• 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.

Editor’s note: Looking for the right PEO service for your business? Fill out the below questionnaire to have our vendor partners contact you about your needs.

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.

Compliance

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

Comprehensive benefit plans can Excellerate your business, demonstrating to existing staff that you value them and enticing prospective employees to join your team. Creating a suite of employee benefits can be a huge undertaking, so having a benefits administrator and human resources software to handle employee benefits management is vital. Below is a guide to benefits administration, how it fits into a company, and some of the best employee benefits management software.

What is benefits administration?

Benefits administration is an organization’s way of managing its employee benefits program. For most companies, benefits administration is the HR department‘s responsibility. Larger corporations may even have HR employees exclusively dedicated to benefits administration and management. These benefits may include health, dental, disability, retirement accounts, paid time off and sick leave. Employee benefit administrators are responsible for discussing these options with the organization’s employees, overseeing open enrollment periods, ensuring benefits are accessible, and troubleshooting any problems employees have with their benefits. [Read related article: Human Resources Management Glossary: Key Terms HR Pros Should Know]

What is the role of a benefits administrator?

An employee benefits administrator has multiple responsibilities in directing and planning the organization’s benefits program.

Research the best employee benefits management software.

Manually overseeing an entire corporate network of benefits can be complex for one person – or even one department. That’s why most larger companies use employee benefits management software to keep some or all of their benefits plans organized. Benefits administrators should research the different types of software to see which option would work best for their company and the benefits it offers. They should prioritize what their company needs, then assess software based on cost, features and the number of employees it will manage.

Train and counsel employees.

Benefits can be complicated and overwhelming for employees. They may have trouble understanding what their benefits are and how to use them properly. It’s the benefits administrator’s job to train employees how to enroll, explain their benefit choices, and discuss how to use them. Companies fail their employees if each individual is left to choose their own packages without guidance, or if they are assigned a benefits package that isn’t customized. Administrators need to make sure employees comprehend their benefits and only pay for what they believe they’ll use.

Negotiate with vendors.

A competitive benefits package can motivate employees to join or stay with a company. Benefits administrators are responsible for getting the best possible rates for their company, and subsequently, their employees. Administrators listen to pitches from benefits providers and then negotiate the rates the company pays. Cheaper rates can lead to lower costs for employees. From there, the benefits administrator and a representative from the organization’s leadership team make a contract with a vendor and work with them to provide employees a refreshed benefits package.

Monitor, analyze, and review benefit and enrollment usage.

A benefits package isn’t set in stone. Administrators should audit which benefits are being used and which are not. They should also seek feedback from employees about additional benefits they would like to see. Younger employees may want benefits such as student loan repayment or comprehensive mental health coverage, while older employees may focus on retirement savings options. Administrators should evaluate employees’ needs and adapt their benefits programs as necessary.

Did you know? One benefit that’s growing in importance for employees of all ages is employee assistance program (EAP) access. These programs offer employees confidential help with various issues, including stress management, domestic violence and alcoholism.

Ensure compliance with government regulations.

Employee benefits must comply with federal regulations, including the Affordable Care Act (ACA), Health Insurance Portability and Accountability Act (HIPAA), Family and Medical Leave Act (FMLA) and Consolidated Omnibus Budget Reconciliation Act (COBRA). Each of these acts has its own requirements that administrators must comply with and verify their company is regularly following.

What are the components of employee benefits administration?

Pick the benefits you want to offer.

Employees value benefits that offer them and their families flexibility and support. Today, the most popular benefits packages are a combination of traditional and voluntary benefits. Voluntary benefits are offered by employers, but are mostly paid for by the employee. Most companies provide health care, dental and vision insurance, but some of the more popular alternative inclusions are student loan assistance and financial wellness planning.

FYI: It is critical to create a benefits package that appeals to employees. The best plans combine robust benefit offerings for a low cost. While offering great benefits is valuable, that value loses steam if employees pay high out-of-pocket costs to access their benefits.

Find a plan that balances cost with coverage.

Administrators should look for plans that balance cost and coverage. On average, employers cover 70% of the cost of medical, dental and vision insurance plans. Bundled payment plans can save on costs as they combine pre- and post-procedural care into one negotiated price, resulting in cost savings for the organization.

Communicate to employees what the benefits package includes and when open enrollment is.

Administrators should explain to their employees what benefits are offered and how to use them. It is also important for administrators to tell employees when their open enrollment period is so they don’t miss their opportunity to sign up for benefits.

