Why benefits admin, private exchange capabilities should be merged

HR departments across every industry are responsible for the distribution of benefits and for some that includes private exchanges. The companies handling these systems are reaching a point where they want technology to help them manage both functions — and they’d like to see them merged.

It’s counterintuitive, really. After all, benefits administration and private exchanges are two sides of the same coin. They both use technology to simplify the complicated world of benefits and lessen the administrative burden. Private exchanges just take a consumer-driven approach, and benefits administration constitutes ongoing management.

While this is how it’s been done for a long time, an intersection of these two areas makes a whole lot of sense.

The end result is a benefits administration interface that allows HR administrators to manage day-to-day tasks that coincide with a shopping experience designed with employees in mind. It’s a single solution that’s streamlined for employers and user-friendly for employees. In other words, it’s a win-win.

The intersection of private exchanges and benefits administration offers numerous benefits to employers and employees alike.

Rather than having one system for benefits administration or a private exchange, all information would be housed in one place, making it more accessible for the broker, employer and employees. This has a side benefit of helping brokers and HR administrators manage eligibility for available products. Basically, there’s one less hoop to jump through during sign-up.

A combination like this also simplifies procedures with technology. Changes in plans and terms can be made alongside enrollment. It also offers employees greater flexibility to customize a benefits package that suits their specific needs, essentially making one-size-fits-all plans obsolete.

The challenges

While I’m a strong believer in this intersection, there are some hurdles to overcome before this can become a reality for companies. Many HR departments are attached to their human resources information system, so adding an enrollment tool isn’t difficult, but changing the entire system is.

It’s hard to walk the line between functionality and simplicity. And since most companies focus on benefits administration or a private exchange — hardly ever both — it can be difficult to get them to see the value of an integrated system that values enrollment and management equally.

The right fit

Should you decide to move forward with integrating the consumer and employer sides of benefits administration, it’s important to recognize that solutions shouldn’t be an either/or affair. That’s how they’re often defined currently, but you have to remain unbiased to these products as the industry shifts from brokering to consulting.

The right fit is always important when it comes to matching products with a specific set of demographics for a client. An exchange may only contain a couple of products, which restricts your objectivity, and a benefits administration platform without decision support or bundling can create more problems.

Why fall into one category when you can set up a carrier-agnostic private exchange that makes benefits administration more efficient?

Many companies fall short in terms of scalability and flexibility of technology and the simplicity of the shopping experience. Some demonstrate expertise in one area and a profound weakness in the other. But systems must shine at both to be pervasive in the market and win over brokers, HR administrators and employees.


Veer Gidwaney is the CEO and co-founder of Maxwell Health. Maxwell Health provides a SaaS platform through health insurance brokers. Maxwell Health is committed to helping both employers and employees reduce health care costs through an incentive-based system that rewards people who actively try to be healthier. Tech Cocktail recently named Maxwell Health the “Hottest Startup in the Nation” in 2013.

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