5 steps to successful benefits outsourcing

Managing employee benefits programs is costly and time-consuming. As all benefits professionals know, a benefits program is like an iceberg: only about 10 percent of the work that makes it successful is ever seen. The rest is below the surface. Benefits outsourcing allows HR and benefits teams to stay above water, where they can focus on important business issues.

When considering benefits outsourcing, there are five key steps you should take to set yourself up for long-term success.

1. Evaluating internal factors

The first step to deciding whether benefits outsourcing is right for your company is to evaluate the following internal factors:

• Consider your desired customer service model. Do you currently have the internal staff to function as a call center to ensure employee matters are being resolved in a timely manner?
• Do you have the internal staff or the budget for outside counsel to answer specific benefits questions about rules and changing regulations?
• Will you need to purchase new software? Consider the cost and demands to maintain it, such as IT support if you are planning to run it internally.
• Consider your finance and accounting team. Does your finance team like paying 15 benefits invoices a month, or perhaps they prefer just one payment once a month to the outsource partner?
• Think about your strategic goals. What is the best use of your staff’s time?

Understanding your current position and desired outcome will help to better prioritize HR functions and what should be outsourced.

2. Deciding what to outsource

Now that you’ve considered all angles of your current benefits administration program, it’s time to decide exactly what to outsource. Teams may want to outsource anything and everything that would take up administrative time. Or, it might make more sense for a team to select specific benefits functions to outsource, like COBRA administration or dependent eligibility audits. Evaluating current processes and efficiencies, as outlined above, will give your team a better picture of what can stay in-house and what can be outsourced.

The two most important considerations for outsourcing? Time and expertise. Does your team have time to fully manage the function at hand? Does your team have the specific expertise to execute the task being considered?

If the answer to one or both of those questions is “no,” consider outsourcing.

3. Re-organizing your team

How do you refocus your team once you outsource? The duties will shift from doing the work internally to overseeing the work of others. There will now be less of a need for administrative support, so how will you adjust and reassign duties?

The answer is simple: take your benefits team off administration and train them for more strategic HR functions.

This might include employee recruitment and retention, employee hiring and onboarding, employee engagement, or collaborating with and overseeing the new benefits administration team. And, depending on how much you outsource, you might still have a need for some benefits related functions, like open enrollment planning and benefits plan design.

Remember, you can maintain control of the process if you have effective oversight of the outsourcing.

4. Getting started

You made the decision to outsource, but how do you really get started? First, clearly define your goals, what services are you looking for and how you want the model to work. It’s important when talking to partners to understand what they offer. Talk to other clients about how their model works and what their implementation process is like. Stay engaged, collaborate and make sure the timeline is realistic. Here are a few things to consider when selecting a benefits outsourcing partner:

• Financial strength & security of the candidate company
• Commitment to customer service
• The breadth of their benefits plan options
• Their service and cost structure
• Industries and professional services
• Administrative and management expertise and competence
• How employee benefits are tailored
• Technology usage, experiences and innovation

5. Moving forward

Once you have gone through implementation, how do you manage that partner on an ongoing basis? Consider a service level agreement up front. You want to make sure you include performance level guarantees – how long does it take for the phone or emails to be answered, how long does it take for problems to be resolved? Establish a detailed process document. Also, engage in the oversight of the process by performing audits and listening to call center calls. Mutual trust between you and the outsourcing partner breeds success.

Once you have considered these five steps, you are ready to choose a partner. Just remember, choose a partner that wants to create a better benefits and HR experience for you.

Bradley Taylor is the executive vice president of business development at PlanSource. He founded and led Next Generation Enrollment, a leading provider of benefits administration technology services, which was acquired by PlanSource in 2016. Prior to Next Generation Enrollment, Bradley was a group sales representative at Unum, one of the largest insurance carriers in the world. Bradley has helped thousands of companies build effective benefits strategies and implement programs that have created a better benefits experience for administrators, employees and their families.