by David A. Williams, Editor

David Williams is the Editor of the HUMANCAPITALMANAGEMENT.BIZ website, which provides businesses with information about applying technology to improve the Human Capital Management process. Dave holds Bachelor and Master's degrees in Business from the University of Washington and has 25 years experience in IT consulting and solutions. Since 1999 Dave has specialized in Human Capital Management issues and solutions. Dave Williams can be reached at  (253)853-4938 or This email address is being protected from spambots. You need JavaScript enabled to view it..

Author's Acknowledgements: I want to thank Rob Thurston, President of HR CONSULTING GROUP (HRCONSULTINGGROUP.COM) and Shafiq Lokhandwala, CEO at Nuview Systems for contributing their invaluable experience, wisdom, and insight to this article.


  • The Problem
  • The Solution
  • The Marketplace
  • Background
  • General Benefits Administration and Communication Capabilities
  • Self-Service Administration, Enrollment and Communication
  • Integration Relationships
  • Solution Benefits
  • Evaluation/Selection Process Mistakes
  • Implementation Risks and Mistakes
  • Critical Success Factors
  • Avoiding Pitfalls
  • Ongoing Costs and Risks

The Problem

Providing employee benefits is essential for all companies of all sizes, but communicating and administering those benefits is very complicated and can be tedious, time-consuming, error-prone, and costly. In addition to administrative staff, costs can include substantial fines and penalties levied by regulators and carriers for mismanaging benefits programs.

Some companies may offer more than two dozen types of employee benefits. Consider the complexities involved in communicating and administering just two representative examples:

  • Flexible Spending Accounts (FSA 's) enable employees to pay for health care, dependent care and other similar expenses with pre-tax dollars. This benefit requires preparing legal documents and communications, adjudicating claims, printing checks, performing non-discrimination testing, preparing tax forms, providing customer service, and ensuring that all claims are paid pursuant to IRS regulations and FSA  plan documents.
  • COBRA regulations require employers to offer continued health benefits coverage to former employees who would have lost their coverage due to job termination for reasons other than gross misconduct. This benefit requires generating timely eligibility reports, tracking a series of dates, sending out all the required notifications, correspondence, election packets, premium invoicing, and COBRA termination notices as required by law, processing the election forms, collecting monthly premiums, verifying funds, paying carriers, and providing Certificates of Creditable Coverage in accordance with HIPAA requirements.

Ironically, even after investing enormously in employee benefits, the benefits often fail to produce the desired results for the company and the employees: poorly managed benefit plans can actually make employees less happy, less loyal, and less productive.

Three or more stakeholders are often involved in each benefit program. In addition to the employer, the employee, and the government, some combination of a carrier, a broker, a Third-Party Administrator (TPA), and one or more unions may be involved. Solving problems among these multiple parties when the benefit data does not reconcile can be very time consuming and frustrating.

Adding insult to injury, the average employer spends $14,000 on benefits per employee per year (more than 42% on top of payroll according to the U.S. Dept. of Commerce), but employees don't fully recognize or appreciate it: employees typically undervalue their benefits at less than 50% of their actual cost.

The Solution

Benefits Management solutions address the above problems by:

  • Automating the record keeping for multiple benefit plans.
  • Storing all of the facts, forms, resources and paperwork for each benefit plan in one central database which serves as the single source of current, accurate, detailed, and consistent information for all the interested parties.
  • Presenting employees with clear and compelling personalized information about their benefits.
  • Compiling accurate and consistent reports for employers, government regulators, carriers, TPA's and unions.

The Marketplace

Range of Benefits Management Solutions

There is a range of solutions available to support employers in managing their benefits programs. These different classes of solutions include:

  • Benefits Administration & Communication solutions, with or without Employee Self-Service front-ends.
  • Broader benefits industry software infrastructures for procuring, managing, and distributing benefits by linking carriers, brokers, TPA's, employers, and employees.
  • Internet-based employee discount shopping networks.
  • Internet-based gift certificate rewards and recognition programs.
  • Benefit Supplier Analysis, Selection and eProcurement tools which allow employers to compare, analyze, and select benefits suppliers based on price, content, and availability, and then track the resulting impact on business results.
  • Claim and Encounter Processing systems which support employers in adjudicating healthcare, COBRA, and disability claims and encounters.

We will focus only on Benefits Administration and Communication solutions in this article.

