How to Choose Between a Benefits Administration Solution or General HCM

Human resources (HR) teams face many benefits administration challenges, whether they’re managing rising health care costs, maintaining regulatory compliance or trying to meet their employees’ needs with a small team. Some HR teams may be analyzing the costs and benefits of using a comprehensive benefits administration provider vs. a benefits module available through a general human capital management (HCM) software provider. 

A comprehensive benefits administration solution will typically offer more value than general HCM software, in terms of robust employee experience and end-to-end service and support. This article will uncover some of the hidden value of a comprehensive benefits administration solution, as well as additional costs you may encounter with general HCM software. This is provided for informational purposes only and is not intended to provide specific advice or recommendations for any plan or product. 

The Unique Value of a Comprehensive Benefits Administration Solution 

Providers with service and solutions dedicated to benefits administration add specific value for HR teams that are overwhelmed with complex tasks. Here’s a look at some of the value a comprehensive solution can offer: 

• Reduces HR workload – A comprehensive benefits administration solution can manage a variety of complex tasks like Medicare status changes, payroll reconciliation, QMCSOs and supporting employees with enrollment guidance. This enables HR teams to spend less effort on repetitive, time-consuming tasks so they can focus more on strategic initiatives, such as aligning benefits to business goals and optimizing their benefits plan design.
• Optimizes the employee experience – HR teams may struggle to resolve the issue of low employee engagement. This issue may be related to employees’ confusion over their benefits, with only 57% stating that they understand their insurance benefits extremely or very well, according to LIMRA’s 2025 Beat Study. A comprehensive benefits administration solution with a user-focused design and data-driven insights can support employees as they navigate the benefits landscape. A simple and personalized benefits experience through an online portal or a mobile app can give employees the resources and data they need to make optimal choices about their health and wealth.
• Supports cost management – A benefits administration solution can be an effective tool for controlling benefits costs, while also supporting employee wellbeing. For example, one of the roadblocks to health care cost containment is poor employee decision-making, such as those receiving unnecessary procedures when they seek care.¹ A solution that integrates tools like decision support and care navigation is intended to help guide employees towards optimal and cost-effective health care choices. A solution that analyzes health care data can also support cost management by highlighting inefficiencies in your benefits program that might be increasing costs.
• Provides access to benefits expertise – Working with a comprehensive benefits administration provider typically feels like having an extension of your HR team. They offer expertise and hands-on support that may not be available with a general HCM software provider. Comprehensive benefits administration solutions may offer highly trained staff to help support your HR team with an employee benefits contact center, reporting, audits and maximizing the ROI of your benefits program.
• Delivers proactive enhancements for customer success – A solution that specializes in benefits administration is designed by a team that is dedicated to benefits success. This includes evolving the benefits administration solution with consistent enhancements, testing new features and design and listening to customer feedback. It can also include expanding partnerships, like point solutions, to further support employees’ needs. 

Additional Costs of Using HCM for Benefits Administration 

Some general HCM software providers offer benefits administration modules that can be added to the primary solution at no extra cost. These modules may only perform basic functions and may not always provide continuous service and administrative support for complex tasks. HR teams must still be involved in numerous activities, which can be challenging if there are any knowledge or resource gaps around certain topics like ACA compliance or Qualified Medical Child Support Orders (QMCSOs). Using general HCM software for benefits administration has the potential to increase costs in these areas: 

1. Time and resources for your HR team – Creating additional workload for your HR team is likely the biggest hidden cost if you choose to use HCM software for benefits administration. Consider whether your team will need additional resources for activities such as: 

• Ongoing administrative and compliance tasks - General HCM software generally won’t perform activities like configuring annual updates or processing events caused by acquisition and/or divestiture, which means these responsibilities likely will land on HR. Depending on your team size, it could require you to hire additional resources to cover these tasks.
• Point solution management – If you’re looking to add point solutions or voluntary benefits for your employees, this might be easier with a comprehensive benefits administration solution. Some of these comprehensive solutions allow you to contract through them for additional benefits and can integrate them within the enrollment solution. 

2. Expenses for tools and fees – HCM software is generally not designed for the complexities of some benefits programs and may not include certain functions that your HR team and employees expect or wish to have. If functions like care navigation and benefits decision support are missing from your general HCM software, you'll likely need to source another vendor – likely at an additional cost – to fill in these gaps. There also might be fees to make updates or add integrations. 

4 Questions to Ask When Comparing General and Comprehensive Benefits Administration Solutions 

If you’re unfamiliar with comprehensive benefits administration solutions, it might be difficult to know how to compare them, especially against general HCM software. The following questions may help you determine which option is the optimal choice for your benefits administration needs: 

• Will the benefits administration solution support your strategic goals? Consider why you might be favoring one solution over another. Are you trying to save on costs or simplify your vendor management program? Maybe you’re looking for a solution that provides more support for complex tasks. You may discover that a comprehensive benefits administration solution is the better value for your goals, especially if you’re looking for ongoing service and support.
• Are there any complexities in your benefits program that might be difficult to manage in your benefits administration solution? Think about whether you have complex benefits needs related to any mergers and acquisitions, a distributed workforce or a large inventory of carriers and third-party administrators. These types of benefits situations may be easier to manage within a comprehensive benefits administration solution.
• Does your benefits administration solution take a holistic approach to maintain regulatory compliance? Make sure you verify the extent of regulatory compliance support that solutions provide. Find out whether you’ll be supported by an experienced client team who will primarily manage regulatory compliance for your organization. If not, many of these responsibilities will likely fall under your benefits team who may have limited bandwidth to support them. In addition to increasing your team’s workload, you may also face steep financial penalties for inaccurate reporting. A comprehensive benefits administration solution may provide more end-to-end support for compliance.
• Have you evaluated the total cost of ownership (TCO) of your benefits administration solution? General HCM software can seem of great value, but it’s important to think about the ongoing costs of using and maintaining it as your benefits administration solution. Once you start to dig into the details of the fees, tools and resources needed to support your team and employee experience, you may find that a comprehensive benefits administration solution is the optimal choice. A comprehensive provider can provide end-to-end service and support, integrated voluntary benefits and tools to support employee engagement. 

Is a Comprehensive Benefits Administration Solution Right for You? 

There's a lot to consider when deciding between a comprehensive benefits administration solution or general HCM software. It’s important to perform a thorough assessment of each solution to identify any gaps that may create additional costs. Selecting a comprehensive benefits administration solution might be the optimal choice for you if you’re looking to: 

• Receive ongoing support for administrative tasks from an experienced team.
• Engage your employees with a mobile app, communications and tools to select and use their benefits.
• Support a complex benefits program or workforce and remain compliant. 

Need help thinking through your benefits administration TCO? Our team can help.