Benefits tech firm Namely on Monday announced it is a launching a private benefits exchange for mid-market companies (50-1,000 employees) in cooperation with insurer Cigna.
The Namely Exchange will launch with 12 health insurance plans from Cigna, from which HR administrators will select up to five plan options to offer their employees. “For now, it’s just going to be offering Cigna products,” says Rob LaHayne, vice president, benefits at Namely. “Our eventual goal is to potentially introduce other carriers, but for now we’re starting with Cigna.” The exchange is being built on technology built by Namely.
Namely, an HR, payroll and benefits platform for mid-sized companies was founded in 2010. In the first quarter of 2016, more than 50% of the company’s new clients choose Namely as their broker. Namely now insures more than 20,000 lives.
“We’ve been a broker for a little over a year and a half at this point,” LaHayne explains. “Our goal in building the exchange is to provide options that were, No. 1, providing them with speed to market and, No. 2, providing them with lots of flexibility and choice.”
In addition to medical insurance, the Namely exchange will contain pre-defined plan options for dental, vision, disability and life insurance that employers can offer. Elections and changes will automatically transmit to Cigna, allowing for seamless enrollment. Benefits deductions automatically feed into Namely, so payroll can be processed accurately.
The small- and mid-size markets are attractive to Cigna, says Barbara Gniewek, principal at consultancy PricewaterhouseCoopers. “This all-in-one solution is a natural fit for Cigna,,” she says.
In February 2014, the insurer launched a separate private exchange, an announcement that came on the heels of many private exchange launches in 2013, but was one of the first from a carrier. The insurer selected bswift, who was acquired by Aetna in November 2014, as the exchange’s delivery platform. Cigna declined to answer questions about the new and existing exchanges.
Unique value proposition
The Namely exchange offers a different value proposition than other exchanges, but is not likely to have a significant impact on private exchanges, Gniewek says. It is unique in that is not a straight private exchange, as it looks to more of a single-carrier exchange and does more than exchange services. “It gives other exchanges something else to chase,” she adds.
Tactically, it might be a big deal for Namely, “since it will be presented as a validation of their HR technology,” believes Nelson Griswold, president at agency consultancy Bottom Line Solutions.
“But, strategically, at the end of the day, the Namely/Cigna private exchange … amounts to ‘much ado about nothing,’ since the market continues to resist the private exchange siren song,” Griswold, an EBA columnist, adds. “Until medical premiums increase enough to force employers to adopt the defined contribution funding model that underlies the private exchange model, private exchanges will continue to generate much more press and conversation than actual lives on the exchange platforms.”
Joe Markland, president and founder of HR Technology Advisors, agrees. “I think this is simple noise and no new invention here. This will not be a big impact,” he says. “Namely is in the benefits business as a broker. I would say this is just another move by a company that sells HR/payroll systems and has entered the benefits business.”
In launching the exchange, Namely will work directly with employers. It will enable the company to have “speed-to-market and to have that great out-of-the-box solution that gives them [employers] the flexibility and choice, especially for those groups rolling out of a PEO and are facing a confusing benefits space right now,” the company’s LaHayne says.
The exchange will work with fully- and self-insured employers. Since many of Namely clients are growing businesses, it “makes sense” for the exchange to offer the full spectrum, including administrative service-only plans, LaHayne says. “[For example] you’re 100 employees now, it makes sense to have a fully insured plan, get a year or two of experience and then evaluate whether or not it makes sense as you grow to move to a level-funded program and then eventually potentially a self-funded program.”
“Namely is a fast-growing and innovative player in the market,” said Patty Fontneau, president of benefit exchange and technology solutions for Cigna in a statement. “Speed to market and the ability to offer employers of this size more choice and flexibility are very important. Namely is helping businesses with HR and benefits administration, and is helping their employees choose from quality Cigna plans that are more personalized to their individual or family’s needs.”
Additional reporting by Employee Benefit News Editor-in-Chief Andrea Davis
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