More TPAs step in to manage benefits: Prudential
By Paula Aven Gladych
A new study by Prudential shows that many companies are turning to third party administrators to outsource their benefits administration.
The “Sixth Annual Study of Employee Benefits: Today & Beyond” found that more than two-thirds of brokers/consultants interviewed felt that the benefits decision-making process has changed in the past five years. Only 40 percent of plan sponsors felt that the process had changed.
Two-thirds of plan sponsors say four or more areas of their organization are influential in the employee benefits decision-making process: 45 percent say four to seven areas are involved, 21 percent say eight or more areas are involved, and only 34 percent report zero to three areas are involved to some extent.
Plan sponsors who say decision-making has changed to a great extent over the past five years are more likely to think their employees are satisfied with their benefits program (46 percent saying very satisfied vs. 22 percent for some change and 23 percent of those neutral/no change).
Many plan sponsors (61 percent) say they use a third-party administrator to outsource benefits administration for their retirement plan; this is the most commonly outsourced benefit. Nearly half outsource administration for medical insurance, while roughly two-fifths use TPAs for life insurance, disability insurance, and dental insurance.
In general, roughly two in five plan sponsors (37 percent) say they are increasing the use of third party administrators (outsourcing benefits administration) to some extent to manage costs. Among those using this strategy, 65 percent indicate it has been successful in achieving desired cost savings.
These numbers are higher than reported in 2007, indicating that there has been a substantial increase in outsourcing benefits administration over the past four years – for all benefits. When asked about outsourcing in 2007, results ranged from a high of 47 percent for retirement benefits to a low of 29 percent for disability insurance.
The research was conducted via the Internet during April and May of 2011 and consists of three distinct surveys: A Plan Sponsor Survey among 1,500 benefits decision-makers; a Plan Participant Survey among 1,200 full-time employees age 22 or older, who work for a company with at least 50 benefits-eligible employees; and a Broker/Consultant Survey among 744 group employee broker/consultants, who work full time for a company with at least 50 employees
The research was conducted for Prudential by the Center for Strategy Research, Inc., an independent Boston-based market research firm.
Originally published on BenefitsPro.com