Our company, ChannelBound, went through a comprehensive evaluation of benefits administration systems with the help of one of our broker partners.  This broker partner helped us select the system and we are rolling it out to their groups statewide.  We listened to a lot of pitches and reviewed a lot of materials from the market and thought we would give our view from a consultant’s perspective that has experience rolling out Customer Relationship Management (CRM) and Enterprise Resource Planning (ERP) Software to Fortune 500 companies.

Why Offer Ben Admin

A benefit administration system puts a layer between you and your customer.  Your customers will fall into one of three categories:

1. No Ben Admin system in place
2. A Ben Admin system is in place and operated by a Payroll Vendor, Insurance Carrier, or other Third Party (Typically Software Vendor or Industry Driven)
3. A Ben Admin system put in place by your firm or your firm’s partner (ie TPA)

Bottom line, controlling system choice can either leave end-clients locked-in and brokers locked-out; or lead to greater efficiency, better customer service and options for brokers to expand.  With such an encompassing intermediary between you and your customer and customer’s employees, it is important to have control of how the system is operated and viewed and the value it deliver to you and your customers.  A good ben admin system can:

1. Increase Productivity for all parties involved: Brokers, Employers, Employees, and Insurance Carriers.
2. Help you as a broker increase client satisfaction and value and thus increase customer loyalty.
3. Increase the touch points and control what your clients are being shown.
4. Uniform Messaging, Compliance and Educational Resources for all Employees.
5. Provide Connectivity of Data within other Software Systems (Payroll, Cobra, ACA, Etc).

Competition for BoR

Before Zenefits changed their model, they caused a lot of disruption and anxiety in the market.  There are still a number of software-centric firms using the same business model to capture BoR.  Big Payroll players also continue to expand their branches to capture additional BoR.

Checking out Crunchbase, both Gusto and Namely have raised close to $200M each to date.  (FYI Zenefits had raised close to $600M).  There are several other similar firms still out there as well.  Their model was to sell software from anywhere from free to $6 per employee per month or so, but make the real money by taking over BoR.

With Big Tech and Big Payroll always looking to grow their revenue and expand their offerings by applying best practices is customer acquisition strategies, the time is now if you haven’t done it, to find the right technology partner to defend and expand your own book of business.

The Ben Admin System Market:  No shortage of vendors. 

Capterra, a leading online software review site, lists 108 Ben Admin systems as of October 2017.  35 were rated 4 stars or higher.  Sifting through the options and making comparisons is tedious.  I give you my take on important selection criteria below.  Just be aware that unsubstantiated software claims and misinformation does occur.  Go with your gut if it’s telling you something isn’t right, and dismiss software sounding too good to be true.

The market for ben admin systems is highly fragmented and evaluation can be difficult.  Partnering with the wrong software partner can lead to:

• Being locked in to a sub-optimal system
• Stress on the part of the broker or end client when trying to get data in and out of the system;
• Lack of integration across multiple platforms and value chain partners
• Shelfware – You have a system that is so hard to configure and use that you waste of lot time and end up not using it

The 5 Pillars of Systems Selection

The system is more than just thinking about Features and Functionality.  It’s the people you will be working with and their ability to deliver value for you now and in the future.   When evaluating any software partner, just keeping in mind these 5 Pillars while going through the selection process will help make sure you do fits you and your client’s business needs.

• Support & Services
• Feature Functionality
• Total Cost of Ownership
• Corporate Vision & Roadmap
• Vendor Viability and Longevity

Support & Services 

Look for great customer support or at least a growing third-party ecosystem that can help you when you need it.  Ask them if they are using something like Zendesk and go check out how thorough their online help is and how quickly they answer questions.    What is in their SLA (Service Level Agreement.)  Do they listen to and take action on customer feature requests.  What security practices do they follow?  What kind of data backup do they have?   Other questions to consider:

• Were you comfortable with the sales process and representative?
• Were your questions answered in an open and honest forum or were they avoided?
• What kind of training is offered and what is the cost?
• What is the average technical support person’s experience level and tenure?
• What is the process for incorporating Feature Requests and addressing software issues?

Features & Functionality

Benefits Supported – Make sure all of the lines of business and any future business lines can be handled.

Eligibility and Enrollment Configuration – Many times you won’t know this until you are actually getting into the complexity of configuring the system.  Consider taking your most complex plan rules and see if the vendor can demo that to you.

UI (User Interface).  Some of these systems look like and are 15+ years old.  There is a legitimate trade-off involved: they should be battle tested, but shouldn’t look like they are from the days of green-screens or Client Server (think mid 90’s).  Most don’t provide a sleek experience for either your Key User or Employees at your client.  You don’t want an outdated ben admin user experience to reflect poorly on your business.

Underlying Technology – Along with the UI, what’s under the hood?  Is the system speed and response time acceptable?  Are they running the latest and greatest software and databases (newer ones will); or are they running on a code base and infrastructure that is 20+ years old?

Security and HIPPA Compliance – Understand what cloud company is running their data center and what security policies and certifications (ie SOC2 Type II) both the vendor and data center provider have put into place.

Carrier Integration – Make sure the carriers you work with have truly been built out and tested.  Know the cost and turn-around time to add new EDI feeds.

Payroll Integration –  Understand which payroll vendors the system integrates to and how that will work with your client base.  Does the vendor offer an API to communicate with outside systems?

Comprehensive Online Enrollment that is mobile ready – Including all benefits, voluntary, FSA, and HSA.  You should be able to manage the employee experience on the system including plan descriptions and decision support.  Allowing for stock videos and / or chat support is nice to have as well.

