Category Archives: HR and Benefits Technology

There is a Ghost Lurking in the Benefits Broker World

Posted on September 2, 2014 | 1 comment

There is a ghost lurking in the benefits broker world. Many brokers are chasing it. I hear about it all the time when speaking to brokers. Yet, nobody can find it. Many claim to have seen it. Others claim to be the ghost. But I have yet to find it.

Is there really a ghost or is it in everyone’s imagination? I have come to the conclusion that this ghost is not a ghost after all. It is an idea. It is how to be different. Brokers are looking for that one thing that when they go out to a prospect and say let me show you something, everyone will want it. Many, many brokers are looking for this “ghost”. And most are still searching. They are searching for this dream or hope to find that silver bullet – that one thing that will separate their firm from their competitors that few can find.

The vendors calling on brokers know they are looking for this ghost or silver bullet and they promise to have found it. “I got the silver bullet”‘ the vendors promise. “I have that one thing where if you partner with me your dreams will come true. Prospects will flock to you. Just sign here and give me $1500 per month.” I hear this claim all the time. And brokers call me up and say “What do you think of so and so?” I ask, what are you looking for? I get no answer. It’s like they are looking for some undetermined thing. They take the meeting with the vendor. They spend the hour and a half and see some demo. But they can’t tell me what they are looking for. It’s a ghost.

Some brokers think they found it. They show me some technology or claim to have some unique service. I look at the technology. I understand the service. But I don’t see the silver bullet. They have not found the ghost. They are paying the $1500 and have shut down their search because they have found it. Or at least they think so. They want me to say it is the silver bullet but it isn’t so I can’t. And the search goes on.

You see the ghost is not a Private Exchange, or some technology. It is not compliance alerts or wellness newsletters. It is not a HR Call Center or some web-based HR Library. The ghost is inside you. It is an idea yet to hatch because most are looking for someone else to deliver it. I personally believe there are many opportunities to be different. To rattle the market in a way where people will start talking. But it starts with the person in the mirror. So my message is stop chasing the ghost. The vendor that knocks on your door with that great idea is knocking on everyone’s door. There are big opportunities to make this benefits world better. But one must start on the inside and not out. As Mark Cuban once said, The best way to predict the future is to invent it.”

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Posted in Agency Operations, Employee Benefits Distribution, HR and Benefits Technology

Benefits Is Going Mobile – Is Your Benefits Firm Ready?

Posted on August 20, 2014 | Leave a comment

I have had a few experiences over the past few months that have convinced me that Employee Benefits is going to go mobile faster than most may believe but not in the way most benefits brokers would think. My first experience was with my own staff. We launched a web and mobile system to manage our HR, Benefits, and Payroll on July 1st. What was amazing is that 100% of my employees used their mobile phones within the first 5 weeks to request a vacation day. What was more interesting though was that my employees all of a sudden became more aware of their benefits. One individual commented that she did not know the company provided disability insurance and another mentioned how he went to the doctors and forgot his medical card and then remembered seeing the benefits button on his Smartphone. What I found most interesting is that none of my employees went to the smartphone to see what their benefits were. They went there to request a vacation day and “bumped into” the benefits button.

The second experience started with me seeing a statistic (that I can’t find now) that said that 60% of the American workforce did not have internet access or email at work. As an office worker myself in a predominantly office based market that did not seem realistic, but I saw that stat when I was at a conference in Vegas. And if you walk around the casinos in Vegas it is easy to see how this stat could be true. So I decided to test this stat when speaking at a conference just yesterday in Richmond, VA. I was speaking about HR/Benefits technology to an audience of HR people from various employers. I first asked the audience “if you had something real important to communicate to your employees how do you do it?” One woman answered that she sends an email. I then asked the crowd to raise their hands if their employees don’t have a work email. Half the audience raised their hands. I followed this by asking what percent of their workforce they thought owned a Smartphone. Almost all that answered said they thought all their employees owned smartphones.

If you add these two stories together it draws a picture of how employers are going to communicate with their employees and how employees are going to access information. It is going to be same the same way we all do in our personal lives and that is via smartphone apps and text messaging. The thing about smartphones is that they are always with us. We stare at them when we kill time at a doctor’s offices, during commercials when watching television, and between innings of our kids baseball games. We consume information on our smartphones because it is easy.

I started this by saying benefits is going mobile but not in the way most benefits brokers would envision. I would imagine benefits brokers would look for some standalone benefits mobile app. However, when you actually look at how employees utilize their benefits few employees use their benefits beyond an office visit or getting a prescription in any year. So, remembering where to find information one almost ever needs is a challenge. I saw a stat the other day where the average American has 18 users names and passwords in their lives. How are employees going to remember a user name and password to some app or website they never use? The answer is to put the benefits information right next to something employees use frequently such as requesting a vacation day. For this reason deploying a solution that has everything an employee would need from their employer in one spot is the best way to communicate benefits to employees.