Manage benefits efficiently.

Once administrators negotiate rates with vendors and set up the benefits program for their employees, they should ensure the benefits are being used efficiently. This includes showing support during enrollment, auditing deductions and reconciling bills. An individual employee’s benefits package is idiosyncratic, making it time-consuming to manage one person, let alone an entire staff. This is why companies use benefits management software to relieve some of this burden from HR departments.

Analyze and ask for feedback.

Administrators should check in with their employees regularly to see how their benefits are serving them. They should make sure that the benefits are easy to use and that they provide the coverage promised. Between these conversations, and internal analytics from employee benefits management software, administrators can identify patterns and glean insights on how to Excellerate plans for the following year.

How do you offer and manage employee benefits?

The best way to offer and manage employee benefits is to use software that simplifies human resources responsibilities. Here are four of the top HR software platforms for various needs businesses may have:

Rippling

Rippling is a top HR solution and one of the easiest to implement. One of its most impressive features is the simplicity of setting up the software. Businesses can install and implement Rippling within just four weeks, and once it’s fully online, the automated process to onboard new hires takes 90 seconds on average. The software’s approval automation tools and customizable features let managers and administrators easily oversee their employees’ benefits. It can also integrate with over 400 applications, so it can work well with any previously adopted systems. Learn more in our Rippling review.

GoCo

GoCo offers an easy way to design custom workflows. It allows administrators to create custom, streamlined onboarding processes. Standard onboarding components such as new hire packets, orientation and company training can all be implemented through GoCo. It can even organize offboarding checklists such as travel, promotion requests, interviews, employee surveys and expense reports.

With GoCo’s simplified onboarding process, HR departments can focus on their other responsibilities, such as administering benefits. Managing benefits plans is also easier through GoCo because administrators can access all necessary documents and information through one easy-to-use dashboard. Learn more in our GoCo review.

Gusto HR Software

Many types of HR software have a per-employee fee. For small businesses, this means the cost of using them can prove to be too much. Gusto is the best HR software choice for small businesses. Its payroll features are intuitive and robust, offering full-service payroll processing, workers’ compensation administration, tax filing and payments, PTO management, and rate changes.

Gusto offers many options for employee benefits features. Through the software, administrators can make their employees’ insurance, reimbursement, retirement plans and other accounts customizable. Learn more in our review of Gusto HR Software.

BambooHR

BambooHR is the best software for companies that prioritize employee performance management. It lets managers track employee goals, supply peer feedback, and create employee and company performance reports. Its options let managers create custom performance evaluations.

The software also gives administrators the ability to track benefits, showing them which benefits are being used, and allows employees to easily access their plans and payment methods. Learn more in our review of BambooHR.

Social Security is usually associated with monthly payments to retirees. However, there is another important facet of Social Security benefits—providing financial assistance to children. Children may qualify for benefits if a parent is retired, disabled, or deceased.

Children who are disabled may be eligible for Supplemental Security Income (SSI), a separate program that's also run by the Social Security Administration (SSA). Here's the lowdown on who qualifies for what.

Social Security is a series of federal programs aimed at increasing social welfare, among them supplemental insurance, housing and food assistance, and—what most people think of—retirement benefits. When you retire, you can receive a monthly Social Security check to supplement your income when you start working less, or stop working altogether.

To qualify for this benefit, you need to be 62 or older and have enough work credits to be “insured.” To be “insured,” you must accrue 40 work credits, or 10 years of work. Based on your annual income from your job, you can earn up to four credits a year.

All wage earners, even if you work part-time or are self-employed, are required to pay Federal Insurance Contributions Act payroll taxes. In 2023, this makes up 12.4% of your income: 6.2% is taxed from your salary, and the other 6.2% is matched by your employer. The taxable maximum is currently $160,200, meaning wages equal to or more than that will only contribute up to $9,932.40 for the year. University students employed by their schools and some government employees don’t have to pay into the system. Check out the official Internal Revenue Service website to find out who is exempt from FICA taxes.

Social Security is different from a retirement account like a 401(k), which is built on the specific amounts you and your employer elect to contribute. Your Social Security is funded by taxes that are automatically deducted from your paycheck and quarterly taxes paid by your employer, through FICA. When you choose to retire, you’ll essentially get this money back in the form of your Social Security checks.

When Should I Take Social Security?

