Sorting through benefits packages, managing costs, and staying up-to-date with policy changes is a full-time job in its own right. It is not always possible for your HR department to keep up with benefit plans while engaged in other tasks. This is why employee benefits outsourcing has become an increasingly popular option for many companies.

Instead of relying on in-house expertise – which can put an unnecessary burden on your own employees – you can outsource benefits administration. Specialists who know the ins and outs of benefits packages, insurance policy, health care, and more can tackle the most arduous tasks for you. This makes your team more productive and can streamline many processes related to enrollment, billing, and beyond.

Not every company is comfortable with outsourcing due to issues like cost, trust, and communication. If you are thinking about employee benefits outsourcing, carefully weigh the pros and cons beforehand. Below, we will talk a little about what is to be gained and lost from outsourcing benefits management.

What Are The Pros Of Employee Benefits Outsourcing?

Expertise

Insurance is legally complicated and parsing through policy is almost like learning a second language. Those tasks with managing benefits programs in-house do not always have the highly-specific training needed to fully understand benefits packages.

Benefits professionals – such as insurance brokers – have this training. Their full-time job revolves around understanding things like health insurance, dental plans, and other common benefits.

Hiring a third party can ensure accuracy and provide a better employee experience. Insurance brokers often come in to give seminars and answer common questions during open enrollment. This helps your employees more fully understand their benefits options and make the most informed decisions possible.

Cost-Effective

Professional brokers and agents make a full-time job of navigating various insurance policies. They can often find innovative ways to cut costs without downsizing that the average person may miss. While it costs extra to hire outside help, more often than not it saves you money in the long term.

Professionals also often have working relationships with major insurance carriers that allow them to negotiate costs when renewing plans.

Streamlines The Process

Professional brokers have market knowledge and specific experience that can improve efficiency. When human resources teams are tasked with managing benefits, they often lack both time and experience.

A third party can figure out the quickest and most cost-effective ways to sign up employees, manage questions, and update your company on policy changes. 

Better Benefits

Outside experts have access to top-rated providers and a deep knowledge of how benefits packages work. Insurance companies are unlikely to be transparent about competitor prices or tell your company how to cut costs. Shopping around and doing your own research takes time that an in-house team does not always have. An outside professional can put that work in for you, ultimately leading to better benefits overall.

A good broker helps you access top-tier benefits that you may not have known were within your price range. They have a deep-seated knowledge of the industry and the time and resources necessary to find the best deals, identify red flags, and recognize quality benefits packages. 

What Are The Drawbacks Of Employee Benefits Outsourcing?

Communication Issues

If you have questions about employee benefits, they often need to be answered in a timely fashion. Employees may also want a resource to talk to in-person rather than through email. Specialists may have multiple clients, and therefore may not always be available immediately.

In-house benefits management also makes it easier to quickly fix errors or make changes.

Trust

Employees need to trust the person handling their benefits. Establishing trust with a third party can be hard, especially if you are relying on remote service providers.

It is not just employee trust either. Business owners should make sure they completely trust any broker managing confidential company information. There is some inherent risk in outsourcing any tasks, especially tasks related to potentially sensitive information.

Less Control

Delegating responsibilities means giving up a certain degree of control. This can feel risky when dealing with something as important as employee benefits. While an outside party has special knowledge of the insurance industry, they do not immediately have deep knowledge of your company.

This can pose problems and potentially cause conflict if you feel an outside party is not adequately addressing your specific needs. One way to mitigate this risk is to make sure you only work with service providers with a good reputation. A quality broker will make every effort to understand the specific needs of your company.

Employee Benefits Outsourcing: The Bottom Line

Outsourcing employee benefits administration is a big decision, so it should always be made with careful consideration. While every company’s needs are unique, the pros do generally outweigh the cons.

Employee benefits outsourcing helps you save money and streamlines enrollment while putting less pressure on your human resources department. There are certainly risks associated with any type of outsourcing, but they can easily be mitigated by being conscientious about choosing an insurance broker. Overall, employee benefits outsourcing can make otherwise time-consuming tasks easy.

Need some help? At UBC Insurance Solutions, we worked for you – not insurance companies. We work one-on-one with every one of our clients to develop a cost-efficient benefits package to meet their unique needs. If you’re looking for ways to save, reach out here and someone will be in touch shortly.