Now let’s quickly address text messaging. Imagine I am an employer and I have 30 people that did not go online to enroll in their benefits and there are only 3 days left to enroll. For 50% of employers their employees don’t have a company email. Wouldn’t it be real easy to send these employees a text message? We all text in our personal lives because it is a quick and easy way to communicate. I believe text messaging will become a common form of employee communications in the near future.

The opportunity exists for benefits brokers to take a leadership position by helping employers realize this opportunity to leverage mobile and text messaging to improve the way employers administer and communicate benefits. It simply makes sense. So, let’s go!

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Posted in Employee Benefits Distribution, HR and Benefits Technology

Here is What a Private Exchange Is and Isn’t

Posted on May 10, 2014 | Leave a comment

Over the past 9 months I have been speaking at conferences or sitting on panel discussions where the topic was Private Exchanges. In some cases the audience consisted of employers and other times the audience was filled with benefits brokers. On each occasion I asked the audience the question, “What is a Private Exchange?” In all circumstances there was never any agreement on what a Private Exchange was. Yet in my presentation I highlight several studies one which says over 70% of employers would consider switching to a Private Exchange. I am wondering what these employers thought a Private Exchange was when they were answering the question. Seventy percent of employers want something that nobody can agree on what it is. And just the other day I was asked by a broker if I could help them respond to an RFP where the employer was asking if the broker (who is supposed to be an independent advisor) had a Private Exchange.  I can’t imagine what response we would get if we asked the employer to define what they meant by a Private Exchange? I think if the broker asked she would not get the business so I did not advise she ask. What I do know, whatever a Private Exchange is, the broker needs to have one. Maybe she will have a better chance to get the business if she had 3 or 4 Private Exchanges. Who knows?

So I am going to define what a Private Exchange is and isn’t. Maybe it will start right here where we all will begin using the same language to describe what these new benefit offerings are or aren’t. One may ask who anointed me the king of defining this. My last name is not Webster (as in Merriam Webster Dictionary). Nobody anointed me. But if no one is going to take the lead why not me. I don’t have a horse in the race. I am not a broker, not an insurance company, and not a technology vendor wanting to promote my technology. I also don’t sell insurance to employers. So I have no vested interest in whatever Private Exchanges are. I will say that I do understand the technology as that is my business. And I know what Defined Contribution and Cafeteria plans are as I sold them in the late 80’s. So I do have some knowledge in the area.

I am going to keep this simple. To me a Private Exchange is intended to be a Private version of a Public Exchange. The entire US population is being educated by the government, media, and other interested parties about what an Insurance Exchange is. To take the word Exchange, and make it something different from what the populace is being told an exchange is, I will say is somewhat “deceptive”. In fact, when I do ask employers what a Private Health Exchange is they usually describe it as a marketplacewhere an individual can get access to a wide range of health insurance options from many insurance companies. In my personal life I think of an Exchange or Marketplace as someplace that has many options from many companies.  I know the difference between an Apple Store and Best Buy. I know the difference between buying a product at the NIKE, SONY, or Apple website versus Amazon. And I know all you reading this do too.

So using this logic of the way the world understands the term Exchange or Marketplace then the majority of the Private Exchanges being promoted today by benefits consultants and brokers, insurance companies or technology vendors, are not Exchanges or Marketplaces. If there are not multiple products from multiple vendors available where the buyer is free to choose what they want from the menu then it is not an Exchange. Multiple products on a technology platform from the same company is not a Private Exchange. And I don’t want to hear the argument that they have Medical, Dental, and Life from different carriers. That is like saying you can buy a TV, stereo, and mobile phone from the same store but you only have one vendor option for each type of product. While there are some states where real Exchanges exist (CA and MD Small Group Markets) and they do exist for individual insurance, for the majority of the group market there are no Private Exchanges. You can offer more medical options and provide a different methodology to fund these options, aka Defined Contribution, but don’t call them Private Exchanges. You are confusing the buyers.

I’m pretty sure this article won’t stop those with agendas from calling these things Private Exchanges and I will have to advise my broker customers that they may have to play the game because they don’t make the rules, but hey, I tried.

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Posted in Employee Benefits Distribution, HR and Benefits Technology, Private Exchanges, Uncategorized

For the Record – The HR Technology Advisors Position with ADP

Posted on April 9, 2014 | Leave a comment

In today’s business world getting your message out is both easier and more difficult. With the internet, Smartphones, Twitter, Facebook, LinkedIn, blogs, and more, it is really easy to publish your message for the world to see. You type, hit a button, and it is available to the world. In that sense it is easy to get your message out. It also easier for your competitors to get their message out. The hard part is getting anyone to listen and getting someone to find your message in a world of information overload. Whether you like it or not you have to play the game. If you don’t spread your message and define yourself others will and not always in the way you want. When that happens you will have to respond. Just look at the “noise” created during a Presidential campaign. The candidates spend as much time trying to define or label their opponent as they do defining themselves.

