Companies Outsource 40% of Their Benefits Functions

New Data Released on Corporate Benefits Department: Staffing

August 29, 2023 | Brookfield, Wisconsin—A new survey report from the International Foundation of Employee Benefit Plans reveals the operations and staffing practices of corporate benefits departments across the United States. Key findings from Corporate Benefits Departments: Staffing 2023 Survey Results include outsourcing strategies, the greatest challenges facing benefits departments, and benefits and human resources staffing structure and size.

Outsourcing

Employers were asked to estimate the portion of their company's overall benefits function that is outsourced. On average, responding companies outsource 40% of their benefits functions. Roughly one-third of companies have increased outsourcing of benefits functions in the past five years, while about 4% have decreased. The most common outsourced benefit services include:

• Employee assistance programs (EAPs)—80%
• COBRA administration—79%
• Pharmacy benefits administration—75%
• Flexible spending accounts (FSAs)—75%
• Retirement benefit payments—59%
• Health savings account (HSA) administration—54%.

"As the complexity of managing benefits has increased over the years, many companies choose to outsource benefit offerings that require specific expertise, emerging technologies and increased possibility of risk," said Julie Stich, CEBS, Vice President of Content at the International Foundation. "Layered on top of that is managing costs and staffing shifts, making outsourcing more attractive."

Challenges

When asked to reflect on the largest benefits-related concern, half of companies said rising health care cost (50%), followed by absence and disability management (39%), compliance with benefits laws/regulations (31%), employee engagement (30%) and communication of benefits/changes (25%).

Staffing Structure and Size

In the past five years, twice as many companies have increased the size of their benefits staff than have decreased (38% compared with 17%, respectively).

More than half of companies surveyed have 20 or fewer employees in their Human Resources (HR) department while 44% have 21 or more HR employees. More than three-quarters of companies have a dedicated benefits department or dedicated benefits personnel (77%) compared with companies where benefits are handled by one or more staff members in the HR department (23%). Companies that have a dedicated benefits department or personnel have an average of five benefits staff.

According to the report, only 7% of benefits functions report directly to the CEO. The majority are within three reporting positions removed from the CEO.

Trends

Looking ahead, employers were asked to share any new trends emerging in corporate benefits functions or jobs. The most frequently mentioned trends included increased responsibility and understaffing in HR and benefits departments, incorporating artificial intelligence (AI)/data analytics and leave management challenges.

For more information and to view full survey results, visit www.ifebp.org/BenefitsStaffing

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About the International Foundation: 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 International Foundation has more than 31,000 multiemployer, corporate and public sector members representing over 25 million lives. For additional information, visit www.ifebp.org.