Benefits administration is a crucial but often complex part of human resources management. However, by automating administrative processes, HR teams can save substantial time and money while also improving accuracy and compliance. This guide explores what benefits administration automation entails, how it works, key challenges with manual approaches, top advantages automation provides, real-world examples of successful implementations, and expert predictions on where this technology is headed next.
What is Benefits Administration Automation?
Benefits administration refers to managing employee benefit programs like health insurance, retirement plans, paid time off, and more. Automating this typically tedious process involves utilizing specialized software, robotic process automation (RPA), and emerging techniques like artificial intelligence and natural language processing.
The aim is to streamline everything from open enrollments to new hire onboarding, premium calculations, change management, and other critical workflows. This reduces the administrative burden on HR staff so they can focus on more strategic initiatives. Most importantly, it improves efficiency, accuracy, compliance, and the overall employee experience.
How Does Benefits Administration Automation Work?
There are a few core components to automating benefits administrations:
Specialized Software: Purpose-built solutions exist like Benefitfocus, Businessolver, and Namely that digitize and automate processes specifically around benefits management. These can connect to existing HCM/HRIS systems to centralize data.
RPA: Software bots can be configured to take over repetitive, rules-based tasks like copying new hire data from one system to the benefits system or calculating premiums. This saves HR staff from constant manual work.
AI & NLP: Emerging techniques can extract and process unstructured content like emails or scanned documents related to benefits plans and changes. This further reduces manual handling of data. Let‘s expand on some key use cases:
-
AI can analyze handwritten enrollment forms or call center conversations to automatically log benefits elections. This removes manual data entry.
-
Computer vision can classify and extract key fields from scanned documents like faxed life event change requests to auto-update systems. This eliminates manual document review.
-
Chatbots and virtual agents can handle employee questions about plans and guide them through open enrollment changes. This provides convenient self-service options.
Connected Systems: Integrating these automation capabilities with core platforms like HR, payroll, etc. ensures seamless data sharing across departments. This provides a "single source of truth" and further enables automation.
Let‘s look at some additional examples:
- Automating new employee onboarding and enrollment in benefits plans
- Digitized open enrollment so employees can self-serve changes to coverage
- Software bots conducting new hire reporting across multiple platforms
- AI-powered reconciliation of medical bills and premium deductions
- NLP for processing life event changes submitted via email/docs
- Computer vision classifying handwritten forms to auto-log elections
- Virtual agents providing self-service support
As these examples show, automation introduces efficiencies across every step while connecting data flows enterprise-wide. Next, let‘s examine why this is so impactful.
Challenges With Manual Benefits Administration
Before exploring the advantages automation delivers, it‘s important to note the significant challenges that manual processes pose:
Extremely Time-Consuming
Managing benefits without automation equates to manual data entry, email/paper trails, spreadsheet tracking, and repetitive administrative tasks. A 2022 study by UKG revealed that this consumes over 70% of the average HR professional‘s time – time better spent on strategic priorities. Further, 63% felt overloaded by administrative work, limiting their ability to bring strategic value.
Figure 1. Top Time-Consuming HR Tasks (Source: UKG)
As Figure 1 shows, benefits management topped the list of draining administrative tasks. Transitioning these responsibilities to automated solutions is imperative for unlocking HR‘s strategy capacities according to 87% of respondents.
Highly Susceptible to Errors
Humans inevitably make mistakes when handling large amounts of data. Per The Standard Insurance Company‘s analysis, 65% of payroll files they processed had at least one error related to benefits management like incorrect deductions or outdated life event changes. Without automation, these systemic issues persist.
Figure 2. Frequency of Errors in Benefits Data Files (Source: The Standard)
Figure 2 quantifies the high error rates organizations face. This causes downstream impacts on employee satisfaction, compliance risks, and wasted hours correcting issues.
Increased Compliance Risks
Between regulations like HIPAA, ADA, FMLA, and more, benefits administration carries substantial compliance burdens. Just one violation incident costs organizations an average of $485,000 in legal expenses and damages according to 2022 research by Thomson Reuters. Avoiding these risks with consistent, accurate automation is crucial.
Advantages of Benefits Administration Automation
Now that we‘ve covered the background, let‘s explore 5 specific advantages automation delivers:
1. Improved Efficiency
Streamlining cumbersome tasks like open enrollments through digitization alone accelerates process timelines by 25-50%, translating to dramatic time savings. Adding RPA and AI compounds these savings further. HR staff regain capacity for strategic goals instead of administration.
2. Increased Accuracy
Automation all but eliminates human error by codifying complex business rules into software. This boosts data quality, providing a "single source of truth" on employee information across systems to prevent issues like miscalculated deductions.
3. Cost Savings
A recent Deloitte study found that just basic automation cuts benefits administration costs by 25-40%. Further savings come from avoiding fines/lawsuits, lowered vendor fees from digitized info sharing, reducing outsourced manual tasks, and more.
