The Invisible Line Between Private Exchanges and Benefits Administration Systems
by Wes Steele
Whether you call healthcare cost trend 6% or 11%, there is one thing beyond dispute. Healthcare costs are rising. Costs have more than doubled over the past 10 years. Employers are looking for ways to project and control costs – wellness programs, high deductible health plans, analytics, spousal carve outs and surcharges, tobacco distinct rates, apps making primary care easy to seek, transparency tools, and more.
When the idea of private exchanges first emerged, predictably the question was asked. Is a private exchange going to save the employer money? Uncomfortably, the answer seemed to be no. Why then, was it predicted that tens of millions, if not hundreds of millions, of Americans would get their coverage from private exchanges? And what happened to this trend? Is it still going to happen?
There was no doubt a technology revolution for benefits management was imminent. There’s a perfect convergence of forces – benefits departments needing tools to manage new regulations and a generation of millenials entering the workforce buying groceries online from organic grocer Fresh Thyme and having the groceries delivered to their house same day via Amazon Prime without ever setting foot in a grocery store (I myself am guilty of this in the suburbs of Indianapolis). Last time I ordered Papa John’s pizza, I did it on-line so that I didn’t have to go through the painful ordeal of reading my credit card number to an actual human being. Is there any doubt I’ll enroll in my benefits on-line and be happy about it?
Where is the momentum?
But wait a minute, during this period of time when private exchanges are supposed to be booming, it doesn’t seem to be happening? Meanwhile, benefit administration technology is launching across America like a rocket ship. So what is the future, benefit administration systems, or private exchanges?
An unexpected answer
Trick question. Let’s highlight the difference between Private Exchanges and Benefit Administration Systems – there isn’t one.
Somewhere, an expert is raising their hand to disagree with me. Hold your horses they are saying! Exchanges can have multiple carrier options! It’s more of a shopping experience! Exchanges go beyond offering benefits via employer payroll deduction!
I hear you, I’m just not buying it. Quietly over the past month, a software system called Benefit Selection by Selerix Systems is doing some interesting stuff. Selerix is a traditional benefits administration system. But, they are making defined contribution benefit management easier. They are improving the shopping experience with both medical insurance and voluntary benefit decision support. They are enabling Amazon-like suggested benefits. And, lastly and the kicker, they are finalizing integrations with a company called Piedmont which enables the platform to accept not just ACH payments, but credit card payments as well. Companies like Washington National Insurance Company will approve “Association” payroll business and accept direct pay premiums without the burden of payroll deduction for employers. In other words – this benefit administration system can be used by individual employees without the involvement of their employers. Now tell me, does that sound like a benefit administration system, or a private exchange? Clear as mud.
The end for paper enrollment?
Is Selerix Systems alone in this development? I doubt it. The market demands a solution to help employers offer efficiency and process flexibility. Paper based enrollment is senseless. How 1990! Wasn’t the internet actually invented to destroy paper enrollment? The end of paper enrollment is near, and if you’re an employer reading this article asking yourself “should I install a benefit administration system or private exchange?” the answer is clear – when you’re installing one, you effectively install the other. And you’re setting yourself up for a 21st century enrollment process, which is critical to your future business success.
What do employers need to know?
It’s not a matter of whether you’ll go electronic – just a matter of when you’ll go electronic. And if you look at exchanges and benefit administration systems and say to yourself “the difference is not very clear to me” you will not be alone. Because as a professional that installs and services benefit administration software for middle America’s corporations, it isn’t clear to me either. What is clear, though, is that installing a system is a step in the right direction.