Benefits Outsourcing is Blooming

Linda Merritt, HRO Research Analyst, NelsonHall

Benefits administration is producing a bountiful crop of new and expanding services. Recent contract award announcements included ADP, Aon Hewitt, Ceridian, Equiniti, Fidelity, Mass Mutual and Merrill Lynch. A wide range of industry segments were represented: banking; food; education; non-profits; hi-tech; pharmaceuticals; and travel. This week, I have taken a look at some of the newer benefit outsourcing “crops” that are starting to grow nicely.

Managed Retirement Accounts

Fidelity’s relatively new managed retirement account offering – Fidelity Portfolio Advisory Service at Work – was designed to address the low rate of adequate preparation for retirement by many employees by combining Fidelity Investments plan sponsor customized portfolio active management services with auto enrollment and available advisory services to help bridge the gap in achieving retirement goals from a defined contribution plan. The service grew in both participants and assets by 50% in 2012. Already in 2013, another 135 new clients have been added, bringing the total to more than 1,800 plan sponsors.

• Fidelity awarded a contract for Portfolio Advisory Service at Work by ADM.

Health and Wellness

ADP’s Vitality wellness solution supports employers with between 50 and 1,000 employees manage rising healthcare costs and also reduce employee absenteeism. Vitality’s incentive-based program includes an interactive wellness portal, health risk assessments, biometric screenings and personalized wellness plans with recommended goals and activities. It integrates with social networking sites, mobile applications and fitness technologies; and when employees achieve planned goals, they earn points towards lowering their health plan contributions. The service is also integrated with ADP’s payroll services.

• ADP awarded a contract by Jackson Companies for ADP Vitality services.

Benefits Bouquet Bundles

HRO buyers want multiple related services from one vendor under one contract; and health and wellness lends itself to packaging separate services into bundles. Ceridian’s LifeWorks.com combines EAP, work-life, and wellness services into one program with its own portal and mobile access. Also available is Health Coaching – a program for high-risk employees that provides access to comprehensive health assessments and personalized guidance programs – and Client Value Dashboard – included for employers to monitor reports usage data and ROI information.

• Ball State University chooses Ceridian’s LifeWorks.com

Private Employer Exchanges

Mercer’s Marketplace allows employers to improve management of their benefits spending and administrative responsibilities for active employees. Employers determine how much to contribute toward the cost of their benefits program and can select from a range of insured and self-funded products and providers. The platform includes full benefits outsourcing and provides employees with call center and online decision support.

• Mercer recently announced names of 10 of its 20 national, regional and state carriers that have joined Mercer Marketplace for providing core medical and voluntary benefits.

A good garden has a variety of plants. Some base crops are evergreen like benefits enrollment and management services, while others are changed out to meet growing market demand. Benefits HRO: how does your garden grow? Very well thank you.

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EAPs: A Key to Increasing Workplace Productivity

According to a report from the Centers for Disease Control and Prevention (CDC), more than 1 out of 20 Americans were clinically depressed in 2005-2006. Since that period, economic conditions worldwide have worsened, the unemployment level has reached all-time highs, and foreclosure rates have skyrocketed. Frankly, I’m a little bit frightened to check an updated statistic on depression.

You might be thinking that those individuals who have managed to maintain their jobs at this time would be grateful. But, the truth of the matter is that the glass is quite often viewed as half empty. There are many reasons why employees suffer from mental health issues. However, instead of just identifying the source of the problem, employers should focus on offering a solution that is known to improve mental health and therefore lead to increased productivity.

That solution is Employee Assistance Programs (EAPs). In 2011, Morneau Shepell conducted a study on EAPs that had two interesting findings for HRO buyers and suppliers:

• Decreased productivity and absence costs employers ~$20,000 per year per employee
• EAP intervention resulted in a 34% reduction in costs related to lost productivity.

With HR departments outsourcing processes such as payroll to focus on more strategic activities while obtaining best-in-class practices, EAPs as an activity has long been a prime candidate for outsourcing as well. After all, many EAP issues are sensitive in nature and employees may hesitate to seek help if there’s a chance that their confidentiality could be breached.

Two HRO providers that include an EAP offering are Ceridian and Morneau Shepell. While both companies conduct business in North America, Ceridian’s primary market is the U.S., while Morneau Shepell’s is Canada. These two providers are dominating their respective target markets due to a lack of competition from other HRO service providers, not to mention having extensive EAP offerings.

For example, Morneau Shepell already offers an EAP app and most recently launched online access for its EAP clients through its workhealthlife.com website, which allows clients to:

• Confidentially request help on issues including health, family, work, financial, relationship, and legal support
• Learn more about suggested EAP support services
• Select the service and how it will be delivered.

Ceridian, on the other hand, provides services beyond common EAP offerings including aging parent counseling.

Outside North America, U.K. providers have also recognized the importance of wellness programs: Capita with its occupational health services offering and Vebnet with its health and well-being programs.

As an alternative to launching a full EAP offering, some HRO providers have implemented services to address hot topics including saving for retirement. Examples include:

• Mercer’s self-service and decision support tools including its RetireTalk and Financial Engines Income+
• Aon Hewitt’s recently launched advisory service for its defined contribution clients.

However, the secret to a productive workforce is offering services that address work, life, and health issues. While saving enough for retirement is one possible source of the problem, there are many others that can be addressed with a full EAP offering.

Amy L. Gurchensky, Research Analyst, HRO, NelsonHall

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