Employee benefits are a big topic when it comes to attracting and retaining good talent. But the challenge isn't just offering good benefits — it's managing them well.
If you don't have a full HR team, that task often falls on other business leaders. The language of benefits administration can be tough to understand. So here are my five steps to analyze your benefits — without having to get a Master's in HR Management.
Step 1: Identify the red flags
Inconsistent policies
When benefits are handled differently across departments, shifts, or employee levels, you're creating a compliance minefield. Common warning signs include:
- Different waiting periods for similar positions
- Varying contribution matching for employees at the same level
- Inconsistent enrollment procedures between locations
- Manual processes that rely on individual interpretation
👉 Waiting periods = time new employees must wait before becoming eligible for benefits
👉 Contribution matching = when employers match a percentage of employee retirement contributions
Nondiscrimination issues
An employer-sponsored plan may fail nondiscrimination tests if it includes any of these provisions that favor executives, management or other high-paid employees.- Office workers receiving better benefits than shop floor employees
- Management having access to benefits that hourly workers don't
- Different co-pays or deductibles based on job classification
- Inadequate family coverage options for lower-wage workers
👉 Nondiscrimination tests = annual reviews to ensure benefits don't unfairly favor highly-paid employees
👉 Co-pays = fixed amounts employees pay for medical services
Documentation requirements
The Employee Retirement Income Security Act (ERISA) requires strict documentation and reporting. Noncompliance with newly issued Department of Labor (DOL) regulations could result in penalties exceeding $2,000 per day for late filings. Common documentation failures include:- Missing or outdated Summary Plan Descriptions
- Failure to provide required participant notices
- Incomplete Form 5500 filings for plans with 100+ participants
- Lack of proper plan documents for cafeteria plans
👉 ERISA = federal law that protects employee retirement and health benefits
👉 Summary Plan Descriptions = documents explaining employee benefits in plain language
👉 Form 5500 = annual report required for large benefit plans
👉 Cafeteria plans = benefit plans that let employees choose between cash and pre-tax benefits
Step 2: Make everything consistent
Create written procedures that ensure every employee receives consistent treatment regardless of their work location, shift, or supervisor. This includes:- Uniform eligibility criteria and waiting periods
- Standardized enrollment processes and deadlines
- Consistent communication and education materials
- Equal access to all available benefit options
Designate specific individuals responsible for benefits administration and ensure they understand their fiduciary responsibilities under ERISA.
👉 Plan administrator = person or company responsible for managing day-to-day benefit plan operations
👉 Fiduciary responsibilities = legal responsibility to manage employee benefit plans in the best interests of employees, not the company
👉 Participants and beneficiaries = employees covered by benefit plans and their family members who may receive benefits
Step 3: Plan for ongoing monitoring
Schedule quarterly reviews of benefits administration to catch issues before they become violations. Focus on:- Contribution timing and accuracy
- Participant communication compliance
- Plan document adherence
- Non-discrimination testing preparation
Remember: Adding new benefits without proper oversight is like building on a shaky foundation. Each new program introduces additional compliance requirements, reporting obligations, and potential audit triggers. Your monitoring system must evolve alongside your benefits offerings.
Step 4: Use HR technology
Manual processes are the enemy of compliance. Modern benefits administration platforms can:- Automate contribution calculations and deductions
- Ensure consistent participant communications
- Maintain comprehensive audit trails
- Generate required reports and filings automatically
Investing in the right technology eliminates human error and creates the documentation trail you need to demonstrate compliance during audits.
Step 5: Develop a compliance-first culture
Train your management team to recognize potential compliance issues and establish clear escalation procedures. Create documentation requirements that make compliance violations visible before they become costly problems.
This means teaching supervisors to spot red flags like inconsistent benefit applications or employees asking why their benefits differ from coworkers in similar roles. When everyone understands the stakes, compliance becomes everyone's responsibility.
Bonus step: Consider partnering with a PEO
For many small to mid-sized businesses, partnering with a Professional Employer Organization (PEO) can be a game-changer. A PEO can:- Handle all compliance requirements and documentation
- Provide access to enterprise-level benefit plans at lower costs
- Maintain expertise in changing regulations
- Reduce your administrative burden and liability exposure
- Offer employees better benefits than you could secure independently
👉 PEO = Professional Employer Organization that provides HR services and shares employment responsibilities
If benefits administration is consuming too much of your time or you're concerned about compliance risks, it’s definitely worth exploring this option.
Request a benefits analysis
Don't wait for a DOL audit to discover compliance gaps. Take control of your benefits administration and protect your company's future.
Contact PRO Resources today for a comprehensive benefits analysis. We'll review your current plans, identify potential compliance issues, and provide a clear roadmap for protecting your business while enhancing your employee value proposition.
Remember: Good benefits attract talent, but compliant benefits protect your business. Make sure you're doing both.
About the Author
Stacy Gray is a seasoned Benefits Administrator known for her comprehensive expertise in employee benefits administration, HR policy development, employee relations, and people management. Throughout her career, she has successfully led initiatives that enhance employee engagement, streamline benefit programs, and ensure compliance with federal and state regulations.