How to Set up Employee Benefits

No matter the size of the company, one of the best ways to keep employees happy, loyal, and productive is through a great employee benefits package.

If employees have to jump through a complex series of hoops to gain access to their benefits, or if the benefit records are inaccurate, it’s frustrating for both sides. Having a clear setup process for your benefits program will alleviate this frustration by making sure everything is done correctly during the onboarding process.

Setting up and managing employee benefits programs becomes a far easier process when making use of HR software. The best HR software reduces paperwork and the chance for errors while allowing employees to have up-to-date information as they need it.

Three Benefits of Setting up Employee Benefits

Although it may seem like setting up employee benefits requires a lot of time and effort, it will be time well-spent. Additionally, there are a few benefits to managing the program through HR software, yielding desirable results down the road.

Reducing Chances of Errors

By automating the management of the employee benefits program through software, chances of mistakes diminish. By relying on software, rather than paper documents, fewer errors will occur.

Employees often can track the status of their own benefits through HR software. So should an error occur, the employee will be able to spot it quicker than someone in the HR department. Fixing these errors in a timely manner keeps employees happy and focused on their jobs, rather than worrying about benefits packages.

Saving Time

Setting up a software package to track benefits saves quite a bit of time for those in the company’s HR department.

HR department personnel will not have to manually enter data as frequently, which reduces the time required to manage benefits.

When employees can check on the status of their own benefits, they need less one-on-one help from the HR department. HR personnel won’t be answering all the same questions as often.

With a software package like Gusto, the software handles the termination of benefits when an employee leaves the organization. This saves quite a bit of time for HR personnel, while also ensuring a dismissed employee won’t continue receiving benefits inadvertently.

Adding a Benefit Company-Wide

When the company decides to add a new benefit for employees, such as a dental insurance plan or life insurance, employees appreciate it.

HR software simplifies this process. The software administrator can assign the new benefit to a group or to everyone, rather than going person by person.

Just add the benefit for the entire company, or for certain levels of employees, and the software takes care of the rest.

The Difficult Parts of Setting up Employee Benefits

Even with employee benefits software, setting up the benefits package does take some time. Here are some of the trickier parts of setting up these benefits.

Calculating the Cost of Benefits

Very few companies pay the entire cost of employee benefits. The company may expect the employee to contribute to the cost of health insurance for the employee and any dependents, for example.

It can be difficult to determine the exact amount that the company should make the employee contribute. The company doesn’t want to contribute so much that it becomes difficult to sustain the contribution in the future. Employees become unhappy and frustrated when the company must reduce or suspend benefits.

Along the same lines, making employees contribute an above-average percentage to their own benefits can leave the company uncompetitive in hiring situations.

Gusto can run scenarios for the company, helping to determine just the right amount to require employees to contribute.

Overwhelming HR Responsibilities

A large company may have a dedicated HR department, often with multiple employees. For a small business, though, the person running HR and overseeing the employee benefits programs may also have another job.

With Gusto, this employee will need less time to perform the HR work. This helps this employee dedicate more time for regular duties beyond HR work.

Additionally, the HR software simplifies the management of employee benefits programs. This means the person handling HR and another job doesn’t have to be an HR expert to be able to manage the program.

Helping Employees Understand Their Benefits

Explaining benefits to employees can be time-consuming for the HR department personnel. However, when employees have a better understanding of the benefits they’re receiving and the value, they’ll be happier and more likely to participate.

Within Gusto, administrators can post explanatory documents on the employee dashboard. These documents can explain the benefits for the employees, giving them access to the information whenever they need it. Consequently, employees will have fewer questions for the HR team.

Offering Personalized Benefits

In a growing organization, it’s possible to have employees in widely varying stages of life. Younger employees may not need life insurance benefits. Older employees may want health insurance for their entire families.

If the organization allows employees to pick and choose which benefits they want or the level at which they participate, this can be confusing to track.

HR software like Gusto simplifies the process of setting up a personalized benefits package for each employee.

Ensuring Fulfillment of Required Benefits

Government regulations require companies to offer certain benefits to employees who meet the criteria. Depending on the size of the company, some of these benefits could include:

• Family medical leave
• Health insurance
• Time off for jury duty
• Time off to vote
• Time off for military service

Additionally, employers must pay unemployment insurance and workers’ compensation insurance on behalf of their employees without charging the employees. Employers must match the contributions of the employees for social security taxes and Medicare taxes.

HR software can ensure that the company follows the rules for all of these required benefits, preventing possible violations.

Step 1: View the Employer Dashboard

After signing up for the Gusto HR software, the HR administrator can use the Gusto dashboard. This shows all of the options for setting up and managing the employee benefits plan for the company. (In the examples going forward, we’ll use Gusto specifically to explain how the process works.)

View the Company Information for Benefits

The administrator of the HR benefits package can use the Gusto dashboard to view overall statistics and data regarding the company’s benefits offerings. Some of the information the administrator can view includes:

• Percentage of Employees Enrolled: Through the dashboard, see how many employees participate in various portions of the company’s benefits plan. If one or two benefits have a low percentage of participation, these benefits may need tweaking.
• Estimated Cost: Gusto will calculate the cost to the company for the employee benefits plan each month. It uses the number of employees enrolled and the amount of the company contribution to make the calculation in real time. As participation levels change, the calculation changes too, providing the most accurate information.
• Invoices for Coverage: Gusto provides a means of managing the company’s benefit accounts, including automatic payroll deductions for employees. However, Gusto doesn’t make payments for services for the company. Administrators can use Gusto to view their invoices from a 401(k) plan provider or a health insurance plan provider. But they’ll need to send their payment for the invoices outside of the Gusto interface.
• Corrections for Deductions: If the HR administrator ever notices a mistake in deductions for an employee’s benefits, Gusto allows for corrections. The administrator can spread these correction amounts over multiple payroll periods, so the employee doesn’t have a significant pay drop in any one pay period after the correction.

