The Benefits Tech Revolution: Where We're Going

In part one of this article, we focused on the state of benefits technology and the role of the broker. In part two, we look at the roadblocks to tech advancements and some exciting developments on the horizon. 

First, let’s look at the challenges. The digitization trend in employee benefits appears to have stalled, with just 31% of employers saying they are mostly digital in 2020 — the same as in 2017, according to a benefit tech study by Guardian Life. 

The rapid evolution of benefits technology gives employers a wider range of options. But that makes it harder for employers to choose the best fit. That’s one reason that 35% of employers say that one of their top benefits challenges is creating a tech strategy. 

Today’s employers contend with systems that are not integrated, a lack of industry standards, and dependence on electronic files and data transfer. Many smaller firms still depend on paper and manual processes while many larger employers have a patchwork of legacy systems. 

Six in 10 employers have had problems installing new benefits on their platform. The most frequent issues are inaccurate payroll deductions and incorrect rules for member benefits eligibility.

EDI is the most common approach to managing and sending enrollment/eligibility data to a benefits administration vendor. However, data quality is one of the more prevalent concerns when implementing a new platform. Issues with incorrect or out-of-sync plan configurations on the platform are often the root cause.

More than 50% of employers expect further increases in the next three years to address their top benefits challenges, including controlling costs, increasing efficiency, ensuring legal compliance, and improving workforce engagement. Utilizing technology is a key benefits strategy among firms that are startups, high tech, and growing fast, as well as those in retail and education. 

API ˗ An Inflection Point 
The market appears to be waiting for the next big innovation. The game-changer could be real-time connectivity with application programming interfaces (APIs) among carriers and platform vendors. There is still low use of API technology among insurance carriers and third-party vendors, but it’s growing. More platforms and carriers are partnering to establish API integrations for a wide range of processes, including setting up a benefits plan, doing enrollment and eligibility transactions, and processing evidence of insurability.

The promise of real-time connectivity has considerable appeal to employers, especially among large organizations, as well as fast-growing startups, retail companies, and those that already have highly digitized benefits administration.

How APIs Can Help

APIs can improve benefits administration in the following ways:

• Policy ˗ API automates passing plan details and rates from an insurance carrier’s to an employer’s system 
• Benefits administration vendor — It reduces setup time and eliminates errors
• Member Benefits ˗ API (EDI replacement) allows real-time transmission of all member transactions from the platform to the insurance carrier. It eliminates the need to build and test EDI files or do weekly reconcilement
• Evidence of Insurability (EOI) ˗ API provides a seamless experience for employees to complete the questionnaire during enrollment and offers automatic status updates to the employee and HR team
• Provider Directory ˗ API gives employees seamless access to provider directories 
• The Overall Enrollment Experience

Only 9% of employers have real-time data exchange for some aspect of their benefits administration (typically payroll or evidence of insurability). But that figure is expected to grow significantly in the next few years. Thirty-seven percent are highly confident that a platform vendor and a non-medical carrier could deliver a solution with seamless, real-time data exchange. Eighty-four percent of those who already have experience with an API are highly confident. 

Contact your LISI Regional Sales Representative about getting the latest tech solutions for your clients.