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How Benefits Administration Can Help Your SMB

Andrew Martins
Andrew Martins

If your business offers benefits to your employees, you need a way to manage those benefits properly.

  • Benefits administration helps to ensure your company can offer an employee benefits package that supports your workforce and meets your goals.
  • By paying attention to the benefits your company provides, a benefits administrator can help keep costs down while establishing a safety net for your employees.
  • Though you can hire a benefits administrator, you will also likely need supporting software as your business grows.
  • This article is for small business owners who want to offer competitive benefits packages efficiently and effectively.

You should view your company's benefits package as a commodity you can leverage to attract new talent and keep your current employees. As you begin to offer benefits such as health insurance, disability coverage and retirement plans, you'll need to ensure the programs you select run smoothly.

"Without someone to organize [your benefits package], the programs can fall by the wayside and become inactive," James Lewin, head of e-commerce and marketing at Bring Me Drink, told Business News Daily.

Through the efforts of a benefits administrator and related software, you can ensure your company's benefits package is managed properly.

[Looking to outsource HR related functions? Read Related: The Best PEO Service Providers]

What is benefits administration?

As an employer, you want to offer a benefits package that meets your employees' needs while staying within the company's budget. Through benefits administration, your HR team can help create and manage such a package and ensure it's up-to-date. In most instances, the benefits administration process for small businesses is handled by a single person, with the help of additional software to streamline the effort.

Benefits administration software is a digital platform that HR team members can use to manage your company's benefits package. At the same time, benefits administration software can let employees learn about the benefits you offer and select the ones they want during the open enrollment period.


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What is the importance of benefits administration?

It's hard to understate how important a good employee benefits package can be for your business. If your competitors' offerings outshine yours, you will likely have a hard time attracting talent, or your best employees may consider jumping ship when the opportunity arises.

Therefore, developing good benefits administration practices within your HR team is a big step toward staying competitive.

"Benefits administration plays a vital role in securing and delivering the rightful benefits to the workforce," said Daniel Carter, founder of ZippyElectrics. "It somehow plays as the 'written law' of the company when it comes to employee benefits. With the right benefits administration, [your employees] can expect that [they] would be compensated by the company during and after years of service."

Good benefits administration can also help your company cut costs. Benefits such as health, vision and dental insurance can be expensive in the U.S. For example, the average worker paid more than $5,500 for family health insurance this year, according to the Society for Human Resource Management. And while healthcare should be a major part of your benefits package, it can, and likely will, include other perks as well.

[Read Related: PEO vs. An Insurance Broker]

With an employee dedicated to managing your company's benefits package, you can rest easier knowing "they're more likely to get the best deals and work hard to benefit both the company and its employees," Lewin said, since the "small company would need to save all of the money they can to reinvest into the business as it grows."

Through benefits administration, your company can create a benefits plan that fits your employees' needs, allows future employees to enroll easily and meets your company's budget.

When to consider benefits administration software

Exactly when to consider benefits administration software depends entirely on your company's situation. Realistically, the software will become a big help once the task of managing your company's benefits package becomes too unwieldy.

At the start of your small business journey, you'll probably have only a handful of employees. With such a small staff, it's easy to keep track of the benefits you offer.

"In a true small business of less than 25 employees in one location, it's my opinion that benefits administration software is nice but not necessary," said Jim Edholm, founder of Business Benefits Inc. "That's a tiny enough universe to allow one-on-one communication about benefits, [and] turnover is insignificant enough to not be a burden."

As your business grows and becomes more complex, however, the person handling the benefits administration responsibilities will need more help. That's when you'll likely find the additional software to be quite valuable. Edholm said companies with approximately 50 to 200 employees typically have at least one HR person and an assistant on staff. Though your company may not follow those exact numbers, the problem remains that, unless these staff members are fully committed to benefits administration, "they will be too busy to assure that all buttons are pushed, all commas are inserted and all compliance objectives are met," Edholm said.

Businesses also may need additional benefits administration assistance to get new hires up to speed.

"Turnover most likely means one to three new hires occurring midyear on a regular basis," Edholm said. "Therefore, assuring that every new employee gets the full introduction to the benefits, the policies, the support that is available becomes an important task. In that case, ben[efits] admin software is a godsend."

Types of benefits

Though your benefits package should be molded in large part by what your employees need, some benefits are required by law or are more attractive to workers than others. In a survey conducted by Fractl earlier this year, 88% of respondents said "better health, dental and vision insurance" were among the most desirable employee benefits.

In addition to health, dental and vision insurance, you should also consider including other safety nets, like short- and long-term disability and life insurance. Other items – like workers' compensation, travel and accident plans, a flexible spending plan, and a retirement plan, like a 401(k) – are also considered benefits administrators' responsibilities. 

Key takeaway: Without benefits administration, the programs you offer may fall out of compliance or result in lapsed plans that could cause some major headaches for your employees. 

What resources can help manage benefits administration?

The right benefits administration software can put your HR team in the best position to serve your employees. When you're selecting benefits administration software, look for the following:

An intuitive system

Benefits administration software must be easy to use. By selecting a suite that users can easily understand and navigate on a desktop computer or mobile device, you help your administrators do their job and ensure your employees can get the information they need.

Automated functions

Modern software can automate some of the more mundane and repetitive aspects of benefits administration. By streamlining the process even further, you can ensure your benefits are serving your employees while also freeing up more time for your benefits administrator to handle the rest of their responsibilities.

Software integrations

You likely rely on a wide range of business software to manage everything from your payroll to time management systems. If you already have other solutions in place, look for benefits administration software that plays nicely with everything you already have. By allowing for integration, these platforms can make the most of the benefits data.


Federal regulations require certain benefits be provided to employees of every business type. Because of laws such as the Affordable Care Act and the Family and Medical Leave Act, your company needs to be able to provide employees with the time they need to deal with emergencies. A good benefits administration package helps manage issues as they arise.

Key takeaway: There are numerous benefits administration software options. Before selecting a system, make sure you know what your company needs so you can choose an option that's appropriate for your business.

Benefits administration providers

Image Credit: dotshock / Shutterstock
Andrew Martins
Andrew Martins
Business News Daily Staff
Andrew Martins has written more than 300 articles for and Business News Daily focused on the tools and services that small businesses and entrepreneurs need to succeed. Andrew writes about office hardware such as digital copiers, multifunctional printers and wide format printers, as well as critical technology services like live chat and online fax. Andrew has a long history in publishing, having been named a four-time New Jersey Press Award winner.