Classifying Benefits Administration and Communication Solutions

Benefits Administration and Communication solutions can be broadly classified along the following dimensions:

  • Supports a single class/type of benefit vs. support multiple classes/types of benefits
  • Backoffice versus online Employee Self-Service.
  • PC network, Internet, or mainframe-based.
  • Hosted in-house versus hosted off-site by an ASP (which in the world of Benefits Management may stand either for "Application Service Provider" or for "Administration Solution Provider").

Solution Sources

Benefits Administration & Communication solutions are offered by a number of different types of providers. Providers include:

  • Providers who come originally from large company/mainframe computing backgrounds.
  • Providers who come originally from smaller company/PC backgrounds.
  • Providers born in the Internet age.
  • Major ERP (GIVE A DEFINITION OF WHAT ERP IS) providers for whom the benefits solution is an integrated complementary module to their HRIS, Payroll and other modules.
  • Providers of Human Resource Information Systems (HRIS's) and other Human Capital Management (HCM) solutions for whom the benefits solution is an integrated complementary module to their HRIS, Payroll and other HCM modules.
  • Providers who focus exclusively on providing "best-of-breed" benefits solutions that support a broad range of classes and types of benefit plans.
  • Providers who specialize exclusively in providing "best-of-breed" benefits solutions that support a single class or types of benefit plans (such as Healthcare/Medical Insurance plans or Flexible Spending Accounts or COBRA Administration or 401(k) or Stock Options or Non-Qualified plans or Life Insurance or Disability or Relocation, etc.).


Before we proceed to look at the capabilities and benefits of benefits solutions, let's pause and lay some quick groundwork for better understanding the complexities and implications of benefits solutions.

Types of Benefits

There are a theoretically endless number of potential benefits that employers may offer and need to manage. Some of the more common benefits include:

  • Medical Insurance
  • Managed Care (HMO/PPO)
  • Dental Insurance
  • Vision Insurance
  • Prescription Drug
  • Life Insurance
  • Long-Term Disability Insurance
  • Short-Term Disability Insurance
  • Long-Term Care
  • Retirement/Pension Plans e.g. 401(k)
  • Employee Stock Option Plans (ESOP's)
  • Profit Sharing
  • Thrift Plans
  • Uniform Allowance
  • Monthly Parking Expense
  • Relocation Expense
  • Educational Assistance Benefits
  • Pre-paid Legal Services
  • Concierge/Personal Assistant Services
  • Paid Time Off (vacation, holidays, personal days)
  • Paid Leave (sick, jury duty, family, military etc.)
  • FICA Tax
  • Federal & State Unemployment Insurance
  • etc.

Classes of Benefit Plans

Many types of benefits are classified into groups for regulatory and management purposes. Common classes of benefit plans include:

  • Cafeteria or Flexible or Section 125 Benefits plans - Plans that offer participants a choice between cash and one or more qualified, or tax-favored, benefits. To obtain the benefit of tax-favored treatment, the plan must comply with Internal Revenue Code Section 125. Typical benefits include health insurance, group term life and dental benefits.
  • Qualified plans - Nontaxable benefits that can be included in a cafeteria plan: group term life insurance, accident and health insurance, dependent care assistance and cash or deferred arrangements.
  • Non-Qualified plans - Employer-sponsored plans that do not meet the requirements of Section 401(a) of the 1986 Internal Revenue Code and that, as a result, suffers distinct disadvantages from a tax standpoint.
  • Defined Contribution (DC) plans - Plans that provide for an individual account for each participant and for benefits based solely on (1) the amount contributed to the participant's account plus (2) any income, expenses, gains and losses, and forfeitures of accounts of other participants that may be allocated to the participant's account. 401(k), 403(b) and 457 plans are defined contribution plans.
  • Money Purchase plans - A type of Defined Contribution plan in which the employer's contributions are determined for, and allocated with respect to, specific individuals, usually as a percentage of compensation. The benefits for each employee are the amounts that can be provided by the sums contributed to his or her account. Unlike a profit-sharing plan, however, forfeitures are currently not added to participants' accounts; they are used to reduce the employer's contributions.
  • Defined Benefit Pension plans - This type of retirement plan is structured to provide a participating employee with a specific amount of retirement benefits. An employee's future benefits are determined by means of a formula. The employer is guaranteeing certain benefits.
  • Target Benefit Pension plans - Contributions are based upon an actuarial valuation designed to provide a target benefit to each participant upon retirement. The plan does not guarantee that such benefit will be paid; its only obligation is to pay whatever benefit can be provided by the amount in the participant's account.
  • Union-Sponsored plans - A program of health benefits developed by a union. The union may operate the program directly, or may contract for the benefits. Funds to finance the benefits are usually paid out of a welfare fund, which receives its income from (1) employer contributions, (2) employer and union member contributions or (3) union members alone.

