getting in to the basics of how to administer benefits, it’s first important identify what type of basic employee benefits you’re planning to offer and why.
Why is this an important first step? Identifying your goals, needs, and the type of benefits being offered all impact your decision on administration.
When assessing small business benefits, ask yourself:
Who will the benefits program cover?
What is our benefits budget?
What benefits do our employees value the most?
Who will manage the benefits program internally, and what is their capacity to add-on another task?
What are our benefits goals? (What do we hope to accomplish by offering benefits?)
What type of benefits will we offer? (For example: If we offer health benefits, will we offer a group health insurance plan or individual health insurance reimbursement? If we offer a retirement 401k, will the company match contributions?)
Now that you have a solid idea about what small business benefits you’ll offer and your goals/capacity, the next step is to decide how to administer the benefits.
Next - How to Administer Small Business Benefits
There are three main benefits administration options: administer internally, outsource, or a combination.
Option 1 - Administer Benefits Internally (Self-Administration)
If you choose to administer benefits internally, consider carefully the time and resources it will take to manage benefits in an accurate and compliant way. Often times, it is not efficient (or effective) for small businesses to administer benefits internally because they do not have the personnel time or expertise to do so well.
Option 2 - Outsource Benefits Administration
If you choose to outsource your benefits administration, you’ll have a few choices. Outsourcing options include: through an insurance company, consulting firm, bank, payroll service company, broker, or software service.
Essentially, outsourcing relieves small businesses from much of the paperwork and compliance requirements with administering employee benefits. That being said, the type of administrator right for your business will depend on your goals, budget, and type of benefits being offered.
With outsourcing, evaluate:
The services the administrator will provide (and not provide)
How the administrator does business (paper v. paperless, turn-around time, customer support, etc)
Option 3 - Combination
Lastly, with small benefits administration outsourcing it’s not “all in” or “all out.”
For example, many newer cloud software solutions (Ex: PeopleKeep) allow small businesses to have middle ground. With a combination approach, you get the compliance and easy administration benefits of outsourcing, with the lower-cost benefits of self-administration.
Once you identify your small business benefit goals, and the exact benefits you will offer, administration choices become clearer. Use this guide to ask simple questions to determine the best route for how to administer benefits.
What questions do you have about how to administer small business benefits? Leave a question or comment below.