The more benefits you offer, the more complicated the administration of those benefits will become. Consequently, you may be faced with a dilemma: should you handle your own benefits administration or should you hire someone else to do it? In answering that question, you should ask yourself:
- How involved in the administration do I want to be?
- Can I afford to purchase the software or hardware needed to manage the process myself?
- Will self-administration take too much of my time?
- Is there someone available in the area who can administer my benefits at a reasonable cost?
The great temptation as a small business owner will be to handle the administration of your compensation package yourself. Many a small business owner has said, "I just have two [or whatever the number] employees; how hard can it be?" Resist the temptation, if at all possible. The road to frustration is lined with small business people who convinced themselves that they could handle their own administration. In today's market, you should be able to find an able administrator for a fair price, so that you can concentrate more of your time on what you know best. Among those who provide administrative services for a fee are insurance companies, consulting firms, banks, payroll service companies, and investment brokers.
Although there are firms and individuals who specialize in plan administration, your best bet may be just to use the company from whom you bought the plan. For example, you could use the insurance company from whom you buy the policy or the investment company who'll be handling your pension funds. They generally offer those services for a small additional charge.
The bottom line. Plain and simple, unless the plan you buy or the purchasing alliance you're a part of takes care of the administration, there are only a few options that will allow small businesses to offer benefits without having to hire a full-time employee to administer them:
Even if you choose to outsource your benefits, you cannot become completely disconnected from their administration simply by virtue of the fact that they involve your employees. Consequently, there are some laws and concepts that you should have a working knowledge of, even if it's only to keep tabs on your administrator. These subjects include:
- COBRA, the health-care continuation law that applies only to employers of 20 or more
- ERISA, a complex law that applies to any benefit or pension plan
- court orders that require you to pay or provide benefits to someone other than the employee