The above definitions are from the International Foundation of Employee Benefit Plans' Glossary of Terms, an excellent online resource for grappling with the mysteries of "benefits-ese".


Designing and managing a benefits plan requires specifying a variety of rules that describe and govern the plan. These rules include:

  • Sources of Contribution rules
  • Eligibility for Participation rules (based on hours worked, age, length of service, etc.)
  • Contribution Formulas and Limits rules
  • Benefit Value Calculation rules
  • Enrollment period rules
  • Vesting rules
  • Disbursements and Transfers rules
  • Pre-Retirement and Post-Retirement rules.

In addition, Non-Discrimination rules are imposed on 401(k), flex, and pension plans by Section 105(h) of the Internal Revenue Code. These rules require "that self-funded employee benefit plans not provide significantly greater benefits to higher paid employees and owners than to lower paid employees. Although some disparity is permitted, there are limits which, if crossed, result in the benefits being deemed taxable income to the beneficiaries" (International Foundation of Employee Benefit Plans).

Major Players

There may be a number of entities involved in each benefit program. Each of these entities will have different motivating interests and different reporting requirements. These entities may include:

  • the employer
  • the employee
  • government regulators (IRS, Dept. of Labor and Pension Benefit Guaranty Corporation (PBGC, established by ERISA))
  • one or more unions
  • a carrier or investment company
  • a broker
  • a Third-Party Administrator (TPA)
  • any Payroll, HRIS and Benefits Management Application Service Providers (ASP)
  • any Benefits Administration Solutions Providers (ASP).

A benefits "carrier" is a commercial insurer, a Preferred Provider Organization (PPO), Health Maintenance Organization (HMO), or government agency that underwrites or administers programs that pay for health, life or other insurance services.

An "investment company" or "investment trust" is a company or trust managed by investment professionals that invests its capital in other companies for purposes of diversification …

A benefits "broker" is a state-licensed insurance solicitor who represents employers, places business with a variety of insurance companies, and is paid commissions by the insurance companies.

A "Third-Party Administrator (TPA)" (also known as an "administrative agent" or "contract administrator") is a specialist firm that may collect premiums, pay claims and/or provide administrative services for a benefit plan. An employer may choose to contract with an intermediary TPA rather than the carrier itself for these services because it expects that the TPA will be more answerable to the employer, facilitate faster, friendlier service for its employees, analyze claims and deliver risk reduction proposals, and reduce carrier premiums.

A "Benefits Administration Solutions Provider" is a term used to describe a more full-service form of an Application Service Provider. (Confusingly, both are referred to as an "ASP".) Like an Application Service Provider, an Administration Solutions Provider hosts the benefits application at its site, but it also provides additional outsourced services such as operating a toll-free call center to provide benefits information and administration services to employees, beneficiaries, COBRA continuants, the employer and carriers.

General Benefits Administration and Communication Capabilities

It is useful to think about capabilities as falling into the following four categories:

  • Core Capabilities.  These are fundamental information tracking, transaction processing, document generating, reporting, and analysis capabilities that all solutions - whether basic or high-end - can be expected to deliver.
  • Advanced Capabilities.  These are capabilities that only more advanced solutions will typically offer. Generally, if you don't get these advanced capabilities with this solution, then you probably won't get them at all because they are not typically available with other complementary HCM component solutions. (Some additional advanced capabilities may be categorized as Foundational Characteristics and Critical Capabilities.)
  • Complementary HCM Capabilities.  These extended capabilities may be delivered in one of three ways: (1) integrated as part of the standard solution, (2) as an optional proprietary add-on module to the solution, or (3) as an optional interface to a solution from another provider.
  • Foundational Characteristics and Critical Capabilities.  It is useful to identify this category separately because one or more of these capabilities and characteristics are often specified as absolute requirements yet many HRIS solutions do not offer them. This means that these capabilities are very useful as initial "yardsticks" in quickly determining which HRIS solutions can immediately be ruled out from further consideration: if a solution does not offer the necessary mix of these critical characteristics or capabilities, then they are simply not in the running.

