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What’s the True Bottom Line of Benefits Administration Models?

What’s the True Bottom Line of Benefits Administration Models?
Posted on Tuesday, February 26, 2019 by Businessolver Team
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Today, benefits account for 31 to 37 percent of employers’ total compensation spend. 

insource-vs-outsource-benefits-technology-solution

While this won’t surprise most HR professionals, it’s a good reminder of just how much businesses are investing to attract and retain top talent. And, as benefits continue to become more important, they’re also growing more complex.

Luckily, that’s where technology comes in. 

But, with so many vendors out there offering benefits administration technology and/or services, which one should you choose? To narrow the field, it helps to think in terms of the two primary models available these days — insourcing vs. outsourcing.

Insourcing relies heavily on internal resources to manage the entire ben admin process from enrollment to customer service. An outsourced model handles all the people, processes, and technology and is generally tailored to suit each organization’s unique needs. From a cost-perspective, the price tag for an outsourced solution may, at first, seem larger than that of setting up an insourced solution. Organizations who insource, however, must make additional investments in staffing, and often must turn to consultants for the ongoing maintenance of their platform. Outsourced solutions, by contrast, have a more predictable cost structure and lower overall cost of ownership. 

Now, as HR budgets continue to be stretched, it’s easy to gravitate towards benefits technology and management solutions that appear to have a lower price tag, like the insourced solution.

Some leaders, like CFOs, are especially prone to this type of thinking. When considering new HR technology and services, it’s natural for them to focus on the perceived savings in the first year of adoption. After all, they, like you, are evaluated annually. 

Although their intentions are good, most CFOs typically lack a direct line-of-sight into the kind of work HR/Benefits pros do every day to achieve the organization’s business goals. To help you have a frank discussion with your leaders, we’ve developed a few targeted questions you can bring up that will provide helpful fodder to move forward in your decision. 

  • Who will build and maintain my platform year after year?
  • Will my platform support my future benefits strategy?
  • What compliance issues should I consider?

When considering new technology, it is imperative to get the full scope of capabilities at your organization as well as get a true understanding of what each type of technology solution can do for you. Since technology contracts typically lasts for five years, your decision to move one way or the other will have lasting consequences. Be sure you have all the information before making your decision. For more helpful questions that will get you the insights you need, download our white paper, “Before You Insource Your Benefits Administration.” 
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