View the Employee-Facing Information for Benefits

Some of the information an HR administrator can upload to the Gusto dashboard that employees can see and use includes:

• Employee Costs: Companies can give employees the ability to see their projected monthly contributions for benefits. This may include the amount the employee will pay for various levels of health insurance premiums or dental insurance, for example.
• Contribution Percentage: Create a list of contributions that the company will make for employee benefits, so employees can see their remaining responsibility. Contributions the companies may make include a portion of health insurance premiums, a portion of dental insurance premiums, and 401(k) retirement account matching percentages.
• Effective Dates of Coverage: New hires need to understand when their employee benefits kick in, whether that’s immediately upon hiring, after a 30-day waiting period, or after another waiting period.

Upload and Store Documents Related to Benefits

By uploading documents for employees into Gusto, the HR team doesn’t have to answer regular questions about the employee benefits plan.

The HR team also can upload documents directly to an employee’s dashboard that require review and signing. These can include a document for setting up a 401(k) account or for signing up for a health plan, for example.

To upload a document to the employee, start in the People section of Gusto. Click on the employee’s name.

On the employee page, click on Documents. In the upload section, follow the prompts to save the document to the employee’s dashboard. Once the employee completes the document, a notification will appear in the employer dashboard.

Step 2: Set up a Health Plan

One of the most basic benefits employees will expect is a health insurance plan. With Gusto, companies can find a health insurance package that fits the business’ finances and the employees’ needs.

Start a New Health Insurance Plan

When using Gusto, selecting a new health plan is an easy process.

Gusto has put together a collection of several potential health insurance plans that it offers to companies that subscribe to Gusto. (Subscribers can bring their own health insurance plan too, which we’ll discuss next.) Gusto’s available plans will work for companies of significantly varying sizes.

After signing up for a health insurance plan through Gusto, the HR software handles the payroll deduction for the employees. It also can deduct for vision, life, and dental insurance, when the company offers those benefits.

The deductions occur automatically in Gusto, and the HR department can synchronize those deductions with payroll runs. Gusto also handles compliance support for the health plan.

Migrate an Existing Health Plan

For companies that already offer health coverage and that want to start using Gusto, they can move the existing health insurance plan to manage it in Gusto.

At the time the company signs up for Gusto, HR personnel may enter the information about the current health insurance plan. Gusto will handle the process of making the employee payroll deductions and matching them up to payroll run times.

Step 3: Set up a 401(k) Plan

Another popular employee benefits option is a 401(k) retirement plan. It allows employees to contribute part of their paychecks before taxes, building money for retirement. Employers provide matching funds.

Multiple types of investments for 401(k) accounts are available, allowing the employee to match the investment to the appetite for risk.

Start a New 401(k) Plan

Gusto offers 401(k) plans through its partner, Guideline. In this partnership, a company subscribing to Gusto can start a 401(k) plan to offer its employees. Guideline has plans that can fit almost any size of business and the needs of the employees.

Administrators can start the process inside Gusto by clicking the Benefits tab. In the 401(k) section, click on the Offer New Benefits link. Then click Next. Add the desired information before clicking the Get Started button.

Gusto will send the administrator to the Guideline website. The administrator will be able to research and pick from several different options in retirement account plans.

Migrate an Existing 401(k) Plan

For companies that already offer their employees 401(k) retirement savings plans, they can track the plan in Gusto without signing up for a Guideline plan.

Within Gusto, look for the 401(k) section on the Benefits page and click Add. Follow the prompts until the Manage 401(k) with Gusto link appears on the page. Click on it.

Gusto will ask for information about the current plan the company has. Enter the requested information as prompted, including information to have Gusto begin managing automatic payroll deductions.

Step 4: Set up the Employee Dashboard

One advantage of using HR software like Gusto is that employees can handle some of the aspects of managing their employee benefits on their own. Every request doesn’t have to go through the HR department, which saves time.

The HR administrator can determine what types of information appear on the employee dashboard. The administrator controls what changes the employee can make through the dashboard too.

Some of the items the employee may be able to see and control in the dashboard include:

• Health Plan Details: Employees can see information on the health plan deductible, the out-of-pocket maximum cost, any coinsurance due, any copayment due, costs for in-network doctors, costs for out-of-network doctors, and prescription drug costs.
• Documents: When the employer uploads a document for the employee to sign, it’s accessible through the employee dashboard. The employee can submit it back to the employer through the dashboard too.
• 401(k) Account Details: Employees can click on the Benefits tab to view information about an existing 401(k) account, including the account balance.
• 401(k) Contribution: If the company manages its 401(k) account through Gusto and Guideline, employees can make changes to their payroll percentage contributions for the 401(k). They also can adjust the types of investments they’re making.
• Paid Time off: For employees who have paid time off (PTO) benefits or sick leave benefits, they can manage these benefits in the dashboard. They can request a partial or full day off, and they can select multiple days. After submitting the request, the administrator will need to approve or deny the PTO in Gusto.

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