December 15, 2015
Increase in Outsourcing: Positive Impact for Corporate Benefits Departments
International Foundation survey finds 40% of benefit functions are outsourced
Brookfield, Wisconsin—Corporate benefits departments are shifting, growing and responding to the needs of their employees by outsourcing more time-consuming benefits functions. The International Foundation of Employee Benefit Plans explored responsibilities, staffing practices, challenges and trends in a recent survey, Corporate Benefits Departments: Staffing and Operations.
On average, companies report outsourcing 40% of their benefit functions, most commonly for:
- Employee assistance programs (EAPs): 77%
- Flexible spending accounts (FSAs): 69.4%
- COBRA: 63.6%
- Retirement benefit payments: 56.3%
- Pharmacy benefits administration: 52.5%
Outsourcing is growing—More than one-third of companies experienced an increase over the past two years. The number one reason companies outsource is to tap into more specialized expertise (47.8%). Other companies cite technology (17.2%), costs (12.2%) and risk (11.4%) as their main reason for outsourcing.
"An outsourcing increase is a positive thing for benefits departments," said Julie Stich, CEBS, Research Director at the Foundation. "Benefits staff are working smarter and more efficiently by choosing the mix of outsourcing, cosourcing and insourcing that's right for them." Stich added that more benefits departments are adding staff members, creating balance and strategic focus among departments.
A majority of companies handle annual enrollment (62.4%), Family and Medical Leave Act (FMLA) administration (59.5%) and benefits communication/education (53.9%) fully in-house. Companies rarely fully outsource benefits strategy/design (6.7%) and benefits communication/education (1.5%).
The top two challenges facing benefits departments by a wide margin are compliance with benefits laws and regulations (72.6%) and rising health care costs (51.9%). Other challenges include employee engagement, communication of benefits/changes, strategic benefits planning and administration of benefits/changes.
As Stich mentioned, outsourcing functions means more time can be spent on addressing key challenges, like benefits communication and wellness. Almost 30% of companies dedicate staff primarily for benefits communication and 34% dedicate staff primarily for wellness programs.
What does the staffing environment look like at most companies surveyed? The average benefits department has more than five staff members. About three staff members make up the department in companies with fewer than 1,000 employees and up to 11 benefits staff members work in companies with more than 10,000 employees.
Benefits departments are growing and the job outlook for employee benefits is strong. In the past two years, more companies have increased the size of their benefits staff than have decreased. More than one-third of companies have created a new benefits staff position or title. The majority (73%) of respondents said they are optimistic about the future of benefits careers. To view the full survey, visit www.ifebp.org/corporatebenefits.
The International Foundation of Employee Benefit Plans is the premier educational organization dedicated to providing the diverse employee benefits community with objective, solution-oriented education, research and information to ensure the health and financial security of plan beneficiaries worldwide. The Foundation has more than 33,000 multiemployer, corporate and public sector members representing over 25 million lives. For additional information, visit www.ifebp.org.