Qualifying Events – Employees should be able to login and add a spouse or child and other such life events.

ACA Module – The system should allow for production of the ACA Reporting (1094C and 1095C) in PDF format along with efiling with the IRS.  This data can get messy especially in mid-year plan or system changes, so additional consulting support is useful.  The system should robustly and intuitively institute the Look Back Measurement Tracking method as well as directed by the IRS.

Centralized Communications – The system can act as a central repository for all relevant benefits communications.  Furthermore, the system should allow for support of end user questions and enable the broker to communicate relevant changes to employers and group members.

Analytics, Reporting, and Alerts – Review their canned reports and see if they are what you need.  Make sure there is a custom report writer.  If you can get alerts when certain events happen (ie employees who have not enrolled), this will allow you to follow up before deadlines.

Data Imports – Review and understand the templates you will need to fill out in order to import data into the system.  If they are too confusing or do not make sense after a 5 minute review, that may be a sign of things to come when you actually try to add groups

Mass Update – Along with data imports, suppose you would like to do a mass update to all or a subset of employees in a group for a particular attribute, say payroll group, is there an easy way to do this or do you have to go through these one by one?

Data Access – There should a utility to easily export all of your relevant data.  Leading CRMs allow for this and is a must have.

ChatBots – Some trailblazing companies are starting to introduce chatbots into their platform to answer employee questions about their benefits.  We strongly advise testing with many use cases before introducing this type of functionality.  We believe artificial intelligence is the future and commend these companies for being on the edge – but it is still very new technology and could produce unexpected results.  There are a few ways these ChatBots can be trained.  On one end of the spectrum is through true machine learning techniques using massive amounts of training data (think Google). On the other side is to have canned answers to common questions. Many have had the experience of asking Apple’s Siri or Amazon’s Alex various questions.  Some answers are right, some are wrong, some are comical, and some are frustrating.  If the tech titans with billions of dollars in R&D still have a hard time with this, it can be anticipated that platforms with orders of magnitude smaller budgets will also have issues.  We caution you to be careful when introducing this type of technology between you and your clients.  And also make sure the tech actually helps and the vendor is not just brandishing AI / Chatbots as a flashy sales technique to pique interest.

API – How robust is their API?  This may not matter to you now – but it will when you want to add third party software or services to your customer’s portfolio.  API stands for Application Programming Interface – but basically it is a way for different software systems to talk to each other easily (at least for programmers).  APIs allow for automation and communication across you and your client’s technology stack.

Nice to Haves – These are not core ben admin, but nice to have if you are looking for a more comprehensive full HR management suite:

• Time Off Tracking
• New Hire Onboarding
• Asset Tracking
• Recruiting Tools
• Document Repository
• Billing & Invoicing Functionality
• Commission Tracking & Reconciliation
• Employee Communication and Enrollment History

Total Cost of Ownership

This is the price of the software plus the cost to setting it up and supporting it.  Review all fees included or offered at additional cost under the contract.  There are a variety of Cost Structures within the Ben Admin Industry.  Make sure you are aware of all fees, for example:  Set-Up Fees, Annual or Renewal Fees, Per Employee Per Month Fees, Change Fees, EDI Fees per Data Feed, Service Fees such as Cobra or ACA Reporting.  Then also be aware of offsets in fees, for example: Preferred Vendor Placement or Product Commission.  You may be engaging a Ben Admin System that will ultimately compete against the broker.  Ben Admin Systems can leverage the product against the System Cost; some are even FREE (with strings attached).  As most of the products are voluntary offerings, they are reducing employer Ben Admin cost by placing business and services (often at above market cost to the employee).  You may pay higher fees for using a “Non-Preferred” Vendor integration (which means the Ben Admin is contracted directly with competing vendors).  Some Insurers will offer discounts when you install a Ben Admin System that will integrate and support their product offerings.  Use a Ben Admin System that is open-access for you as the broker to include the companies and products your employers choose to offer.

Corporate Vision & Roadmap

Gartner made the Magic Quadrant famous for software evaluation –– Google it if you are unfamiliar.  The Magic Quadrant plots “vision” on the X access and “ability to execute” on the Y access.   This is a good framework to think about – will they meet my needs now and are they focused on adding more value-added services in the future?

Ecosystem:  Does the system have a robust software and third-party services ecosystem?  Are they close off or more open?  Check out Google or Microsoft’s eco-system they have 1000’s of third apps that build on these platforms to address verticals and different types of use cases.  No system can do everything.  Note this goes hand-in-hand with having a robust API.

Is the company investing in Research and Design?  What is on the company’s future release list and are these the types of things you are interested in?

Vendor Viability and Longevity

With the proliferation of vendors, it is important to pick the right horse for the longer term.  Typically, but not always, if you look at the history of software there is an emergent set of winners that take a good portion of the market.  Salesforce did this with SaaS CRM.  That said, new players in CRM are still arriving and addressing different subsets of the market.

What will happen to this fragmented market over the next couple of years?  We think consolidation is highly likely as the underlying data models and business for most of the Ben Admin Systems have a lot of similarity.

Other questions to consider:

• Does the company have outside funding from venture capital?
• Is the company profitable? Or on the road to profitability?
• How many years has the company been in business?
• How many customers and groups do they have on the system?

Putting it All Together

Thinking through these 5 pillars will allow you to make a more informed decision about a strategic partner that will most likely become more and more important in an ever-increasing technology-centric world.