It's useful to consider benefits enrollment and communication capabilities separately from general administration capabilities because enrollment and communications functions are handled differently in an online self-service solution than they are in a strictly backoffice-oriented solution.

Core Backoffice and Self-Serve Administration Capabilities

Core capabilities are the fundamental information tracking, transaction processing, document generating, reporting, and analysis capabilities that all solutions - whether basic or high-end - can be expected to deliver.

Core administration capabilities common to all Benefits Administration & Communication solutions - whether backoffice or self-service - are:

  • Automated record keeping of plan descriptions and rules
  • Eligibility verification
  • Record contributions
  • Record claims
  • Calculate premiums due carriers
  • Calculate employer contributions due union-managed plans
  • Transmit participant and premium data to brokers/TPA's/carriers
  • Exchange plan, participant, contribution, and disbursement data with payroll/HRIS applications or service providers
  • Calculate accrued benefit values for each participant and plan
  • Record disbursements
  • Reconciliation tools which compare payroll to benefits carrier files to identify and eliminate duplicate/redundant coverage from different vendors
  • Management reports showing:
  • Benefits summaries by employee group
  • What employee profiles are choosing what plans
  • Who will be eligible to enroll during the next open enrollment period
  • Who has and has not enrolled during an open enrollment period
  • Non-discrimination compliance testing and 5500 reporting to the IRS, DOL
  • Additional government reporting for the IRS, Dept. of Labor, PBGC
  • Union reporting
  • Plan Design checklists
  • Board Resolution to Adopt/Amend templates.

Even basic solutions offer some flexibility in continuing to work with current carriers, brokers, TPA's, payroll and HRIS partners in addition to the provider's own pre-selected network of partners.

Core Backoffice Enrollment & Communication Capabilities

In a backoffice benefits administration and communication solution, employee communication is handled by compiling and printing the benefits information that employees need to be informed, empowered benefit consumers. This printed information includes:

  • Benefit summaries which describe important plan provisions
  • Plan comparisons
  • Legal summaries including Summary Plan Descriptions (SPD's), insurance booklets and other legal documents
  • Plan eligibility rules
  • Frequently asked questions
  • Forms for notices, applications, elections, designations, assignments, releases, etc.
  • Company contacts
  • Provider directories
  • Personalized plan contributions and balances
  • Personalized projected pension and social security
  • Personalized benefit value statements.

Personalized benefit value statements show each employee how much the employer and the employee contributes to each benefit and the accrued value of pension and other plans. These statements clearly communicate to each employee the full value of their compensation and benefits program.

Enrollment and election changes using a backoffice administration and communication solution are accomplished by printing the necessary forms, having the employee complete them, and then using benefits administration staff to enter the information from the forms into the system.

Advanced Backoffice Administration & Communication

Advanced capabilities are those that only more advanced solutions will typically offer. Generally, if you don't get these advanced capabilities with this solution, then you probably won't get them at all because they are not typically available with other complementary HCM component solutions. (Some additional advanced capabilities are categorized separately below as Foundational Characteristics and Capabilities.)

In addition to the core capabilities listed above, more advanced backoffice benefits administration and communication capabilities may include:

  • Support for administering more types of benefit plans.
  • Support for more rules required by complicated plans.
  • More methods of employee contributions such as EFT, direct billing, or credit card.
  • Connection with more brokers and carriers.
  • Increased flexibility to work with existing partners.
  • Automatically determine the correct benefits for which each employee is eligible.
  • Track, notify and enroll eligible participants automatically.
  • More automated personalized notification, alerts and reminders delivered via email in response to specified events.
  • Tools (used by benefits administrators) to support employees in making the best decisions about benefit plans. Examples include:
  • Tools for entering employee profile and preference information and then presenting alternative plans ranked in order of best fit for comparison.
  • Calculators that show employees the potential tax savings of participating in 401(k) and cafeteria plans.
  • "What if" calculations of the impact changing plans and/or contributions would have on take-home pay and future value.
  • "What if" modeling of the effects on compensation and benefits of an increase in pay, a change in hours worked, moving to another city, taking long-term leave, adopting a child, etc.
  • More graphical presentation of data.
  • Literature fulfillment management.
  • Activity logging for an in-house Employee Benefits Call Center.
  • Support for an in-house online Employee Benefit Help Desk.

