In the past, Read says employee benefits were rarely outsourced because they were perceived as largely a deduction issue. Furthermore, compared to the pension area, employees' questions about their benefits were relatively easy to answer. Basically, employees wanted to know which benefits they and their dependents were entitled to and their dollar value. However, the downsizing trend in the 1990s has left fewer people behind to administer benefits. They also have more on their plates, explains Read.
Companies decide to stick with what they know best and outsource the rest.
The first step in deciding whether you want to outsource your company's employee benefits is to define your goals, says Read. Include as much information in your RFP as you can. Establish a solid relationship with the plan administrator, before you make your final decision, says Read. Probe each finalist on how they would handle specific situations and compare the answers. Carefully examine the costs each one is quoting to make sure any extras are identified.