That gets me to the purpose of this article. I am about to launch a marketing campaign that I know will be misinterpreted by the market. Maybe saying misinterpreted is the wrong word because those who directly hear my message will more likely understand what my message is. What I do anticipate is that there will be noise created by others who do not hear my message that will misrepresent my message in the market. Some simply don’t want to take the time to listen and others may have their own agenda. This article is intended to clearly state my message for those that want to understand my position as it relates to this issue with ADP.

My firm, HR Technology Advisor (HRT), is launching a big marketing campaign highlighting how employee benefits brokers can leverage ADP to deliver a Private Exchange or Defined Contribution plan to the employer market. This concerns brokers because many see ADP as a competitor. Other technology firms who we do business with will not like it because ADP is a big competitor to them and I am promoting an idea based on a competitor. To many brokers, payroll companies, and HR and Benefits Technology vendors, ADP is arch-enemy number 1. As a consultant to benefits brokers and by extension an objective advisor to their clients when choosing technology, this “perceived” favoritism to ADP may not sit well. The key word is perceived. Let me get into the details.

At a high-level some people don’t understand the core purpose of my (our- Don Rowe is my partner) company, HR Technology Advisors. HRT is first and foremost a consultant to benefits brokers. Our job is to help benefits brokers understand how technology is impacting their business; how it will impact their clients HR and Benefits; know who the players are; and help position their firm competitively in the market. And then, as a paid representative of the brokers firm, we assist the brokers with direct client and prospect situations where we help them advise their clients on HR and Benefits technology and sometimes help them get prospects by participating in prospect presentations.

This is where ADP comes in. According to our statistics at HRT, employers are predominantly looking for technology that includes either HR and Benefits functionality or HR, Benefits, and Payroll in a single platform. Many have heard me say employers don’t want one system to track vacation days, sick days, and performance reviews; another to track benefits and enroll employees; and a third to process payroll. In fact, in 2013, close to 90% of the employers we assisted wanted a system that included HR and Benefits or HR-Benefits-Payroll all in one. And according to a recent market survey we did, ADP has a 46% market share of those employers using technology for Benefits Enrollment. Paychex was second with 29% and the next closest was 7%.  So whether a broker likes ADP or not the majority of any brokers’ clients are going to be using ADP as a tool to manage their benefits. It is not a broker’s choice as to what technology an employer wants to use to manage their HR-Benefits-Payroll. It is also not our choice at HR Technology Advisors. As a consultant to employers we work with ADP more than any other company because they have the largest market share. I equate this to the average benefits broker who may work with their local Blue Cross plan more than any other insurance company. They do so because in most markets Blue Cross has more than 50% market share. That does not mean the broker is solely a representative of Blue Cross nor are we only a representative of ADP.

As a consultant to brokers we use this knowledge to help our broker clients position their firm more competitively. While many brokers are running from ADP because they think they are a competitor (We addressed this in an article written in 2009 titled, “ADP – Friend or Foe” – download at www.joemarkland.wordpress.com ) we understand the value that brokers can bring their clients by having a service model to support those clients that have ADP or want ADP. Trust me, many clients need help with their technology and most brokers aren’t delivering the help. Here are a few questions I have asked brokers.

–          Have you ever helped your client test their ADP Benefits Enrollment System for accuracy?

–          Have you ever analyzed the pages employees would be accessing when enrolling in their benefits and see how well the benefits information is presented?

–          Have you ever uploaded a 2 minute video on the ADP platform that explains to an employee what Critical Illness Insurance is?

I have never had a broker answer yes to all of these questions. Helping clients with ADP is a service clients will value.

Now in 2013 Private Exchanges hit the market. Many brokers scrambled to sign-up with some benefits only technology vendors. At the same time we continue to engage clients who repeatedly tell us they want HR-Benefits-Payroll in one system. I found this conflict between what brokers were delivering  and what clients wanting to be very interesting so I wrote an article titled “An Alternative Approach to Private Exchanges” (also on my blog) and held webinars with the same title. In my article and on my webinar I predicted that ADP will be the largest Private Exchange technology vendor within 2 years. Not because I am going to make them but simply because more employers are using their system to manage their benefits than any other platform. So, as a consultant to brokers and employers I have helped employers figure out how to use their current ADP platform as a Private Exchange of Defined Contribution plan. Why? Because that is what employers wanted. They did not want to use another system simply to provide their employees with more medical options in a Private Exchange. So we worked hard with ADP to develop a model using third-party technologies, content from insurance companies, and internal programming resources to help employers leverage their ADP system as a Private Exchange. My marketing campaign is designed to bring our methodologies and message to the market so that employers can get what they want and the brokers that deliver this solution a competitive advantage.

I want to finish this by addressing the other technology vendors we have worked with at HRT. As I have stated we represent the brokers interest and by extension their clients. We have sold and implemented solutions from many vendors and there are many great solutions in the market. Yes, ADP has 46% market share, but they don’t have the other 54%. That being said I had one vendor ask me why I am doing this with ADP and not them. My simple response is because nobody asked. If a HR-Benefits Technology vendor does not offer the ability to administer a Private Exchange simply ask and I will show you how.