Other advanced capabilities that assist benefits professionals in administering benefits include:

  • "Personalization" based on each user's profile which contains information about their job role, their specified individual preferences, and possibly their prior history of using the system. This personalization exposes only the capabilities, and displays only the information (content), each specific user requires or desires.
  • Configurable automated workflow capability that helps push work and data through the system properly and quickly. Oversights are minimized, cycle times are accelerated, and everyday decisions are more informed because automated workflow reminds each user what to do, alerts them to what is overdue, and delivers the right information at the right time in order to do each task well. Automated workflow can typically be configured using different business rules to fit different routing, review, approval and notification processes based on Business Unit, country, location and a variety of other factors. Automated workflow can:
  • Guide users through common functions, e.g. new hire setup, transfer to new location, change job, change pay rates, etc.
  • Maintain checklists and track task statuses for employment orientation, termination/separation, etc.
  • Proactively remind users to initiate processes.
  • Alert them when information or work arrives for them to process e.g. requests for time off, pay raises, etc.
  • Alert users and managers about process tasks that are overdue.
  • Automatically route processed information or work and notification to the appropriate person(s).
  • Configurable Automated Event Triggers that can be configured using business rules to automatically notify users via email, pager or cell phone, pagers when specific events take place. Trigger Events might include upcoming scheduled activities for oneself or one's subordinates, overdue tasks, schedule slippage, status changes, or exceptionally high or low performance numbers. Ask the solution provider what kinds of events can be configured to trigger what kinds of notifications.
  • Mass Change capability that allows users to make mass changes to systems records, e.g. mass insertions of records, mass deletions of records, and mass updates of field contents.
  • Online help may be in the form of a browseable/searchable version of the reference manual or it may be in the form of context sensitive help. Help content may be modifiable to reflect specific company benefits plans, policies, procedures, etc.
  • Online data exchange with benefits providers.
  • Online Benefits Services "portal" which provides centralized access to a variety of resources which are useful to benefits professionals including:
  • Online training tutorials for benefits law.
  • Online Benefits Resources Library that provides access to current regulations and guidelines for compliance with state and federal benefits laws.
  • Online access to legal services to answer basic legal questions.
  • Links to a variety of other online benefits resources.

Some additional advanced capabilities are described below under Foundational Characteristics and Critical Capabilities.

Complementary Administration & Communication Capabilities

If available, these capabilities may be rudimentary or advanced, and they may be delivered in one of three ways: (1) built in and integrated as part of the standard solution, (2) as an optional proprietary add-on module to the solution, or (3) as an optional interface to a solution from another provider. Ask your provider how you can acquire any of these capabilities you may be interested in. Examples of these complementary capabilities include:

  • Support for designing all types of benefit plans.
  • Library of prototype plans.
  • Plan Proposal tools to support benefits administrators in comparing relative costs and attractiveness of competing plans to employees and the employer.
  • Outsourced live and/or online Employee Benefits Call Center to support benefits enrollment, education, billing and service.
  • Online Analytical Processing (i.e. interactive OLAP analysis) of benefits data.
  • Data Warehouse or Data Mart repository which combines benefits data with data from other HCM functions, financial systems, and other IT applications in order to monitor and evaluate the impact of the benefits solution, and HCM in general, on business results.

If these complementary capabilities are either incorporated as standard or offered as proprietary add-on modules, then important questions to ask include:

  • Do the capabilities and costs compare favorably enough with alternative best-of-breed solutions from third-parties that would need to be custom integrated?
  • Was it developed internally or acquired from another company?
  • How consistent is the user interface among the different modules?
  • How seamless and real-time is the integration?
  • In what cases (if any) is data entered by one user not immediately available to be viewed or reported by all other users authorized to see that data?
  • In what cases does the same data need to be entered separately into each system?
  • Is the data stored in multiple databases? If so, how easy is it to draw desired custom reports from the multiple databases?

If these complementary capabilities are offered through a packaged interface to a third-party solution, then important questions to ask include:

  • How seamless and real-time is the integration?
  • In what cases is data entered by one user not immediately available to be viewed or reported by all other users authorized to see that data?
  • In what cases does the same data need to be entered separately into each system?
  • How easy is it to draw desired custom reports from the multiple databases?
  • What is the history of the two providers working successfully together?
  • How will the relationship and integrated solution be impacted if either of two partners is acquired by the other partner's competitor?