While you can start your Social Security benefits when you turn 62, your benefits will be permanently reduced. To receive your full retirement benefit amount, you must reach your “full retirement age” before you begin claiming. Depending on your birthday, your FRA is usually between 66 and 67. Use the Retirement Age Calculator on the Social Security Administration website to find out yours.

Social Security also protects workers against the risk of disability. If you’re disabled before you’re 62, you’ll receive your full benefits as if you were retiring at your FRA.

Author and Morningstar contributor Mark Miller breaks down the math in his book Retirement Reboot: If someone with an FRA of 66 claims their Social Security at 62, their benefits will be reduced for the rest of their life. If that person waits to claim Social Security until their FRA, their monthly income would be worth 33% more.

And if they wait until they’re 70, it’s worth 76% more. This is called delaying Social Security.

What Does It Mean to “Delay” Social Security?

If you delay claiming Social Security past your FRA, you’ll receive higher payments. The monthly payout increases slightly for each month you delay. And before you ask if you should wait until 75 or push it to 80, know that the benefits stop increasing once you reach age 70.

“Delaying Social Security is often the greater good for people who expect to have average or longer-than-average life expectancies and/or have younger, lower-earning spouses; it increases lifetime income,” says Morningstar’s director of personal finance Christine Benz.

Deciding if you want to delay your Social Security is an important, and personal, decision. There are a lot of factors to consider, such as cost of living and life expectancy.

Benz points out another big consideration: market volatility. That’s why she encourages investors to adjust their investment portfolios and plan to accommodate delayed filings. This is also known as creating a “retirement bridge.”

“The basic idea is that you develop alternative cash flow sources to tide you through heavier withdrawals early on in retirement, in the pre-Social Security years,” says Benz. “A bucket approach to portfolio construction can work well in this context, where someone draws upon cash and fixed-income holdings early on. Alternatively, an immediate annuity might be a fit.”

How Is Social Security Calculated?

There are a few key numbers that are used to determine your Social Security benefit.

The core thing to understand is that your monthly payout is calculated based on the average amount made during your 35 highest-earning years of wages, up to the year you turn 60.

Here’s what happens with that number:

• These wages are indexed to reflect general wage growth in the economy over time. This serves as a type of inflation adjustment using wages rather than consumer prices, and the resulting number is your average indexed monthly earnings, or AIME.
• Your AIME is used to calculate your primary insurance amount, which is the monthly payout you would get if you claimed Social Security at your FRA. The PIA is the sum of three separate percentages in the year you turn 62, which are known as “bend points.” The bend points are adjusted each year; you can find the latest formula on the Social Security Administration’s website.

Remember that your PIA may not ultimately equal your monthly payout if you start claiming Social Security early, or if you delay receiving payments.

How Does This Work If I’m Married? Should My Spouse and I Take Social Security at the Same Time?

Miller highly encourages all married couples to coordinate their Social Security claim plans. Depending on your situation, there are a few different approaches that may make sense.

Consider a couple where one partner is 62, already retired, and has little or no savings. In this situation, Miller suggests the lower-earning spouse claim benefits first so the higher-earning spouse can delay. Then the couple would receive enough Social Security income to tide them over while they wait for the higher-earning spouse’s monthly payout to go up, ultimately increasing their lifetime benefits.

Another option is a coordinated delay strategy, which will supply a married couple the best odds for greater lifetime benefits. Once again, delaying the higher-earning spouse’s Social Security claim will increase the couple’s combined benefits.

However, Miller points out two important details to consider: the gender pay gap and the risk of delaying too long.

Women typically earn less than men, but women also tend to live longer than men. So for heterosexual couples, it may make sense for a higher-earning husband to delay claiming Social Security and maximize the couple’s lifetime benefit. But should the husband die, Miller writes, “The lower earner steps up to 100% of the deceased spouse’s benefit—and any increased benefit gained from her own delay vanishes at that point.”

If your spouse is already retired and collecting benefits, you qualify for a spousal benefit. In other words, when you apply to claim your Social Security and your benefit is less than 50% of your spouse’s, the spousal benefit makes up the difference.

If your spouse dies, you don’t need to apply for survivor benefits. Your monthly benefits will be automatically changed after the Social Security Administration receives a report of the death.

Is Social Security Taxable?

This depends.

Let’s say you file a tax return as an individual. Here are the IRS rules:

• If your combined income is between $25,000 and $34,000, up to 50% of your benefits may be taxable.
• If it’s more than $34,000, up to 85% are taxable.