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Posted in Employee Benefits Distribution, HR and Benefits Technology, Private Exchanges, Uncategorized

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The Coming Obsolescence of Stand-alone Benefits Enrollment Systems

Posted on December 23, 2013 | 1 comment

Let me start by saying that I realize the title of this article alone is going to be met with objections and criticism from many in the benefits technology business, some of who are my friends. It is also not something that I wish upon the industry. But as a consultant to the industry I have seen the trends for some time and the time has come to declare that the demise of stand-alone benefits enrollment systems is in sight. And it is time for all who either own such a system, sell such a system, or use such a system to prepare for the inevitable.

The beginning of the end started in 2006 when ADP acquired Employease, which at the time was one of the largest benefits enrollment vendors in the space. This was followed in 2007 by the acquisition of Benetrac by Paychex. These leading payroll firms made these acquisitions not because they wanted to be in the benefits enrollment business, but because they recognized the opportunity and the increasing market demand by the employer market for a single system to manage HR-Benefits-Payroll. Since that time they have quickly become the leading benefits enrollment companies in the U.S. with ADP controlling approximately 45% of the market and Paychex 26%. [i]

While I recognized this trend as early as 2002 I first wrote about it in an article published in Employee Benefit Advisors magazine in September 2009 titled, “Payroll Firm, PEO’s, and BPO’s Have Got it Right”. (See this in the Article Section in my blog at https://joemarkland.wordpress.com/past-articles/) In this article I pointed out that employers would be looking for a “single system that stores all HR, benefits and payroll information”.  Many employers don’t want one system to track someone’s pay, another to track benefits, and a third to track someone’s vacation days, performance, and other data that an employer may track on an employee. Employers don’t want to makes changes to 3, 4 or 5 systems if an employee simply changes their address. And “for employee self-service, accessing one system to see all pay, benefits and time-off information is much more user-friendly”. I often compare this merging of systems to the iPhone. At one time I had an iPod, a camera, and a cell phone. Now the iPhone and the rest of the smart phone market has all three features in one.

At the time I had written the article and on many occasions since I have claimed that the transition to a single platform would occur in about 5 years. We are now a little over three years since the article and based on recent market activity and my assessment of that activity, I still believe this to be true. My belief is based on statistics gathered from my own company’s customer base. As an HR and Benefits technology advisor to benefits brokers, and by extension their clients, we conduct needs assessments and recommend HR-Benefit-Payroll solutions to employers. They use this analysis to make purchase decisions. We work with anywhere from 20-40 employers per month and have been doing so for about 10 years. Over the last 36 months we have seen a huge shift in demand with stand-alone benefits enrollment systems moving from 55% down to 10% of our activity. The following chart shows our data as to the type of systems employers have been requesting in our assessments.

Benefits Enrollment Only

HR-Benefits-Payroll

2011

55%

45%

2012

35%

65%

2013

10%

90%

The HR-Benefits-Payroll column in the above chart may represent systems that either are HR and Benefits or HR-Benefits-Payroll. Keep in mind that we are introduced to these employers by benefits brokers, so one would think the statistics would lean more to benefits enrollment only systems. That is not the case. Employers, by a 9-1 ratio, are predominantly looking for a single system. This statistic not only plays out for new customers. We are also witnessing a significant migration of existing clients that use benefits enrollment systems convert to a single HR-Benefits-Payroll solution. Over 95% of those that have changed systems have transitioned to a single platform.

Other than the obvious, which is the employer’s desire for a single system, I attribute this rapid conversion to the following:

  1. Increase in number of vendors – Any competitor to ADP or Paychex has had to develop similar capabilities. While some are still evolving, the number of vendors offering these capabilities has grown tremendously creating a greater awareness in the market while giving employers more options
  2. Reduction of HR Staff – Employers want to the reduce costs related to corporate overhead. HR is one area. Therefore efficiency in HR by leveraging technology is a goal for many employers.
  3. Compliance – HR and Benefits is getting more complex. Employers need to organize their data to stay compliant. The reporting needed for the Accountable Care Act is an example of this. Payroll Companies have led the way here with this type of reporting.
  4. Employee Self-service – Employers do want to expand employee self-service in an easy to use way. A single point of entry to all HR-Benefits-Payroll information provides a better and easier employee experience while reflecting well on the company.

