Employee benefits have grown increasingly complex in recent years. Rising healthcare costs, evolving compliance requirements, employee engagement challenges and growing administrative demands continue to stretch benefits and HR teams.
While every organization faces unique circumstances, many benefits professionals report similar concerns related to staffing, communication, vendor management and strategic planning. Survey data from the International Foundation of Employee Benefit Plans (IFEBP) highlights several trends that continue to shape benefits departments today, including increasing workloads and a growing reliance on outsourced expertise.
Challenges shaping benefits departments
Benefits professionals said the following are their most significant challenges:
- Increasing healthcare costs
- Absence and disability management
- Compliance with benefits-related laws and regulations
- Employee engagement with benefits
- Benefits communications
Other common challenges include benefits administration, vendor management, strategic benefits planning and low rates of health care literacy among employees.
While the survey predates some of today's developments, many of these pressures have intensified. Employers continue to grapple with rising healthcare costs, growing pharmacy spending, increased interest in personalized benefits, evolving compliance requirements and new technologies such as artificial intelligence.
Growing responsibilities and resource constraints
Respondents said their responsibilities are outpacing the HR and benefits personnel need to keep up.
Understaffed departments speak to the complexity of employee benefits. In recent years, most organizations have maintained or increased their benefits staff. Even still, respondents noted stagging is not keeping pace with required duties.
A potential issue is a lack of tenure. According to the news site HR Drive, more than 45% of HR professionals have been in their current roles for two years or less. Additional training and support could give employees a greater understanding, knowledge and ability to tackle their HR and benefits duties.
Why employers continue to rely on outside expertise
One outcome of understaffing is increased outsourcing. According to the IFEBP, companies outsource an average of 40% of benefits functions. The benefits most frequently outsourced are:
- Employee assistance programs
- COBRA administration
- Pharmacy benefits administration
- Flexible spending accounts
- Retirement benefits management/payments
- Health saving account administration
Additional services regularly outsourced include nondiscrimination testing, investment oversight, voluntary benefits administration and disability administration.
Organizations most often outsource for the following reasons:
- Additional expertise
- Risk management
- Challenges with emerging technologies such as artificial intelligence and data analytics
- Costs associated with benefits management
- Lack of benefits staff
The most common in-house benefits functions are open enrollment, benefits communication and education, and FMLA administration.
Find trusted resources
We are here to support you as the world of employee benefits continues to grow in scope and complexity. We can help you with top challenges such as strategic benefits planning, administration and vendor management. We can also connect you to trusted resources for benefits communication, education and outsourcing.