White Paper
January 21, 2026
The High Price of “All-in-One” Benefits: Why Consolidating Benefits Into Your HRIS Costs More Than It Saves
There’s a reason “penny wise and pound foolish” has survived centuries of business wisdom. What looks like a cost-saving move up front can end up being the most expensive decision you make. And nowhere is this truer than in how employers approach benefits administration.
Right now, many HR leaders are hearing the same pitch from their HCM software vendors: “Why not consolidate? Pay us a little more, and we’ll handle your benefits enrollment and administration too.”
At first glance, the offer sounds irresistible. One point of accountability. One system for everything. One invoice to manage. Who wouldn’t want that?
But as with most too-good-to-be-true platforms, the real costs don’t show up until later. And when it comes to something as high-stakes as employee benefits—where compliance, employee health, and financial security are all on the line—those hidden costs can be enormous.
This isn’t about defending a business model. It’s about recognizing the risks of treating benefits as an afterthought, and why dedicated expertise is the safer, smarter investment in the long run.
The Myth of HRIS Consolidation
HCM vendors have perfected the art of bundling. Payroll, time tracking, recruiting—add one more line item to your existing contract, and you feel like you’re getting a deal.
But benefits administration isn’t payroll. It isn’t a “nice to have.”
It’s one of the largest line items in your budget. It’s a heavily regulated space. It’s also a deeply personal employee experience—touching health, family, and money.
When benefits get reduced to an HCM system’s lowest-priority feature, you’re inviting complexity, compliance exposure, and employee dissatisfaction into your organization.
Expertise Isn’t Optional: Why HRIS Platforms Can’t Handle Complex Benefits Populations
Consider the reality for most employers. You’re not administering a single, uniform plan for a homogenous workforce. You’ve got union contracts, salaried and hourly groups, retirees, grandfathered benefits, multiple carriers, multiple generations, and evolving legislation.
An HCM vendor’s benefits module wasn’t built with that level of complexity in mind. Their “templates” force you to adapt your programs to fit their system. Any deviation—a new vendor integration, a carve-out group, or a compliance nuance—requires IT workarounds, consultants, possible fees, or months of waiting for updates.
Contrast that with a dedicated benefits administrator. This is their core business. The technology, the processes, and the people are built around benefits from the ground up. Complex eligibility? Multi-tiered retirees? Union rules? They’ve seen it all, and they’ve solved it before.
The difference isn’t abstract. It’s the difference between a system that bends to your strategy versus a system that forces your strategy to bend.
Hidden Costs Add Up Faster Than You Expect
On paper, the bundled price from your HCM provider looks cheaper. But here’s what those numbers don’t show you:
- Implementation costs. Many HCM systems require six-figure setup fees—often managed by outside consultants your team still has to oversee. That’s hundreds of hours of internal IT and benefits staff time consumed before you even go live.
- Call center staffing. Benefits questions don’t stop at 5:00 p.m. or during open enrollment. With an HCM model, you’ll need to staff up internally or contract out to a generic call center. Neither option comes close to a specialized benefits team that knows the ins and outs of COBRA, ACA, or plan design.
- Additional internal team support. While the HCM model handles much of work associated with benefits administration, support from your internal team is still needed – and, if you downsized your team when you first outsourced benefits administration, changing back to an insourced model will require team support beyond what you currently have. This translates to cost to cover salary and benefits for the added staff.
- Vendor integrations. Carrier feeds aren’t free. In an insourced model, every file to every vendor is a separate cost, multiplied by the number of plans you offer.
- COBRA and ACA. These services don’t magically appear in the HCM bundle. They’re farmed out to third parties, creating a fragmented service model where employees bounce between vendors.
- Regulatory exposure. The most expensive costs are the ones you don’t budget for. Miss a notice deadline. Botch a secure data transfer. Overlook a plan eligibility nuance. The fines, audits, and reputational damage can run into hundreds of thousands of dollars annually.
In fact, when you tally these categories, the “cheaper” HCM option can cost triple what outsourcing to a dedicated benefits administrator does. One recent analysis showed insourcing benefits administration drove annual costs to nearly $700,000 versus $215,000 with a specialized vendor.
Over three years, that added up to more than $1.2 million in extra spend—all for a worse employee experience.
The Employee Experience Isn’t a Side Issue: How Poor Benefits Technology Damages Employee Experience and Retention
It’s easy to frame this conversation as pure dollars and cents. But let’s not forget why you’re offering benefits in the first place.
Benefits are a massive investment precisely because they matter so much to employees. They’re about keeping families healthy, protecting financial security, and making sure employees feel supported at work.
When employees can’t navigate a clunky HCM interface, or when they can’t get straight answers from a generic call center, it undermines that entire investment. Confused employees make poor benefits choices. Poor choices lead to higher claims, lower satisfaction, and increased turnover.
Specialized enrollment tools—chat support, guided plan recommendations, mobile apps with ID cards—don’t just make benefits easier. They make them effective. Employees end up in plans that fit their needs, saving both them and the employer money.
That’s not a “feature.” That’s the ROI of doing benefits administration right.
Agility in a World That Doesn’t Sit Still: The Cost of Inflexibility in Benefits
Benefits aren’t static. Each year brings new carriers, new plan designs, and new regulatory requirements.
In a consolidated HCM model, every change becomes a project—complete with requirements meetings, coding, testing, and additional fees. Small changes can take months. Larger changes risk derailing open enrollment altogether.
In a specialized model, change is the norm. The systems and staff are built for rapid reconfiguration, clean testing, and smooth launches. That agility isn’t just nice to have. It’s the difference between keeping pace with your strategy and being shackled by your system.
Future-Proofing Through Innovation: How the Innovation Gap Puts You at Risk
The benefits landscape is about to change faster than it ever has. Artificial intelligence isn’t a side show. It’s reshaping how employees evaluate plans, get guidance, and access care.
If you tether your benefits to an HCM platform, you’re locking yourself into yesterday’s priorities. Their R&D dollars go to payroll and timekeeping. Benefits modules get whatever’s left over—occasional bolt-on “upgrades” that patch old tech and introduce more friction than they remove.
That’s not just inconvenience. It’s exposure. Employees will expect intelligent, personalized guidance. Competitors will offer it. If your system can’t deliver, your workforce notices—and they leave.
Meanwhile, compliance rules will only get more complex. AI can flag risks and prevent errors before they become fines. If your benefits stack isn’t built for that, you’re carrying the liability.
The choice is stark: Embrace a partner that is leading the AI revolution in benefits—or get stuck with a legacy module that leaves you behind, paying more for outdated tools that keep you locked out of the next evolution of benefits.
The Safer, Smarter Path: Choose Benefits Expertise Over HRIS Add-Ons
So, should you consolidate with your HCM vendor just because it looks simpler and cheaper up front?
If benefits were a side-line, maybe. But benefits are not a side-line. They’re one of your largest investments, a critical compliance obligation, and a deeply personal employee experience.
That’s why expertise matters. It’s why what looks like savings now can easily spiral into higher costs, greater risk, and more employee frustration later.
The real question isn’t: “how do I consolidate vendors?” The real question is: “How do I maximize the return on my benefits investment while minimizing risk?”
The answer is to choose expertise. Choose the partner whose entire business is built around benefits administration.
Choose the path that saves you in the end.
* All of the statistics mentioned are from our internal source in 2025.
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