Many benefits brokers and benefits enrollment companies will debate these statistics. Around the industry benefits enrollment vendors are having an outstanding year in 2013. I expect 2014 to be just as promising. I believe this can be attributed to several reasons. The first reason is that many benefits enrollment systems are either fully funded or partially funded by benefit brokers and/or insurance companies. Brokers and carriers continue to use technology and what I call “giveaways” as a differentiator or to sell product. In the past it was benefit websites. Today it is benefits enrollment systems and HR Call Centers. These free or discounted systems and services creates a false perception of market demand. Many of these systems were implemented without ever having gone through an analysis to determine employer needs. Why should they, in many of these situations the employer is not making a purchase decision. It is the brokers, carriers, or whoever is funding it that is the customer of the benefits technology vendor. I would estimate that close to 50% of the stand-alone benefits enrollment systems are funded by some third-party.  Of systems my firm has implemented that number is closer to 75%. Competition in the benefits brokerage business has increased the number of “free” enrollment systems but this does not represent a real increase in employer demand for such systems. Give away anything for free for a day and I will show you an increase in demand.

Now along comes health care reform and the threat of reduced compensation from medical insurance. How many stories have you read about how a broker can make up for lost medical commission by selling more voluntary and worksite products? This push has resulted in an even greater funding of benefits enrollment technology by insurance companies that sell voluntary and worksite products.

For a while I thought the development of Private Exchanges would give the benefits enrollment companies some reprieve. I still think it may for a year or two. With Private Exchanges the technology bar has been raised and the enrollment technology vendors have had to add functionality to handle defined contribution plans and provide decision support tools to help employees make better insurance purchase decisions. In my opinion this technology edge will be short-lived as all other vendors will have to add these capabilities. In my short experience with Private Exchanges I still have found the majority of employers wanting to run their Defined Contribution Plan or Private Exchange within their existing HR-Benefits-Payroll technology. Using third-party tools I can Private Exchange-ize almost any HR-Benefits-Payroll system. With all these new employee contribution methods and the increase in voluntary products I still find the ease of making the payroll deductions a primary requirement of the employer. This once again puts the single system vendors in the driver’s seat.

My predictions come in a year when benefits enrollment company Benefit Focus went public and raised around $75 million in their IPO after showing a previous 6 month operating loss of $15.2 million[ii] . More recently Towers Watson acquired benefits enrollment company Liazon for $215 million. I think both may disagree with my labeling them as benefits enrollment technology companies but that is how I see them. That is the goal isn’t it – to enroll people in their benefits? As for the money aspect of these transactions I say “good for them”. They capitalized on the opportunity. However, neither of these events changes my opinion as to where the market is going.

If broker competition, health care reform, the push to sell more voluntary products, and the advance of Private Exchanges is creating more demand what is going to stop the advance of benefits enrollment only solutions? The answer is two-fold and includes increased employer demand on one side and the ever-growing vendor market providing the supply. In the end logic will prevail and employers will get what they want which is a single system; and the army of payroll vendors, HRIS vendors, HR Consultants, and even some benefits brokers will educate the market and deliver the solutions. I guarantee that brokers who work with me will be delivering such systems. Think of this for a minute, ADP has around 800 sales people calling on employers every day and they are just one company. Collectively there are thousands of sales people calling on employers to deliver these solutions. They will move the market.

The transformation has begun but will still take some time. In the near future mergers will happen between enrollment vendors, payroll vendors, and HR vendors to meet the market demand. Some stand-alone enrollment systems will survive to meet the needs of those clients with very complex benefits or those who want best in class solutions. This will more likely be in the 1000+ employee market, even though many larger companies such as Nokia with 50,000 employees are implementing a single system. (See http://www.computerweekly.com/news/2240210585/Nokia-Solutions-Networks-HR-rejects-best-of-breed-for-best-of-platform ) In the less than 1000 employee marketplace I predict that by the end of 2015 you will see an even larger percentage of the market convert to a single system for HR-Benefits-Payroll. If you are in the benefits business then you will have
to make some changes to prepare for this market change. Or, I could be wrong. I presented my facts so that you may decide.

[i] HR Technology Advisors 2011 Study

[ii] Street Insider August 14, 2013

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Posted in Employee Benefits Distribution, HR and Benefits Technology

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It’s Time to Simplify Benefits

Posted on December 22, 2013 | Leave a comment

Since I have been in the benefits business, either as a distributor or as a technology advisor, benefits communication has always been a problem and a topic of discussion. Brokers and employers have been developing fancy benefit booklets or creating detailed benefits statements all in an effort to get employees to understand and appreciate their benefits. Now with the advent of the web, brokers and employers have built websites and developed videos to give employees access to benefits information 24/7 often only to take them down a year or two later because nobody is using them. Trust me, I have seen hundreds of utilization reports and very few people are using these sites. Yet, after all this effort the majority of employees still don’t understand their benefits. I say enough already! Why don’t we try to make things easier? Well I have some suggestions.

Let’s start with the health insurance business. When I got in the business in 1986 many plans were still straight deductibles and coinsurance. In fact, one of the most popular products was the Guardian Insurance $100 deductible 100% plan. While I realize this type of plan was not sustainable financially, I will say it was simple. Concurrently there was the growth of HMO, PPO, and POS plans. Along with that came all kinds of copays and new rules on whom you had to see first before you saw someone else. Now there are HSA’s and HRA’s sold with high deductible plans. I think it’s funny that they call high deductible plans, Consumer Driven. Wouldn’t it have been easier if we just took a straight $100 deductible 80/20 to $5000 plan from 1986 and adjusted the deductible and coinsurance every year for inflation?

