Employee benefits outsourcing, and the point at which employee benefits administration outsourcing pays for itself
- Benefits cost per employee a year
- $11,900
- Per employee a month
- $991.67
- As a percent of base salary
- 19.2
The numbers on this page come from the inputs you enter and the method stated: 3,600 seconds to an hour, 52 weeks to a year, twelve months to a year, and nothing else. No industry shrinkage figure, no occupancy benchmark and no assumption about your attrition; every one of those is yours to enter.
Employee benefits outsourcing is a decision with an arithmetic in it, and the arithmetic is usually skipped. The question is not whether an outside firm can run the package better than the person currently running it between other jobs. It is whether the hours it takes back, priced at what those hours actually cost you, exceed the fee. This page works that comparison the way a headcount plan works any other one: what the internal hours are, what they cost, what the fee buys, and what the answer usually turns out to be at different sizes.
Open the How much are benefits worth Free to use. No account, no card, no sign-up.
Count the internal hours before you price the alternative
The hours are enrollment season, the monthly leavers and joiners, the carrier reconciliations, the questions people ask, and the filings. Count them for one real month and one enrollment month rather than estimating a year, because the year estimate is always low and always the one used to argue against the fee. Put them beside the fully loaded hourly cost of whoever does them, which is the same figure your plan already uses for every other role.
Price the fee per employee per month and compare like with like
Whatever shape the proposal arrives in, reduce it to a rate per enrolled employee per month. Then the comparison is two numbers: the fee for the year, and the internal hours for the year at their loaded cost. Below a certain headcount the fee's floor dominates and outsourcing loses on arithmetic alone. Above it the internal hours grow with headcount while the fee grows more slowly, and the crossing point is where this decision actually lives.
Decide what you are outsourcing: the work, or the judgement
Outsourcing the work is enrollment, eligibility administration, carrier feeds and filings, and it is what most employers mean. Outsourcing the judgement is letting somebody else decide what the package contains and who is eligible, which is a different and much larger thing. Both are available and they are often sold together. Be explicit about which you are buying, because the second one is hard to take back.
Keep the exit in the agreement
The cost of outsourcing badly is not the fee, it is the year it takes to get your own records back into a shape you can operate. Ask before signing what you receive on the last day, in what format, and how long you keep access, and hold your own eligibility rule and headcount plan outside the supplier's system throughout. An employer who cannot leave has not outsourced administration, it has sold it.
Will it do what you need for Employee benefits outsourcing?
Tell us how your team plans its staffing today and where the number gets argued; a person who has built one answers.
Employee benefits outsourcing: common questions
At what size does employee benefits administration outsourcing start to pay? It depends on your own two numbers rather than on a rule of thumb: the annual fee at your headcount against the internal hours at their loaded cost. The pattern is that the fee has a floor and the hours do not, so very small employers usually lose on arithmetic and the crossing point arrives as headcount grows. Work it with your own figures; this site publishes no benchmark headcount, because the answer is a fact about your costs.
Is employee benefit outsourcing the same as using a broker? No. A broker places and negotiates the plans. Outsourcing administration means somebody else operates them. The two are often bought from one firm, and when they are, the administration price is frequently invisible because it is paid out of placement commission.
What is the most common thing employers forget to price? Their own hours during enrollment season, and the cost of the person who answers benefits questions while doing another job. Both are real costs that never appear on an invoice, which is exactly why they get left out of the comparison that decides this.
Does Orgplanly help with this decision? It holds the headcount the fee is charged against and the loaded hourly cost the internal hours are priced at, which are the two inputs this comparison needs. The free worksheet works the package cost per employee from your own figures. It does not sell administration and ranks no supplier.
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