For joint tax returns, the rules are:

• If you and your spouse’s combined income is between $32,000 and $44,000, up to 50% of your benefits may be taxable.
• If it’s more than $44,000, up to 85% are taxable.

If you and your spouse file separate tax returns, you will most likely pay taxes on your own benefits.

Can I Still Work When Taking Social Security?

Remember, the purpose of your Social Security retirement benefits is to replace the income you lose from no longer working. As we’ve covered earlier, your monthly Social Security income increases the longer you delay.

If you choose to start collecting Social Security while you’re still working and have not yet reached your FRA, your benefit could be reduced. Let’s break down the limits for 2023:

• Under FRA: $1 will be deducted from your benefits for every $2 earned above $21,240.
• The year your reach your FRA: $1 will be deducted for every $3 earned above $56,520.

When you do reach your FRA, your benefit amount will be recalculated to supply you credit for the months your benefits were reduced or withheld. For more information behind the calculations, check out the Benefits Planner on the Social Security Administration website.

If you’re at the highest-earning point of your career, you may be cutting yourself off from receiving your maximum monthly payout. Even another year or two at your highest lifetime salary could increase your average wages and thus your Social Security payment.

Is Social Security Adjusted for Inflation?

Social Security benefits have guaranteed inflation protection with the annual cost-of-living-adjustment.

Every fall, COLA is calculated by averaging the Consumer Price Index for Urban Wage Earners and Clerical Workers from the third quarter and comparing it with the previous year. For 2023, there will be an 8.7% increase, one of the most significant boosts since these automatic adjustments began in 1975. In 2021, Social Security received a 5.9% bump; the year before, it was only 1.3%.

For anyone panic they’re missing out on this adjustment because they’re delaying their claims, Benz shares this reminder: “Inflation increases are reflected in everyone’s future Social Security income, even if they haven’t yet filed for Social Security.”

Have more questions about Social Security or retirement? Visit the official Social Security Administration website.

A former Hamilton man admitted to making false statements in order to receive disability payments from the Social Security Administration.{ } (Photo: Getty Images)

VERIFY answers common questions about Social Security benefits, including how they’re calculated, whether they’re taxable and if family members can receive them.

WASHINGTON — A new proposal from the Social Security Administration would make life easier for millions of disabled Americans whose friends or family help them out with food.

The proposal, set to be published Wednesday in the Federal Register, would make it so the government no longer cuts monthly benefits for people who get regular help with meals or groceries.

More than 7 million Americans with disabilities receive monthly payments from the Supplemental Security Income program, which has strict eligibility requirements that Congress hasn’t adjusted for decades.

Beneficiaries supply the government permission to monitor their bank accounts, and an application form on the Social Security Administration’s website asks if the applicant buys all their own food separately from household members or if somebody from outside the house helps them.

The form says applicants “must report to Social Security” if the amount of help they receive from others “goes up or down,” and that they have to notify the government if someone starts helping them with expenses.

The maximum SSI benefit is $914, but it can drop by a third, or $304, if someone else pays for a beneficiary’s food or rent. Roughly 10% of recipients faced a food or shelter reduction in January 2022, according to the Social Security Administration.

Under the proposed rule, rent help could still cause a benefit reduction, but food help wouldn’t.

“We expect that these changes will simplify our rules, making them less cumbersome to administer and easier for the public to understand and follow,” the Social Security Administration said in its proposal.

The proposed change likely reflects the priorities of President Joe Biden — under his Republican predecessor, the Social Security Administration pursued cuts to disability benefits.

The change won’t take effect immediately; by law, the Social Security Administration has to wait for the public to comment and then respond to the feedback.

The current rule discourages friends and family members from helping people with severe disabilities, said Jennifer Burdick, a legal aid lawyer with Community Legal Services of Philadelphia.

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“It’s administratively unwieldy and honestly mean-spirited to ask SSI recipients to report every free meal they receive and then cut their benefits in response,” Burdick said.

David Goldfarb, director of policy for The Arc, an organization that advocates for people with disabilities, said he hoped the Social Security Administration would consider simplifying the rest of its “in-kind support and maintenance” calculation.

“For example, if someone is sleeping on a friend’s couch or floor, which has no market value in terms of rent, I don’t think that should be included in these calculations either,” Goldfarb said.

Sen. Sherrod Brown (D-Ohio) has described SSI as a “forgotten” program since Congress has let it run on autopilot for years. Brown led a bipartisan effort to update the program’s rules against accumulating savings in a bank account last year, but party leaders kept the change out of an end-of-year government funding bill.

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