Today health insurance is very confusing and it’s going to get worse. I think my prescription drug card today has like 8 different copays. Recently I had treatment for a health condition and between my primary care physician, the specialist, the hospital, and the lab, I have so many bills I had to bring them all to the office and try to figure them out. Each bill had about 6 different figures on them. Between what they were billing, the discounts, copays, deductibles and coinsurance I could not figure things out. It’s been two weeks and the bills are still on my desk. There is no way the average American is going to figure this out. I have such a headache from this I need to see a doctor.

While I do realize the logic for creating these monster plans, it simply hasn’t worked. The health insurance business is becoming like the tax code. Everyone is manipulating the system to modify behavior. If you want people to buy more cars then you give a “Cash for Clunkers” tax credit. You want people to buy more houses you lower interest rates and give people an interest deduction. You want people to stop using Emergency Rooms you give them a $100 ER deductible. And that gets me to my prescription copays – I simply punt on that one. When I go the Pharmacy I just say “tell me what I owe you”, and I assume the pharmacy is telling me the truth. I have no idea whether the drug is name brand, generic, generic plus, or whatever new category has been created. Enough already!

Personally I think this whole country could operate on about 10 easy to understand health insurance options. As an employer and employee would I care? No. I don’t need all those options. I would bet that I could develop 10 plans that would be within 3% actuarially of every plan in America today. What I believe is that other than all the little nuances in health care plans (that nobody understands) the majority of plans in effect today are almost exactly alike. Imagine how easy it would be for employees, doctors, hospitals, etc… to understand and administer such plans. This would not eliminate competition. It would make Aetna’s Plan 1 the same as Blue Cross and United Plan 1. I would go to the doctor and say I have Plan 1 with Aetna and everyone would understand. To make things even easier I would go back to straight deductible and coinsurance plans. Obviously this is not going to happen with ObamaCare. Just think of what a $100 deductible 80/20 to $5000 plan from 1986 would look like if you adjusted the deductibles and copays for inflation.

I could go on and on with other insurance coverages. Your Spouse can buy Voluntary Life equal to 50% of the employee amount but the employee can get no more than 3 times earnings to a maximum of $150,000 when combined with the Base Life paid for by the employer. And if the employee is 65 and is subject to a reduction schedule it needs to be multiplied by 65% assuming his birthday is closer to the last renewal date than the next one. What?

If you are a benefits broker or insurance company the idea of making things easier may be considered blasphemy. I can hear all the arguments already. But one really has to honestly ask, does anyone really care about all these plan differences? Personally I don’t think so.

 

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Posted in Employee Benefits Distribution, HR and Benefits Technology, Uncategorized

What Would Steve Jobs Do if He Were a Benefits Broker Today?

Posted on December 22, 2013 | 1 comment

One of the things my firm does at HR Technology Advisors is look for new and unique technologies that can change the way employers and employees manage their HR, Benefits, and Payroll. The HR and Benefits industry, like most others, has had its share of new technology vendors offering the latest and greatest solutions that they claim can change the world. In this market, like others, there will be winners and there will be losers, but the winners may change the way things are done forever.

As a practice I conduct regular educational webinars for benefits brokers introducing new ideas that can be leveraged to generate new business and often highlight some forward thinking HR and Benefits Technology vendor. To my surprise, the most common response I get from brokers attending these webinars is “Nobody is asking me for this”. Whenever I hear this comment it makes me think of Steve Jobs. You see, Steve Jobs was the total opposite of “Nobody is asking me for this.” When I read the book about Steve Jobs by Walter Isaacson I took many notes (on my iPad) which included one of my favorite Steve Jobs quotes.

“Some people say, ‘Give the customers what they want.’ But that’s not my approach. Our job is to figure out what they’re going to want before they do. I think Henry Ford once said, ‘if I’d asked customers what they wanted, they would have told me, ‘A faster horse!’’ People don’t know what they want until you show it to them. That’s why I never rely on market research. Our task is to read things that are not yet on the page.”

Now think back to the time you saw the first iPhone commercial. (You can see it here: http://www.youtube.com/watch?v=4acWkNihaxc ) If you were like me, then you were thinking, “Wow, I want that.” But prior to that commercial how many of you were sitting on your couches thinking that you would really like a handheld device with a glass screen where you tap on icons to watch a movie, browse the internet for a restaurant, find that restaurant on a map with a phone number, and then press on the phone number that pops up a phone so you can make a reservation? Unless you were a Trekkie (Star Trek Groupie) then you most likely weren’t “asking for this”. Steve Jobs and Apple “changed the game” and delivered something that once seen, everyone wanted. I don’t know how many people bought an iPhone right after seeing the commercial but Apple has sold over 300 million of them worldwide. Imagine they sold over 300 million of something that nobody was asking for.

