5 reasons benefits enrollment will go electronic this year
During the late ’90s, when employee self-service was making its break into the HR market, many of us were mesmerized with the new vendors that entered the market demonstrating Web-based benefit enrollment solutions.
At that time, the concept of no longer having to use forms, applying eligibility rules automatically, collecting elections and delivering enrollment data to carriers and payroll systems seemed like a game-changer in our business. That was more than 15 years ago, and yet today many employers are still using paper to enroll their employees.
This seemed counterintuitive for several reasons, including the cost efficiency of self-service technology over manual work, reduced errors in data and insurance calculations, and overall faster processing of benefits. Why hasn’t client adoption met expectations with mid-sized employers during the last two decades? The answer usually falls into areas such as lack of budget or a company culture or environment is not suitable for this type of automation.
Recently, a number of trends are pointing companies in the direction of benefits administration. Overall adoption is growing at a much faster pace than we have seen in a long time. This can be attributed to the following five factors, which are worth noticing:
1) ACA compliance — In order to comply with The Affordable Care Act, employers need to have a cost-effective method of tracking monthly eligibility, elections and waivers of coverage which electronically enrolled benefits provide. Once tax filing is due in the first quarter of the following year the benefit administration system will complete the 1094-C and 1095-C forms and assist with the electronic filing. Also, benefit administration systems may support variable hour measurements for ACA compliance.
2) Complete human capital management — In the past, small- and middle-market companies purchased payroll systems without much consideration for other areas of HR automation. Over the last 10-plus years, several affordable human capital management solutions have entered the market and have grown significantly in popularity. These solutions are delivered as software as a service model, meaning they are licensed through subscription and accessed over the Internet. SaaS human capital management offers a full suite of functionality, from recruiting to payroll, and generally provides a benefits module with Web-based enrollment and benefits administration.
3) The new generation of workers — Millennials (employees born between 1980 and 2000) hate working with paper. Companies still living in a paper world risk turning off younger workers that are accustomed to receiving information in a digital format. For this reason, forward-thinking companies are looking to invest in solutions that offer employee self-service through HR technology.
4) Mobile — According to comScore, a global leader in digital measurement, 173 million people in the U.S. own a smartphone. Also, at least half of U.S. households have at least one tablet computer, according to Gartner Consulting. HR technology companies are looking to expand accessibility of their application by enhancing their mobile experience. While functionality is more limited on the smaller screen of an iPhone, tablets are another story. And, mobile has enabled companies to transcend the argument, “My employees do not have a computer,” by providing access to a larger audience of workers.
5) Private exchanges — We will continue to see growth in the private exchange market as employers are looking to expand choice and control costs. The engine underneath a private exchange is often a benefits administration platform providing online enrollment and carrier connections. Several private exchange solutions have become available in the small employer market, expanding the footprint of paperless enrollment.
Also see: "How data drives better ACA plan decisions."
Weiskirch is principal, EmployeeTech, Inc. Reach him at email@example.com.