4. Enhanced Reporting & Analytics
Centralized, accurate employee benefits data combined with automation lends itself to powerful reporting and analytics. Leadership gains insights into costs, participation, risk factors and can make data-driven strategy decisions. Further, predictive modeling can forecast future cost trajectories.
5. Improved Employee Experience
Finally, digitizing cumbersome paper/email-based processes enhances convenience for employees. Intuitive self-service portals also empower them to manage elections and life event changes on their own timelines. This boosts engagement and satisfaction.
According to the 2022 State of Employee Benefits Technology report by BusinessSolver, the advantages clearly outweigh any implementation barriers. Over 90% of polled HR leaders plan to increase automation investments, citing efficiency, accuracy, compliance, and cost reduction as driving factors.
Clearly, forward-looking benefits teams simply cannot afford manual approaches anymore when scalable automation is readily available using proven solutions.
Expert Predictions on Benefits Administration Automation
Industry analysts widely agree that automation will become a baseline expectation rather than a competitive differentiator before long. Here are two insightful 2023 predictions around adoption trends:
Gartner estimates that 75% of large enterprises will implement AI augmentation specifically for benefits administration by 2025 to reduce error-prone data entry and keep up with increasing regulatory burdens. Further, they predict concerted moves towards "hyperautomation," combining technologies like RPA, AI, and iPaaS for end-to-end automation.
Mckinsey also sees the integration of individual automation capabilities into comprehensive solutions driven by maturing AI/ML advancements. They predict faster scaling across both commercial and public sector as leading solutions demonstrate clear value in early adoption cases. They also note continued cost reduction and usability improvements that will accelerate adoption.
As these expert perspectives highlight, benefits administration automation is reaching an inflection point for mass adoption over the next 3 years. The platforms and capabilities exist today for forward-looking HR teams to implement pilot programs and demonstrate game-changing ROI to justify enterprise-wide rollouts – now is the time to get started!
Ensuring Responsible AI & Eliminating Bias
As AI and ML play a growing automation role, ensuring ethical usage and preventing algorithmic bias is critical. Product engineering teams must carefully construct representative, balanced data sets for training machine learning models powering automation. Ongoing bias testing procedures should also be implemented.
Additionally, transparent AI principles company-wide help build trust with employees on automation implementations. Adopting technologies within reasonable safeguards ultimately lifts workforce empowerment and capability augmentation versus replacing jobs outright. With deliberate efforts by HR and IT leaders on governance and change management, organizations can unleash automation‘s full potential.
Boosting Strategic Value of HR Through Automation
A common misconception is that automation minimizes the strategic impact of HR leaders and professionals. In actuality, the opposite is true. An estimated 88% HR say repetitive administrative work inhibits their capacity to drive business priorities. By transitioning these responsibilities to automated solutions, substantial bandwidth opens up.
Rather than data entry and spreadsheets, professionals can conduct higher value activities like:
- Workforce and talent strategy planning
- Employee experience improvements
- Change management across digital transformation initiatives
- Diversity, equity and inclusion program development
- Succession planning and leadership continuity
- Organization and culture development
Further, analytics and data-driven insights unlocked by connected automation systems empower more informed strategic decisions on these fronts. Upskilling teams on deriving intelligence from self-service analytics tools ensures maximum leverage. With upgraded skill sets and balanced workloads, automation allows HR to operate as true strategic business partners.
Increasing Use Case Diversity
While a bulk of benefits administration automation today focuses on enrollments, deductions, and change processing, new applications continue emerging:
Personalized Guidance
Predictive analytics and AI enable custom recommendations to employees on optimal benefits packages and investment portfolio mixes based on their life stage and risk appetite. Chatbots can deliver this tailored guidance during open enrollments to influence better outcomes.
Fraud Detection
Anomaly detection algorithms can analyze claims, pharmacy, and biometric data patterns to uncover potentially fraudulent activities across health plans and disability programs. This improves oversight and lowers investigation workloads.
Automated Audits
Compliance automation leverages process mining to track benefits processes end-to-end, flagging deviations from policy and providing audit trails on activity. This simplifies compliance reporting.
As innovation around AI/ML accelerates, benefits administration automation use cases will continue expanding over the next decade. HR leaders must stay attuned to fast-moving advances that generate additional value.
Best-of-Breed Vendor Landscape
As a rapidly evolving market estimated to reach $1.5 billion in annual spending by 2025, the benefits administration automation vendor landscape keeps broadening. Some leading options to consider across categories include:
Specialty Platforms: ADP Workforce Now, Alight Solutions, Businessolver, bswift, Empyrean Benefit Solutions
HR Software Suites: BambooHR, Gusto, Rippling, SAP SuccessFactors, UKG Pro
RPA & Intelligent Automation: Automation Anywhere, Blue Prism, UiPath, WorkFusion
Managed Service Providers: Accenture, Capgemini, Cognizant, Infosys, Wipro
Vetting multiple vendors against key criteria allows benefits technology buyers find optimal solutions fitting their unique needs and strategies. When exploring options, ensure the underlying automation capabilities match present and future process requirements.
