Artificial intelligence has become ubiquitous across HR functions, from recruiting to performance management to workforce planning. With AI-powered tools promising faster workflows, cleaner data and better decision-making, HR teams are evaluating an array of countless tools that vary widely in capability, compliance safeguards and real-world usefulness.
But when it comes to benefits administration — a space defined by regulation, risk and nuance — ultimately, the opportunity with AI is not to replace human expertise but to augment it.
AI is Changing Benefits Administration
Benefits administration is a complex subject encompassing a wide range of programs (including HSAs, FSAs, HRAs, ICHRAs, commuter benefits, COBRA and retiree billing) each with its own regulatory requirements, documentation standards and financial consequences for missteps.
AI is already making an impact, with many platforms touting fully integrated artificial intelligence systems designed to streamline operations and workflows. The prospect of time savings for HR and benefits professionals is among the most tangible early wins, especially for tasks such as claims review and adjudication. Routine tasks are becoming easier and faster with the aid of AI. What once took HR teams hours of manual review (e.g., determining whether an FSA expense is eligible based on itemized receipts) can now be accelerated through intelligent automation that filters and processes claims, including those that need additional review.
AI is also beginning to power user-centered conversational agents that help both administrators and participants find answers quickly, reducing dependency on help desks and ticket queues.
But AI technology alone cannot interpret every nuance of benefits compliance or regulatory complexity. In benefits administration, a misinterpreted plan rule, such as expense eligibility/reimbursement design, or a missed COBRA deadline, can lead to incorrectly paid claims, costly penalties, lost coverage and reputational harm. These outcomes require experienced human professionals to prevent and correct.
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The Risk of Artificial Intelligence
One of the top concerns from HR teams when evaluating benefits administration technology is compliance and accuracy, both of which are non-negotiable. Federal, state and municipal regulations evolve constantly, and administrative errors can have real consequences.
Over-reliance on AI without proper oversight is a real-world risk. AI agents must be strictly governed and reviewed because the data and information it has access to can be highly sensitive information. Organizations must safeguard protected health information under HIPAA and separately ensure that personal financial data is not shared or exposed by mistake. Such errors not only risk compliance exposure but may lead to regulatory fines – including up to $50,000 per incident for HIPAA violations.
Another potential risk arises if HR and benefit teams assume AI decisions are always correct; they may skip critical verification steps. In a highly regulated industry like benefits administration, even small mistakes can have significant consequences.
AI systems can produce confident but inaccurate outputs, sometimes called “hallucinations.” Without human review, these errors and misinterpretations of claim rules can lead to incorrect claim approvals, misclassification of benefits or flawed guidance to participants.
For example, a mistake in COBRA processing can cause a plan administrator to miss important notification deadlines and potentially result in someone losing their healthcare coverage. These mistakes are not only costly to the business financially, but they can also harm its reputation.
Purpose Built Intelligent Automation Works With Human Teams — Not Instead of Them
AI might detect patterns or anomalies, but only an experienced benefits professional can determine when an anomaly requires intervention, assess whether an unusual expense is truly eligible under complex tax-advantaged rules, and judge whether plan details have been interpreted correctly.
That’s why it’s so important for HR teams to ensure they use a technology solution that works with them, not instead of them.
In contrast to blind automation, purpose-built intelligent automation offers a better solution, as it integrates with existing processes and augments human expertise. Features such as automated data mapping, error-flagging routines and anomaly detection help reduce manual work while maintaining reliable control. For example, intelligent workflows can assist benefit administrators with data mapping by taking raw inputs and accurately assigning values, but trained professionals still have the option to check and confirm everything is correct.
Platforms built this way emphasize embedded quality safeguards, such as intelligence for duplicate detection, error-only reporting, and control totals. Such deliberate safeguards help preserve data integrity across imports, exports, and reconciliation steps, allowing HR teams to focus on strategic work rather than data wrangling.
It still allows automation to support the work, but does not completely replace HR or human expertise, providing the best outcomes and reducing risk.
Responsible AI Deployment Matters
When evaluating benefits administration technology, focus on purpose and outcomes, not hype. HR leaders should evaluate how AI tools are governed, tested and controlled. Key questions to ask include:
- Regardless of the technology used, does the platform simplify benefits administration while strengthening compliance?
- What types of data does the AI agent access (and is sensitive information properly restricted)?
- How are AI-powered workflows audited for compliance and accuracy?
- Does the provider have a track record of avoiding legal and oversight failures tied to automation?
- Can users access knowledgeable support for nuanced questions that AI tools struggle to answer?
- Does automation reduce error-prone manual tasks without introducing new risk?
Asking these questions helps separate meaningful innovation from buzzwords and ensures that investments in AI-augmented technology translate into better experiences for benefits teams and the employees they serve.
The Bottom Line
AI is reshaping HR at a rapid pace, but in benefits administration, where accuracy, compliance and human well-being intersect, technology should never replace human expertise. The most effective path forward combines intelligent automation with the judgment, experience and oversight of trained professionals.
HR leaders who choose automation to enhance teams and prioritize real expertise as much as innovation will protect compliance, improve the employee experience and achieve the best outcome.
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