Now many of you may think this is crazy to not ask your customers what they want. Don’t confuse what Steve Jobs was doing with not caring about what your customers think. This is where I am going to quote another young Billionaire, Mark Cuban. In his book titled, “How to Win” I found a quote that addresses this issue. It is as follows:

“Your customers can tell you the things that are broken and how they want to be made happy. Listen to them. Make them happy. But don’t rely on them to create the future roadmap for your product or service. That’s your job.”

There is a distinct difference between listening to your customers and driving the vision of your business. It appears that Steve Jobs, Mark Cuban, and Henry Ford share the same philosophy. And to quote Mark Cuban again:

“The best way to predict the future is to invent it.”

So if Steve Jobs were a benefits broker today what would he do?  I am not going to claim to know but I would imagine if Steve Jobs were a broker he would think of a new technology to make things easier.  He would ask himself and his team to imagine what would be the best system for an employee to access work related information. How would they purchase benefits? How could they learn about them? How would an employee transact an enrollment? How would they request a vacation day? How can they access pay information to do their taxes?  What would be the perfect system for an employee? What I do know is that if Steve Jobs built such a system people would say “Wow! I want that.”

Now I don’t think I can elevate HR and Benefits Technology to the same level as the iPhone because the iPhone’s launch was almost a “one of its kind”. Nor do I think someone has built a HR and Benefits solution that would match what Steve Jobs would have built. However, the idea and opportunity to bring something new and innovative to a prospect or customer that they “aren’t asking for” exists in the benefits business much like any other industry.

That being said, I recently did see a solution that I think if a CEO saw it they would say, “Wow! I want that.” Because I believe the majority of CEO’s want to show their employees they are forward thinking.  They want their employees to be happy, healthy, and productive. They want to be efficient and save money. They want to promote their brand and culture to their staff. They want to eliminate business risks related to HR and Benefits or for that matter, in any area of the company. And they want to inspire their employees to help move their business forward much like you may want to move yours forward.

Just imagine a system where an employee logs in and can immediately see all the things that are important to him or her. They can see how many vacation days they have left, the balance of their 401K, their FSA balance, and see their YTD pay. They can watch a video on Wellness and do a Personal Health Assessment. They could get tips on finance from Dave Ramsey and even go through a whole financial plan online. They could enroll in their benefits and do online chat with a benefits counselor. They could purchase products at a discount through payroll deduction. They could chat with their co-workers and participate in topic based discussions. They could do all this from home or work on smartphone, tablet, or Smart TV without having to log into ten places or remember ten user names and passwords. They would have just one.  Just imagine!

For someone who wants to change the way they do business and deliver this type of solution the opportunity is there today. It does take hard work and a commitment to change. It requires a vision and attitude that there is a better way. As a technology consultant I know the technology exists to get this done yet less than ½ or 1% of employers are delivering this type of experience to their employees.

The good thing about solutions like this is that CEO’s are not sitting on their couches watching commercials promoting these types of solutions. It’s not because they aren’t watching TV, it’s because solutions such as this aren’t sold through TV commercials. Someone has to get in front of the CEO and show them. And then I believe they will say,” I want it”. The question is who will show them first.

So if Steve Jobs were a benefits broker today what would he do? Well one thing I am quite sure of is he would not say, “Nobody is asking me for this”. He would find a way to be the innovator because he believed “Innovation distinguishes between a leader and a follower.” (“The Innovation Secrets of Steve Jobs,” 2001).  And I will add that being an innovator is more fun too.

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The Unintended Consequences of Private Exchanges for Employers

Posted on December 21, 2013 | Leave a comment

As I was preparing a presentation that I will be giving about Private Exchanges to an employer group in Charlotte and I had somewhat of an Ah Ha moment. I had been reading so much about Private Exchanges and had seen so many demos of Private Exchange technology that all the noise was kind of getting in the way of my own independent thoughts. I had to give an audience my view of Private Exchanges and I came up with several ideas one if which is my AH HA moment thought. So here it is:

“Private Exchange Technology and their Decision Support Tools may result in too many people choosing the wrong solution relative to what an employer may be trying to accomplish.”   

This is one of my thoughts so let me explain. One of the big benefits of moving to a Private Exchange is that employees will get more health insurance options. Rather than the employer choosing a one size fits all approach they will give employees a menu of options and let them choose from the menu.  And with those options they will provide technology to guide employees through the decision process and direct them to the solution that best meets their specific needs. The idea is that the low utilizers or healthy people will more than likely choose lower cost options while the older, higher utilizers will choose the higher cost options. This obviously assumes the lower cost options have higher deductibles, co-insurance and copays and maybe a limited provider network while higher cost plans will have lower deductibles and co-insurance and a broader network of providers. Thinking of it this way one needs to ask “Is this the employer’s goal.” It may not be. There may be unintended consequences associated with Private Exchanges.

