5 Common Complaints About Benefits Administration Companies

Business owner frustratingly looking over documents

Companies outsource their benefits administration to a third party for a wide variety of reasons — to ensure compliance with laws and regulations, to gain access to expertise and technology that they otherwise couldn’t afford, or to help current HR employees get refocused on the core company business, to name a few.

But positives usually don’t come without some balance, and choosing to outsource benefits administration can also come with its fair share of challenges. Here’s a look at some of the most common complaints that come with choosing to outsource benefits administration, and what you can do to alleviate some of the stress.

1. Insurance coverage changes

This issue is #1 for a wide variety of reasons, from employees who are unhappy with the coverage they’re offered to communication issues between internal HR teams and the third-party administrator.

Within this umbrella category, you may encounter scenarios where employees who leave the company experience gaps in coverage when switching over to COBRA, issues with FSA and HSA reimbursements being sent to the wrong location — or not being sent at all — or a complete policy switch that could affect some staff members negatively.

Here’s what you can do: When selecting a third-party benefits administrator, look for one that communicates frequently, clearly and in a timely manner about upcoming changes to your relationship and then follows through as originally stated. If a policy switch is on the horizon, you should have plenty of time to decipher those changes and communicate them to your internal teams in a way that’s relevant to them.

2. Limited connection with the third-party

While in-house HR team members can play an important role in growing a work culture that feels more like family, a third-party provider can make you feel more like a stepchild — especially when important calls go unreturned. It can leave your employees feeling stuck, feeling like their only choice is to wait on hold instead of just coming to talk to you.

Here’s what you can do: Learn as much as you can about your third-party partner so that you’re able to answer questions directly rather than sending employees to a website to research it themselves. That knowledge can go a long way toward not only closing gaps, but building bridges.

3. Lack of control

If great power comes with great responsibility, then the opposite is also true. When a company chooses to outsource its benefits administration, it can also mean losing some control over transactions, technology and employee experience. Especially for small business owners, who are used to having direct line-of-sight into every aspect of their business, letting go can be a difficult challenge.

When benefits are managed by third-party providers, internal teams may have trouble getting the right reports, accessing information, or even getting someone on the line. Especially at large outsourcers who have multiple, large clients, internal HR teams might feel like they’re low on the priority list.

Here’s what you can do: Be smart and deliberate when choosing your third-party partnerships, and understand that bigger doesn’t always mean better. (Sometimes, a partner company around the same size as yours might be better able to relate to your day-to-day.) If you can, choose a partner that has some experience in your specific type of business, and who treats you as a valued customer from the outset.

4. Data security risks

After the health-care organizations themselves, benefits administrators carry with them some of a person’s most sensitive data — their health history. When that information is trusted to a third party, it can lead to anxiety over how that information is being handled. What if that administrator is hacked? What if confidential information is leaked to the public?

To make matters worse, the personally identifiable information that’s required for health and other benefits makes it highly valuable — and highly vulnerable. From 2013 to 2018, medical/healthcare businesses were the top target for cybercriminals.

Here’s what you can do: When searching for a benefits administration partner, make data security a top priority. Understand their privacy policy and user end agreements, and ask for details on what protocols they have in place to ensure the safety of your data. In addition, ensure that they have experts on staff who understand regulatory and compliance issues including HIPAA, ACA and others.

5. Impacts on company culture

Forty-six percent of job candidates cite a company’s culture as a deciding factor in whether they accept a job offer. At the same time, employees who don’t like their company’s culture are 24 percent more likely to quit. These numbers highlight the importance of carefully weighing how the decision to outsource will affect your culture.

For a long-time employee who’s always just walked down the hall to ask questions about their health benefits, for example, it can be a big adjustment when they now have to call a separate company. And for an HR professional who has been used to handling everything themselves, moving to a more managerial role or shifting focus altogether can be like starting a new job.

Here’s what you can do: Be transparent, ask for feedback and try as much as possible to avoid surprises. Especially for employees who will be directly impacted — most likely the in-house HR team — including them on the journey can make the difference between a positive and negative reaction to a new work situation. It’s also important to remain a cheerleader for your employees and let them know that you’re in it together.

The bottom line: Remember that while a benefits administration company is an expert at benefits management, you’re still an expert at people management — especially those with whom you work every day. At Corban OneSource, we handle the heavy lifting of benefits administration expertly, securely and with the understanding that your employees are more than just customers.