HOW AI IS TRANSFORMING BENEFITS FOR HR TEAMS AND EMPLOYEES ALIKE

An extended labor shortage, competitive job market and shifting employee expectations have made voluntary benefits no longer a luxury, but a strategic imperative for businesses looking to retain top talent.

Recruitment and retention are still high priorities, especially in today’s market—it’s a war for talent. The big problem is when small and mid-sized businesses (SMBs) attempt to hire a candidate from a large or medium sized company, the SMB cannot provide competitive benefits. More than ever, SMBs are desiring to offer choices like dental, vision, disability, accident, critical illness, hospital, pet, legal, direct care, college savings plans, 401k and so much more.

For SMBs, managing employee benefits is often a complex and time-consuming process. HR teams juggle manual data entry, paper applications, compliance tracking, employee inquiries, challenging payroll deduction management and open enrollment logistics, all of which drain resources and increase the risk of costly errors.

But a new era is emerging. Artificial intelligence (AI) is helping SMBs reduce administrative workload while also enhancing the employee experience. Here are some of the most powerful ways AI is reshaping benefits administration.

AUTOMATING ENROLLMENT AND ONBOARDING

It’s not a surprise that SMBs are still doing paper enrollments. This is a high-margin-of-error and grueling task to any HR leader. Onboarding and enrollment are among the most labor-intensive HR functions. AI simplifies them by auto-filling forms, syncing with HRIS platforms and validating data in real time. These tools minimize the risk of errors that can lead to compliance issues, guide employees through complex benefit choices, and even detect and process qualifying life events (QLEs) seamlessly. The end result is a far more satisfied, happier employee. Implementing AI into the enrollment process also creates higher adoption, which is a great concept to keep employees retained.

PROVIDING EMPLOYEE SUPPORT

AI-driven chatbots and virtual assistants are transforming how employees access benefits information. Available 24/7, conversational AI delivers personalized support and handles hundreds of inquiries simultaneously. This relieves HR teams of the burden of answering repetitive employee questions one by one. Sample requests include finding an ID card, asking about the status of deductibles or requesting an explanation of benefits (EOB). These efficiencies are priceless.

ENSURING COMPLIANCE

Responsible use of AI is critical, as is compliance. Keeping pace with evolving federal and state regulations is a constant challenge. AI can track legislative changes, perform automated audits and alert HR teams to compliance risks in real time. This capability is especially valuable for SMBs without dedicated legal or compliance departments. This also helps companies avoid fees or penalties associated with late filings or incorrect submissions. The resulting savings and efficiencies are game-changing for SMBs.

ANALYZING EMPLOYEE SURVEY DATA

Employee surveys are essential for understanding satisfaction with benefits but analyzing them manually is slow and often shallow. AI analyzes both qualitative and quantitative data at scale, uncovering trends and generating actionable reports. It can also highlight underutilized benefits and recommend reallocating resources to higher-value offerings, ensuring packages are both cost-effective and meaningful.

PERSONALIZING THE EMPLOYEE EXPERIENCE

Gone are the days of one-size-fits all benefits packages. Today’s workforce expects, and deserves, benefits that reflect their unique needs, lifestyles and life stages as outlined below:

Boomers (age 59-78+) are either approaching or settling into retirement. Their benefit priorities are shifting towards long-term care security, legacy planning and flexible exit strategies that allow them to transition out of the workforce on their own terms. Employers may consider offering benefits such as phased retirement programs, grandparental leave, healthcare navigation support and legacy planning tools.

Gen X (age 44-58) is juggling caring for aging parents, planning for retirement and supporting their children through college. To accommodate, companies may consider offering caregiver leave and support groups, estate planning workshops, hybrid work flexibility to support Gen Xers’ family responsibilities and college savings matching programs.

Millennials (age 28-43) are in their prime working years and, having weathered several global financial crises and conflicts, greatly value work-life balance and financial wellness. Home office stipends, long-term financial coaching, sabbatical programs for tenured employee and fertility or adoption support for Millennials growing their families are all strategic benefit options.

Gen Z (age 18-27) is the newest entrant to the workforce. They are deeply focused on career development and mental health support. As a result, AI-driven mentorship matching, subscription-based wellness platforms, social impact PTO (volunteer days) and gamified performance reviews may all be a good fit for Gen Z.

Ultimately, incorporating AI into benefits administration increases efficiency, reduces operational costs by minimizing manual processes and errors, improves accuracy and compliance, enhances the employee experience and provides businesses with a competitive advantage.

As the workplace continues to evolve, AI will no longer be a “nice to have” in benefits administration, it will be a necessity for businesses looking to thrive. HR leaders who embrace AI will not only relieve their teams of administrative burden, but also deliver a more personalized, meaningful benefits experience that drives retention and engagement for years to come.