Zenefits announced today it is offering employers an Affordable Care Act compliance tool for free — a tactic some industry experts say raises the bar again for competing benefit brokers, but others claim is too little, too late.
Zenefits is rolling out an ACA compliance automation tool to its benefits customers that “makes it simple for businesses to comply with the ACA new coverage and reporting requirements, and avoid costly penalties from the IRS for missing any deadlines,” says CEO and co-founder Parker Conrad.
See also: “IRS allows employers to test run ACA reporting”
The Zenefits tool promises, among other things, to verify whether an employer’s health plans meet minimum essential coverage requirements, calculate and determine which employees are full-time and part-time, notify an employer when an employee is about to qualify as a full-time employee based on hours worked, track by month and year which employees qualify for coverage and whether they and their dependents have been offered the required level of coverage, and automatically offer coverage to those who qualify to ensure compliance.
The HR tech company’s announcement promises to get the benefit industry and employers buzzing again, but some say the compliance tool is late with its market entry and brokers will feel little impact.
“Zenefits is a little late to the game. Companies and traditional brokers have been talking about the ACA for years. They’ve had technology in place for many months to support their client’s compliance efforts,” says Phil Noftsinger, business unit president for CBIZ Payroll.
See also: “Zenefits has crossed the line”
The ACA’s requirements become mandatory for employers in 2016, and their first deadline is in January.
“It’s important Zenefits provide this technology,” Noftsinger says, adding, “I’m glad to see they’ve gotten it in before the fourth quarter.”
With reporting deadlines quickly approaching in 2016, however, Noftsinger wonders if Zenefits is ready to handle the increased traffic the late offering will bring.
Regardless, he says the announcement should have little impact on benefit brokers.
“Brokers should do what brokers do best and that’s talk to their clients about it,” he suggests. “Zenefits is making a lot of progress in the marketplace by attempting to commoditize what we do. We talk to our clients.”
Zenefits’ tool is not a replacement for the role of the broker, however, he says.
See also: “Why Zenefits isn’t anti-broker”
“There are a number of solutions that a good broker that is knowledgeable about the marketplace can talk to their client about,” he says, “But being ACA compliant is more complex than just giving someone a tool. It’s about sitting down and talking about an employer’s ACA footprint based on the company size. It’s about making sure the employer is positioned well in terms of whether the people on staff need to have benefits and what benefits they need, etc.”
“Technology without consultant work is no solution at all,” he adds.
Joe Markland, president of HR Technology Advisors, however, says Zenefits’ foray into ACA compliance raises the stakes for brokers, yet again.
Zenefits’ new offering is indicative of a trend with employers wanting an all-inclusive solution with HR, benefits, and payroll together, he says, and is likely a result of competition with the payroll companies handling ACA tracking and reporting. He predicts Zenefits will eventually merge with, buy, or be bought by a payroll company.
The demand for payroll services from employers, he says, will lead to increased competition for brokers.
“Many employers view the services of Zenefits and companies like ZenPayroll as more valuable than what a broker delivers,” he says.
“Brokers have responded to Zenefits by partnering with some HR and benefits vendors that also have onboarding. The problem with that is the employer market will want payroll with it, too,” he says. “The bar has moved again on brokers. And it will move again in six months. Brokers need to stop playing catch-up and start looking at how they can differentiate themselves. Their answers aren’t going to come from outside their firm in the form of some partnership with a technology vendor, but from the inside.”
He says another thing brokers have to improve upon to keep up with Zenefits’ success is increased marketing.
“Zenefits called my firm three times and sent four emails in two weeks. Brokers can’t just say they have what Zenefits has. They need to be able to market to their existing clients and prospects. Marketing matters,” Markland says.
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