Employee Benefit Adviser Article by Ray Seaver of bswift
CHICAGO, IL — Friday, April 1st, 2005
By now, most brokers have been approached by companies that provide Web-based benefit enrollment and administration. But within the past year, many have been hearing from a much more pressing constituency: Clients.
It may come as a surprise that most companies do not already offer their benefits on the Web, considering how many business processes have gone electronic. Recently, my company came across a very large media organization, where executives told us employees still use paper enrollment forms. But only now, with the convergence of carriers' acceptance of electronic data interchange, universal Internet access by employees and a more confident economy, is the field of play readied.
Therefore, an increasing number of employers are searching for ways to cut their benefit costs and streamline their processes. Naturally, they are turning to their brokers for direction and guidance. Brokers who understand and prepare for this reality will be well positioned to retain and increase their books of business.
What are Web-based solutions?
Web-based enrollment and administration allow employees to self-enroll, update and view their benefit plans online. Employers then can administer those benefits electronically. Basic employee data is usually fed from an employer's existing payroll system, an HRIS or, in some cases, from an Excel spreadsheet. Most systems allow employers to post messages for their employees, enforce plan rules and run detailed reports. Electronic data interchanges with carriers eliminate the need to ship boxes of enrollment forms and reduce the potential for error.
The question is not if Web-based benefits will catch fire but when it will happen. Inevitably, employers will see this technology as an efficient way to manage processes that currently are paper-based. Now is the time for forward-thinking brokers to position themselves to answer their clients' questions.
Many brokers have noticed a recent uptick in client interest in enrollment and administration technology, and are using it to their advantage. Vic Petersen, owner of Utah-based FirstWest Benefit Solutions, notes, "Technology is becoming a bigger part of our value proposition all the time, and has actually helped us grow our business dramatically over the past year."
Innovations in the benefits world, from the PPO to the FSA, follow a familiar pattern. First, they are introduced with initial chatter and excitement. Then, there is a lull, during which the innovation matures and evolves. Finally, it takes off faster than anyone had anticipated and one year becomes the "it" year. Web-based enrollment is an idea whose time has come.
Carriers, at one time reluctant to accept EDI feeds, have been emboldened as practical and HIPAA-compliant protocols have evolved. Also, a recent Nielsen//NetRatings study found that three out of four Americans now have Internet access in their homes; this number does not include those individuals with Internet access at work, school and libraries. Finally, as the economy has picked up steam, employers are once again embracing innovation. Indeed, the inevitable drive for lower costs and higher efficiency means that the days of the paper form are numbered.
Broker or administrator?
Within the last year or so, two distinct models have evolved for brokers to deliver Web-based solutions to their clients.
In the "broker" model, brokers forge a partnership (or multiple partnerships) with Web-based solution providers. Some brokers charge clients for these services, and some even earn commissions; others subsidize the service in order to deepen client relationships. This model gives clients choices while allowing brokers to focus on their core competency of benefit design. This works best for brokers who want to remain the primary point-of-contact for their clients but don't want to blur the line between their role and that of a technology provider.
On the other end of the distribution spectrum is the "administrator" model, in which brokers buy enrollment and administration technology, market it directly to their clients and take on the responsibility of direct client support. This requires brokers to become active in technology management as well as the day-to-day business of benefit administration, making it advantageous to the adviser who wants to diversify operations and take on a greater role in administration. The administrator model's pricing is typically a "wholesale" rate, with the broker being responsible for setup, training and client support.
Rewards vs. risks
At one time, offering Web-based solutions was seen as a risky proposition. The dot-com boom introduced dozens of companies offering quick solutions with questionable reliability and little understanding of benefits. Many brokers got burned and horror stories abounded. Internet access was less universal, and many carriers were reluctant to set up EDIs between employers and carriers. Now, however, the industry has matured and the remaining players offer a variety of robust options for brokers to explore.
The most obvious risk for brokers now lies in choosing the models and vendors they wish to embrace. Care must be taken so the chosen model complements the broker's strategic goals. As when selecting a COBRA administrator or TPA, the broker must wisely choose a technology partner that matches his own style and values.
The balance has shifted in favor of Web-based solutions, and the greatest risk has become that of inaction. Brokers owe it to themselves and their clients to brush up on the technology that will drive their business into the future. Soon, technology will be seen as a critical part of any comprehensive benefits package, and brokers who fail to recognize this risk losing out to those who do.
Author(s): Ray Seaver
Source: Employee Benefit Adviser
Date: April 1, 2005
bswift is changing the world of benefits administration by combining deep expertise and a passion for technological innovation with a unique consumer-driven approach. Partnering with enterprises nationwide and serving millions of employees, bswift offers cloud-based technology and services for online enrollment, interactive decision support, ACA compliance reporting and employee engagement. bswift also provides access to consumerism, product and consulting solutions needed to build a benefits program specialized for both employers and employees alike. For more information about bswift, an Aetna company, visit www.bswift.com.