Insurance carriers and their employer customers face two diametrically opposing challenges regarding Web-based employee benefits programs: online benefits programs that are rarely used or those that are accessed too frequently.Specifically, if a majority of employees aren't sold on the virtues of accessing benefits information via the Internet, the return on investment for the program's sponsors can be delayed or vastly reduced.
On the other hand, if a large number of employees opt to participate, the program has to be supported by technology that can handle a high volume of requests-often simultaneously. Nowhere is that more true than during open enrollment, which places a heavy strain both on a carrier and a corporate administrative staff.
Earlier this year, Newark, N.J.-based Prudential Insurance Co. of America met this challenge head-on when it embarked upon a major change within its own employee benefits administration system. The conversion meant re-enrolling 37,000 of its own employees over a short period of time.
Prudential has been providing solutions to employers for years through a diverse range of employee benefits packages-from life insurance to long-term disability. But the carrier found out first-hand about the real power of Web- based benefits when it faced mass re-enrollment during the conversion.
Using IBM Corp.'s WebSphere application server, Prudential was able to support approximately 26,000 user sessions during the last week of re- enrollment. Websphere supported up to 900 simultaneous users.
"We had never done open benefits enrollment at Prudential on the Web before," says John Huetz, systems director for Prudential's corporate center systems. "Previously, we had relied on an interactive voice response (IVR) system, but it was never intended to handle the volume we anticipated."
An estimated 85% of all Prudential employees re-enrolled online, rather than activating the carrier's IVR system. "We had no performance problems, and pages were returned within a couple of seconds," says Huetz. "That was really important. Responsiveness had to be excellent, especially since we expected people to wait until the last minute to use the system."
Prudential's investment paid hearty dividends during a crucial re-enrollment period, when demand is high and time is short. But as many carriers and employer groups are discovering, online employee benefits programs can be invaluable year-round.
Employees have become increasingly vigilant about their benefits packages, seeking to monitor and view terms and conditions of health, dental, life, disability and workers compensation and 401(k) plans. Accessing this data manually can be a cumbersome process. As a result, the demand has risen for online self-service accessibility.
One option that some employers are pursuing is to partner with an online benefits provider, such as Greenwich, Conn.-based BenefitPort. Carriers, in turn, can generate new business opportunities by aligning with an online provider. BenefitPort, for instance, networks with more than 14,000 brokers serving 40,000 employer groups and comprising 700,000-plus member lives.
Once new business is established, the Internet supports and streamlines ongoing administration of group benefits plans. A corporate benefits manager can upload forms and other documents, often served through the carrier by a third- party application service provider, says James Clarke, president of Irvine, Calif.-based Employee Benefits Services.
"The end result is that an employer doesn't have to manually process enrollment and beneficiary forms, which can involve a great deal of keying and re-keying data. They can also be freed from having to calculate premiums and verifying evidence of insurability," he adds.
Reducing operational expenses certainly is a major reason behind the growth of online employee benefits programs. Equally important, Clarke adds, is the fact that many employees have expressed a desire for online access to their benefits packages. By connecting to a Web site that hosts an employee benefits program, employees can apply for life insurance coverage, change beneficiaries or even apply for additional coverage as life events shift.
Trial and error
While corporate online communications becomes a priority in the face of rising employee self-service trends, employers and their carrier partners must work to convince doubting employees that accessing benefits information online possesses many redeeming qualities.
In June, Toronto-based Canada Life Financial Corp. launched the first phase of what the carrier calls a "highly personalized and automated self-service group solution" for its various plan sponsor (employer) partners. The solution- marketed as eXtended Relationship Management-was designed by Markham, Ontario- based Insystems.
One of Canada's largest life insurers, Canada Life was the first Canadian insurer to provide personalized booklets and contracts online. The company estimates that uploading booklets and contracts online is saving it more than $100,000 per year just in the manual preparation of documents.
Moreover, a booklet delivery process that used to take two weeks now takes 10 minutes, says Jeff Anderson, project manager for group information systems for Canada Life.
Employees using the Canada Life solution can log onto their corporate Web site and gain access to an electronic version of their employee handbook. They also can monitor the status of an outstanding claim.
Similar to American employees, Canadian employees have developed a thirst for using the Web to conduct various types of research. But unlike most American employees, Canadian employees aren't able to choose from a wide variety of group benefits packages. As mandated by Canadian law, the breadth of an individual primary benefits package is determined by an employee's professional rank-from top executive to the hourly-paid worker.
Because primary coverage is often inadequate, many Canadian employees opt to purchase supplemental coverage and establish flexible spending accounts through a group insurance provider. Flex spending is driven by individual credits that employees accrue and then use for various insurance-related needs, and the Internet enables employees to keep tabs on credits and determine their availability.
"Let's say a new employee joins a company and wishes to acquire supplemental coverage beyond the provincial plan," Anderson states. "The technology is intuitive enough to ask appropriate questions based on the data an employee feeds into the system-and to know which questions not to ask. Ultimately, the data collected can pinpoint the additional out-of-pocket expense the employee must bear."
For example, when employees want to add more disability or life coverage, they'll be asked various questions, including which hobbies they might engage in-particularly ones of high risk.
"If they listed deep sea diving as a hobby, the questions would concentrate on such things as frequency-how often they scuba dive," Anderson explains. "Or it might probe into whether an instructor is present during the activity. Once the answers are submitted, the application is transmitted back to the data base through the middleware application, and a quote for the additional life or disability coverage is returned."
Logging onto a Web site hosted either by the employer or by Insystems via Canada Life, employees enter a password-protected area to view a read-only electronic version of their booklet. Scrolling through a table of contents marked by hyperlinks, an employee can point and click to the specific elements of their individual benefits package.
"An employee may need to visit a chiropractor, but isn't sure if it's covered," Anderson states. "So they can go online and read through their booklet to make that determination. They may know the visit is covered under their voluntary coverage, but they need to go to the Web to see to what extent it's covered."
From Canada Life's perspective, employee benefits programs over the Internet should continue to blossom under the proper approach. The key will be to disseminate information touting the program's advantages.
"We advertise the program's availability in billing statements and through a company's intranet site," Anderson notes. "If employees can go to the Web to get answers to basic policy and claims questions, this greatly frees up our call center volume. This further reduces operational expenses beyond the printing costs of booklets."
One X-factor will be to try to expand a program beyond the point where the carrier and the plan sponsor won't throw good money after bad. "There's a critical mass involved where if only 20% of all possible users activate an employee benefits program, the return on investment for the program is far less dramatic than if 40% of employees opt to use it," Anderson says.
When online volume is low, he explains, an employer still must endure a significant level of manual processing, while still making investments in technology to support a Web-based program.
Nevertheless, most industry observers believe that it's a necessary investment. "Employee self-service used to be a 'nice-to-have' perk, but it's quickly becoming a 'must-have' for plan members (employees)," Anderson says.
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