McCamish
The role and responsibilities of benefits administrators
Benefits Plan Administration (BPA) is usually handled by either an in-house human resource team or a third party. An expert third party brings domain expertise and up-to-date knowledge of benefits laws to the table. They also manage retirement and pension fund planning. However, they do not make investment decisions.
BPA Benefits plan administrators specialise in designing and administering a business’s benefits program. They negotiate with insurance and retirement plan service providers and select or recommend the best plans in line with the company’s goals. Additionally, they may also handle wellness and legal assistance programs.
This article explains the duties of an employee benefits and 401(k) plan administrator and the reason for having a BPA.
Why should you have a benefits plan administration service?
Surveys show that 78% of employees are likely to stay long-term and find greater fulfilment at work due to the benefits plan. Lower churn means fewer disruptions and a lower cost of hiring and training. With high-quality health and retirement benefits, employees are likely to take fewer sick leaves and give more at work, thereby maximizing their benefits package. It guarantees security not only for the employee but also for their families.
As the number of employees grows and the benefits administration tasks become more complex and time-consuming, it is financially and operationally wise to hire a professional third party. They know and are regularly updated about the laws that govern retirement benefits, for example, the Employee Retirement Income Security Act (ERISA).
What does a benefits administrator job description do?
From negotiating with insurance providers to ensuring that the employees complete their enrolment, a benefits administrator plays a critical role in the company’s benefits program:
Enrolling new employees
New employees must enrol in the company’s benefits plan upon completing the minimum waiting period to avoid becoming late applicants. They also need to register their dependents who they want to cover in the plan, even if they have another third-party coverage. A benefits plan administrator must educate the new employee about the long-term benefits and the enrolment process within the time limit.
Ensuring legal and regulatory compliance
The benefits administrator must ensure legal and regulatory compliance as per the US Department of Labor or any other relevant regulations. They must also be aware of voluntary compliance programs, publications, and advisory opinions. Most of the information on ERISA is technical and is one of the many sources of information for employer-sponsored employee benefits programs to be compliant.
Managing the benefits with employee life events
Employee life events such as change in marital status (marriage, common-law partnership, or divorce), childbirth, adoption, or losing health and dental coverage require immediate action. The benefits administrator must update the insurance provider about these life events as soon as the employee informs them.
Updating the insurer about employee status change
This includes any change in status that may potentially impact the benefits eligibility. The benefits administrator must inform the insurer immediately to keep the employee coverage. Let us understand this with an example:
- Employee A started working 20 hours per week as a part-time employee. At this point, they are ineligible for the group benefits offered by the employer.
- The same employee became permanent and now works 37.5 hours per week. This makes them eligible for employee benefits.
In this case, the benefits plan administrator must add the employee to the insurance plan by contacting the service provider.
Additionally, when the employee chooses to exit voluntarily or is terminated, the employee benefits administrator must update the plan immediately.
Communication with the employees
All employees need regular communication about their benefits plans and eligibility during onboarding and the term of service. The benefits administrator must communicate regularly regarding coverage changes and employee and dependent eligibility updates. Without regular communication, the employee stands to lose out on the benefits and may raise a dispute, highlighting the importance of strong communication skills.
Understanding and handling the claims process
The benefits plan administrators also educate and handhold the employee during claims. This includes the following activities:
- Ensuring that the employee fills out claims forms
- Employees submit the form electronically or manually on time during the open enrollment period
- If there is a mobile app or a portal, ensure that the employee has access
- Manage cashless or reimbursable claims
- Maintain a clear channel of communication for the employees if they have questions about their benefits package.
Review premium statements
The insurer will send monthly or quarterly statements with the premium amount, enrolments, terminations, and rate changes. Administrators must review the statement in detail for any discrepancies and ensure that the company pays its premiums timely.
Managing retirement benefits
Benefits coverage changes as employees retire. The BPA must inform the employees about the change in benefits plans set by the insurer. Long-term disability benefit premiums terminate four months before the age of 65, and life insurance and AD&D premiums reduce by 50% and terminate between 65 and 70.
How can Infosys BPM help with BPA Benefit Plan Administrators?
The VPAS® Benefits Plan Administration (BPA) is a cutting-edge benefits plan recordkeeping system by Infosys McCamish. With its rule-based structure, it supports complex benefits plans such as deferred compensation, 401(k), SERPs, and split dollars.
Read how benefits plan administrators at Infosys BPM can help.