There is a statistic by Dave Ramsey, the personal financial guru that says, “40% of employees admit that stress over money significantly impacts their work productivity”. There have been times in my life where that was true for me personally and I am sure I have employees who work for me today that would say the same for them. When it comes to employee benefits what do I want to give my employees? I would say one thing is “peace of mind.” Isn’t that what insurance is supposed to be? Try driving around in your new car without insurance and see how you change your driving habits. From my perspective an insurance policy is intended to protect a person or family from financial harm or ruin that could result from an unanticipated large expense.” The key word is “unanticipated”.

The other thing I want to do is protect them and their family from financial stress or ruin in the event of an unanticipated event. I buy them Life Insurance to help their family in the event of death. Disability to protect them from financial ruin if they are disabled. And I don’t want them to go bankrupt or become financially stressed from an unanticipated health event for themselves or a family member. Sure paying for office visits or dental is something in the insurance policies that I provide, but do I lose sleep because an employee may have to pay 50% for their kid’s braces on some 3 year payment plan. No. Or what if they have to pay $20 for an office visit. No. A couple going to the movies is more than $20.

One of the problems with Private Exchanges and or Public Exchanges is the focus on the little stuff. Look at all the chatter about ObamaCare. All we heard about was getting physicals paid and oral contraceptives paid for. Now that people are signing up for Public Exchanges we are beginning to hear about deductibles in to $4000 – $5000 range and out of pocket maximums in the $10,000 – $15,000 range. Is that what people need – free oral contraceptives and $10,000 Out-of-pocket maximums?

So now along comes Private Exchanges whose purpose is to give employees more options. These Private Exchanges come with Decision Support tools to help employees choose the right plan. They all ask employees questions like, “How many office visits do you expect in the next year”? Or “how many ER visits do you expect”? Are you kidding me? Who can predict the number of office visits or ER visits in the next 12 months? As consumers are we supposed to “time the market”.  And is “timing the market” what insurance is really all about? I recently saw a study from Intermountain Healthcare that says 90% of their highest claims from one year to the next are different people. I have personal experience where last year I had some issues to address where I did exceed my deductible but this year I hardly spent anything on health care at all. Who knows what next year will bring?

That gets me to the title of this article. Will offering more health care options with decision support tools result in employees “taking their eye off the ball”? Will employees take on risks they can’t afford? We are in an economic environment where a large percent of our population are living pay check to pay check. And we all know that many of the younger people don’t have the money in their banks to fund the costs of higher deductibles and co-insurance associated with lower cost plans.

Now I hear the naysayers already, “our decision support tool will not suggest that someone to take on a risk they can’t absorb”. However I have not seen any decision support tools ask questions like “Do you have $5000 in savings to pay for the costs of your deductible?” Most start with “How many office visits do you expect in the next 12 months?”

Now I realize health insurance is too expensive for many. Helping those with little money to save some money on health insurance is a good idea. That’s not the point of this article. My main point is that a possible unintended consequence of more employee health care options is exposing employees to financial risks they simply can’t afford. Is that what employers want when they provide insurance for their employees?

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Private Exchanges – Technology is Not the Differentiator

Posted on December 13, 2013 | Leave a comment

I was talking to a benefits broker the other day about benefits related technology, more specifically about Private Exchange technology and health insurance Decision Support Tools, and the broker made the claim that “such and such vendor (I won’t name names) had the best decision support tools on the market. It is powerful technology, he said.” I thought this was odd and wondered how this broker drew that conclusion. He then proceeded to say that Decision Support Tools will be the big difference in the Private Exchange market.  Now that claim stopped me in my tracks and I immediately had to disagree.  

One thing I know about technology is that it is always changing. Just think of your car, your cell phone, and your TV. Has that technology changed over the last 3-5 years? For anyone to think that one vendor is going to perpetually have the best of anything is, in my world, crazy.  And a tool that can help employees decide which of three or five health plans they should choose is not powerful technology. The Space Shuttle is powerful technology. A website that takes someone through some fancy screens that has some back end logic is not. Such screens (I can’t get myself to say technology) with back-end logic is easily duplicated in months if not weeks.

Let’s look at this another way. Let’s assume you have the best technology. What percent of the market buys the best? Does McDonald’s have the best hamburgers? Does Taco Bell have the best Taco’s? Are there more people driving Ferraris or Toyota Camry’s. Do more people shop at Walmart or …..? You get it. There is often a price difference between the best and what the majority of the market can afford or are willing to buy. And for the record, I don’t know too many benefits brokers whose strategy is to sell the highest priced products.

So if you are a benefits broker and think you have found that silver bullet, that powerful technology, that is going to separate you from the pack, give me a call and I will show you a long list of companies who are going to make sure that one company does not rule the day.  And if you want to see powerful technology go out at night in a dark place and look to the sky and watch all the satellites fly by. Then I may agree you are looking at powerful technology.

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