When evaluating a benefits administration platform for your agency, there are seven criteria to consider. We've covered the first two in previous columns — the company's background, and whether it offers a benefits-centric or employee-centric approach. The third criteria that brokers should use to compare software vendors is how many ways the platform can manage funding benefits.
How an employer funds benefits is a question that unleashes a large degree of creativity from brokers and their employer clients.
Here are just a few of the options you probably use with your clients: basic employer contributions that vary with each plan and coverage tier, defined contributions, defined contributions but only for ancillary coverages, defined contributions with different buckets of employer money for different sets of benefits, fixed percentage based on the "employee only" tier of a given "base plan," or the ability to roll over employer money towards dependent coverage tiers because the employee chose a plan less expensive than the "base plan."
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Accommodating all of these approaches and more is not easy for a benefits system. Part of the reason it is not easy is because every single approach changes the basic functionality of the system.
What do I mean? Let's review the impact of these variations on five basic functions for any halfway decent benefits system.
These are items like a shopping cart tool that totals employee's costs while they are electing benefits, a page at the end that summarizes their costs, a login area where he or she can return to review their elections, a summary PDF that is generated upon completing enrollment, and reports that the employer or broker can pull.
For example, let's look at a basic variation — whether an employer offers a defined contribution or defined benefit structure. The answer to this question will significantly alter the way benefit information is displayed to employees and employers in the benefit administration platform.
In this image, you can see how these options present differently in the platform's shopping cart function. Now, imagine if the employer just offers a defined contribution for ancillary coverage, or another one of the creative funding strategies your clients may use, or a combination of several different approaches. Each option would require totally different functionality on both the back end of the software as well as the presentation component.
As you can see, it gets complicated pretty quickly, and this affects everything from summary PDFs to employer-generated reports.
Not every system can support the full spectrum of options. When you're selecting a system, ask to see how they handle the variety of funding options, and whether the system can handle the approaches that you and your employer clients prefer.
Rather than selecting one that can only handle one or two funding strategies and hoping for further development, look for a platform with a wide range of funding functionality.
This column is adapted from the book "Online Benefits Technology: The Strategic Broker's Guide."
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