For more information about integrating capabilities, modules and solutions see the article Evaluating Data Integration and Migration Capabilities on this website.

Foundational Characteristics and Critical Capabilities

One or more of these capabilities and characteristics are often specified as absolute requirements by "executive sponsors", IT, and other key stakeholders, yet many benefits solutions do not offer them. Therefore these capabilities can serve as initial "yardsticks" in quickly identifying benefits solutions that can be immediately eliminated from further consideration.

Such foundational characteristics and critical capabilities may include:

  • Extent to which the user interface is customizable to reflect company "branding", terminology, etc. (This usually depends upon whether the screens are coded using HTML and the degree to which screen field labels are stored in accessible database tables.)
  • A user interface which meets the Department of Education's Section 508 Universal Accessibility standards for the visually impaired. Among other things, Section 508 of the 1998 Rehabilitation Act states that all electronic and information technology procured, used, or developed by the federal government after June 25, 2001, must be accessible to people with disabilities. Affected technology includes application software and websites. Companies who contract with the federal government will want to be compliant.
  • Extent to which the software architecture (through multiple "domains" or otherwise) permits different Business Units (BU's) and/or geographies to operate and report differently and restrict the data that is available to other BU's and/or geographies.
  • Globalized for multiple currencies for international offices and/or customers (via e-commerce or otherwise).
  • Globalized for multiple languages so that different users can simultaneously work in a different language. Note that Japanese, Chinese and some other Asian languages have a special requirement for "double-byte characters".
  • Support for "localization" which permits tailoring the solution to meet the different needs of different countries or regions. Localization means the solution can be configured for different polices and processes to satisfy foreign laws (e.g. privacy policies, reporting requirements, etc.), local cultures, and local preferences. Some differences that may require localization include differences in benefits plans, policies, and procedures.
  • Performs satisfactorily (esp. "response time") using the Internet connection speeds (i.e. "bandwidth") available to most users.
  • "Scalability" or growth capacity. The question here is "What investment in IT infrastructure is required for this solution to satisfactorily serve a projected number of users, process a projected number of transactions, store projected volumes of current and historical data, and generate projected volumes of queries and reports?" The most scalable software architectures are promoted as "multi-tier", "n-tier" or "3-tier" architectures. Briefly, the multiple "tiers" refer the 3 separate specialized "layers" that the programming is partitioned into. These programming layers cooperate with each other to do the job. The "presentation layer" software runs on a Web server and presents the solution to users and their Web browsers. The "business logic" layer runs on an application server and performs the logic and calculations that we primarily associate with making the program do what it should. The "data layer" runs on a database server and consists primarily of the underlying database that stores and retrieves all the data. This architecture tends to be the most scalable because (a) each layer can run on one or more separate computers that are optimized for performing the specific task, and (b) optimized computing power can be incrementally added almost infinitely (a bit of an exaggeration) at each layer as needs grow and bottlenecks of different kinds develop. A well-deployed multi-tier architecture can also support the highest levels of data security because a security "firewall" (which can maximally control access to the database) can be inserted between the presentation and business logic layers.
  • Compatibility with specific third-party carriers, investment companies, TPA's, payroll providers, HRIS providers, etc.
  • Compatibility (i.e. integrates with and possibly operates similarly) with ERP/Financial systems.
  • Compatibility with either Windows-based or Macintosh PC's or both.
  • Compatibility with either Internet Explorer browser or Netscape browser or both.
  • Compatibility with the rest of existing and planned IT hardware and software infrastructure.
  • Compatibility of the underlying Database Management System (DBMS) with corporate IT standards.
  • User PC software/hardware requirements. For example, some IT departments may insist on a true "thin client" design so no additional software beyond a standard web browser needs to be installed on user PC's during implementation and upgrades.
  • A "native" Web application, or a client/server application which may be optionally Web or intranet-enabled using Citrix server or some other means, or a client/server or desktop application that is not Web-enabled.
  • ASP (Application Service Provider) delivery is required or expressly ruled out. Briefly, ASP's (also sometimes called "hosted service providers") are solution providers that will install and host the software at their site (rather than having to install and maintain it on your computers at your site) and "rent" you access to it via the Internet. Renting the solution on an ASP-basis may be a requirement because (a) the business strategy call for outsourcing tactical functions as much as possible, (b) a minimal IT staff is not equipped to support this solution, or (c) the IT staff simply does not have the time or resources available to commit to this solution right now. On the other hand, IT, HR or other key stakeholders may have absolutely ruled out ASP-based solutions out of concern (rational or otherwise) for reliability, accessibility and/or security of any solution that is hosted off-site.

