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Reducing the Risks of Employee Benefit Plan Administration

Human resource personnel are generally responsible for overseeing the administration of employee benefit programs. These can range from pensions, to profit sharing, healthcare insurance or disability programs. The programs can be simple or complex, but they all increase the risk of errors and omissions lawsuits. Program recipients include more than just an employee, as family members or qualifying dependents are often included under a plan.

Identify the Scope of Risk

To fully understand the nature of your liabilities in this area, you must take into account the processes in place, the plans offered and the people involved. If there were any past claims made against the company, it can reveal potential weak areas in the process. The full extent of the risk should be covered by employee benefits liability insurance, which means you will need to assess the coverage it provides as well.

Identify the Risk Level

Your risks for a liability claim may be higher if your organization experiences the following:

  • Has high turnover rates with benefit administrators
  • Doesn’t have enough administrators to the workload
  • Doesn’t have highly skilled or experience benefits administrators
  • Has complex or multiple benefit plan options
  • Doesn’t have current, organized or clearly defined processes for administering and overseeing benefit plans and recipients

Managing the risk in benefits administration requires a multi-faceted strategy the includes strong insurance coverage, trained employees and correcting operational issues. Though employee benefits liability insurance is helpful, it isn’t the only solution to mitigating liability risks.