The Benefits Tech Revolution: Where We Are Today

The adoption of benefits administration and enrollment technology has grown significantly in the past three years. The COVID-19 pandemic has likely accelerated the trend by bringing added costs and complexity, according to a benefit tech study by Guardian Life. Thirty-five percent of employers say that one of their top benefits-related challenges is to create a benefits tech strategy.
 
Part 2 of this article will address the biggest roadblocks to benefits technology and what’s on the horizon.
 
The Role of the Benefits Broker
The study reveals a real opportunity for brokers to bring tech solutions to their clients. A majority of employers want and expect a benefits broker to help guide their tech decisions. But just 19% of employers have discussed benefits technology solutions with a broker in the past year.
 
When selecting and managing an enrollment platform, most employers use their benefits broker, but work directly with the vendor to implement and manage the platform. Employers that are most likely to rely on a broker to help source and manage their platform are small to midsize firms that are mostly dependent on paper processes and find managing benefits to be increasingly complex. 
 
Challenges That Drive Benefits Technology
Employers are turning to technology as benefits administration has become increasingly complex. Larger firms, those in the high-tech and education sectors, and young startups are among the most likely to feel challenged in managing their benefits programs. Several factors add to the complexity including:

• Expanded benefit offerings 
• Increased voluntary/employee-paid benefits, which require more flexible billing and eligibility options, but lack insurance industry standards
• Evolving state and local regulations that make it hard for multi-state employers to maintain compliance without external support
• Demands from employees for valuable benefits and a seamless experience
• More than 90% of employers use a technology system/platform to manage some aspect of their HR or benefits functions. Nearly two-thirds say their benefits processes are more digital than paper-based. Highly digital organizations tend to be very large corporations or small startups in the high-tech sector

How Employers Are Using Tech Today
Nearly 3 in 4 employers report using an in-house system, software, or third-party platform for their benefits enrollment. In the past year, 14% of employers implemented a new enrollment platform for their nonmedical group benefits. Large employers and fast-growing, high-tech startups are most likely to have adopted a new platform in 2019. 
 
Integrating benefits systems is on the rise. Payroll is the most common function to be integrated with other human-capital management (HCM) modules while about 50% of employers use stand-alone platforms for benefits enrollment and administration. Midsize employers (100–1,000 employees) are the most likely to integrate their enrollment with another platform, such as a payroll system, rather than use a stand-alone platform.
 
Larger employers are more likely to use electronic data interchange (EDI) for collecting enrollment and eligibility data while smaller firms are more dependent on paper processes. Only 9% of employers have real-time data exchange for some aspect of their benefits administration (typically payroll or evidence of insurability), but it’s expected to increase significantly in the next few years. More platforms and carriers are partnering to establish API integrations for a wide range of processes, including benefits plan setup; enrollment and eligibility transactions and updating; and evidence of insurability processing.
 
Thirty-four percent of employers would recommend switching to a leading carrier for nonmedical group benefits with real-time connectivity for member transactions (enrollment and eligibility updates) and plan updates (configuration, rates, renewal). API connectivity has even greater appeal among large organizations, as well as fast-growing startups, retail companies, and employers that already have highly digitized benefits administration.
 
How Technology is Paying Off:

• Employers are most likely to say that technology has resulted in efficiency gains in enrollment, record-keeping, and eligibility processing
• Employers that have moved most of their benefits functions from paper to digital report much higher employee satisfaction with the user experience
• Workers who have a benefits experience that’s more digital tend to have a better view of their employer’s benefits package
• A digital benefits experience contributes to more positive employee perceptions about the value of their benefits
• A more digital experience leads to a better understanding of their benefits

Contact your LISI Regional Sales Representative for assistance in bringing the latest tech solutions to your groups.