For more information about how ASP solutions are justified, and how to distinguish among different ASP offerings see the article Evaluating ASP-based Solutions on this website.

  • Support for HR-XML standards. It is probably too early to consider this an absolute current requirement, but it is important to be aware of it. XML stands for eXtended Markup Language and is an emerging successor to HTML (which is the programming language used to develop Web pages). Close to 100 HCM solution providers have formed an independent the standards body called the HR-XML Consortium. The Consortium has begun publishing specifications for standardized formats of common HR-related documents (e.g. resumes, job descriptions, etc.). These standardized formats will ultimately make it easier (i.e. less expensive) for different HCM solutions to exchange information directly and over the Internet. HCM solutions that are designed to "speak" HR-XML will not require custom interfaces to exchange data with other HCM, ERP, SCM or CRM solutions that read and write HR-XML. HR-XML is not yet a widely implemented standard, but it has important potential and it is at least worthwhile to find out what a provider's plans are for it.
  • Value-Added Services available. Depending upon the resources requirements (e.g. expertise, people, time) imposed by the complexity of the solution being considered, and upon the current availability of those necessary resources within the company, it may be critical that the solution be acquired from a provider who offers (either directly or through established partners) the complementary consulting, management, technical, training and support services necessary to ensure the project's success.
  • Implementation timetable. If a hard deadline for being operational is imminent, then it simply will not be possible for some providers and solutions to meet the deadline.

Self-Service Administration, Enrollment and Communication Capabilities

Self-Service Prerequisites

In order to successfully implement self-service benefits enrollment and communication capabilities, two major conditions must be met:

1. A high enough percentage of employees must have adequate access to the system via the Internet at work and/or at home using either PC's or shared kiosks.
2. Employees must be willing and able to successfully use it regardless of education level or any disabilities.

Self-Service Administration and Communication Capabilities

A self-service benefits administration and communication solution is a front-end employee interface to the backoffice benefits administration and communication solution. As such, it builds upon the capabilities of the backoffice solution described above to offer additional capabilities and to shift the way enrollment and some administration tasks are handled. It is a secure, online, employer-branded benefits portal website which employees can access instantly at their convenience - anytime, anywhere - either through a "Benefits" link from the corporate intranet, or directly as a standalone Internet URL.

Benefits self-service capability allows more personalized administration, enrollment and communication than is possible for a strictly backoffice solution. Once a user logs into the system with their user name and password, personalized web pages explain all relevant benefits, present the relevant forms, and allow access to the user's personal benefits records and statements. More personalization means each employee receives more pinpointed, meaningful information and has a more engaging, efficient and satisfying experience.

Once the infrastructure is in place to support benefits self-service for employees it can potentially be expanded to allow carriers, brokers, TPA's, and payroll/HRIS service providers access the data they need on a self-serve basis as well.

Self-service Benefits Management is a major component of a complete Employee Self-Service (ESS) system. Other components of a complete ESS may include:

  • Self-service HR
  • Self-service Learning Management
  • Self-service Career Planning and Management
  • Self-service Performance Management
  • Self-service Schedule and Project Assignment Management
  • Self-service Time and Expense Management

Basic Self-Service Benefits Communications Capabilities

In a self-service benefits administration and communication solution, employee communication is handled by compiling and presenting online the benefits information that employees need to be informed, empowered benefit consumers. This online information includes:

  • Benefit summaries which describe important plan provisions
  • Plan comparisons
  • Legal summaries including Summary Plan Descriptions (SPD's), insurance booklets and other legal documents
  • Plan eligibility rules
  • Frequently asked questions
  • Forms for notices, applications, elections, designations, assignments, releases, etc.
  • Company contacts
  • Provider directories
  • Personalized plan contributions and current balances
  • Personalized projected pension and social security benefits
  • Personalized benefit value statements
  • Benefits-related news items
  • Benefits-related surveys
  • Links to carrier websites and other useful online benefits resources.

Employee Benefits Consulting Articles and Resources