Fidelity Investments officially entered the private health exchange business this week, with the launch of its Fidelity Health Marketplace, which is targeted at small and mid-sized businesses.
The exchange offers employers the ability to choose from a network of national and regional medical, dental, vision and life insurance carriers and is already being used by some Fidelity employer-clients in Massachusetts and New York.
Joe Laurin, president of Fidelity Health Marketplace, spoke with EBN about the reason behind the move and how the company’s private exchange will integrate with its 401(k) recordkeeping business.
Why are you launching this exchange now?
In actuality, we launched almost a year ago but we've been taking that time to build a platform, build a business, build out our service offering as well as line up all the insurance carriers and their products and beginning to sell in the two states we’ve begun in – Massachusetts and New York. We do have a few customers in Massachusetts and New York and we did this intentionally, flying under the radar. We’re in many ways conservative. We want to be very careful. We want to make sure this offering is exactly where we want it to be and that’s what we’ve been doing over the last few months and so now, we’re just announcing that we’re going to start to scale that business and work more broadly with customers.
As private exchanges continue to grow, employees often have many questions during open enrollment. Towers Watson compiled the top 10 questions asked by full-time active employees who enrolled though their OneExchange. Are you ready to answer these employees questions?
Would you expect to have this exchange available in all 50 states at some point?
Yes, that’s our plan. As you may know, insurance is a state by state proposition and so even though we’re now licensed as a company and our brokers are licensed in all 50 states, we need to work with the carriers in each of those states to make sure that, again, we have the right agreements in place to operate with them in those states and then to get the particular products available on our shelves.
Is it a multi-carrier exchange?
Yes and no. It is a multi-carrier exchange in that we can offer many different carriers to any particular customer, but the customer selects which individual carrier it wants to work with and then we offer the multiple products from that individual carrier [to the employees]. What we say is multiple carrier to the employer, single carrier to the employee.
Is it running on Fidelity technology or are you using a third-party technology?
We’ve partnered with a company called hCentive. The enrollment engine in integration with the carriers is really what we’re leveraging them for and then of course, we’ve integrated this with Fidelity’s benefits so we’re obviously using some of our own technology in the overall solution.
We stripped out all the industry jargon from the site, made it very easy and simple for the employee to navigate and then make good decisions.
We’ve put a lot of effort into re-designing the user interface to make it very simple. … We stripped out all the industry jargon from the site, made it very easy and simple for the employee to navigate and then make good decisions.
How does it integrate with the recordkeeping and retirement side of Fidelity’s business?
We have integration now with NetBenefits, which is the 401(k) side of the Fidelity business and what the plan sponsors and their employees already have access to. Now if someone’s a 401(k) customer, they have access to NetBenefits as the portal to their retirement benefits as well as their HSA benefits. Really what we’ve done now is we’ve added a third dimension to that, which is the health benefits part.
But the health exchange is also available to employers that aren’t using Fidelity as their 401(k) recordkeeper?
That’s correct, it is.
What has feedback been like in the year that you’ve been doing this? What has the employer response been like?
This small end of the market is one of the reasons we’ve launched this service.
It’s been terrific, actually. This small end of the market is one of the reasons we’ve launched this service. They’re oftentimes underserved by the existing brokers and they might have 100, 150 employees who are still doing enrollment for their benefits on paper and at the same time, they might have a benefits person in HR who’s handling benefits as well as three other things on their desk. So relieving the administrative burden for the benefits admin person, as well as bringing technology, Web technology, this same kind of e-commerce technology we’re all used to in every other part of our life, bringing those things to the employer and employees is really a huge step for a lot of these folks.
What trends do you see in the broader health insurance exchange industry?
Well, there are a lot of things going on there. Certainly one related to private exchanges. There have been a lot of studies done about how exchanges are going to be a big part of the market. I think everyone agrees that the uptake has been a little bit slower than originally predicted. The good news for us is that the uptake that has been growing the most and has the most interest is really from this smaller and medium end of the market so we think we’re targeting the right place and it makes sense. There’s a real need here. There’s a real gap in the service and the technology that small and mid-size companies are having access to and this is a hallmark of Fidelity – we identify a pain point for our customers and we bring a solution.
The other part of it is beyond the technology. … We're wrapping this thing in Fidelity service so we have our own live phones that will be available for these clients as well. We’ll have dedicated account executives for the plan sponsors as well. I think that’s a real differentiating point for us. This Fidelity service, along with the e-commerce technology and this bringing of the financial wellness and healthcare wellness together.
Will you be working with brokers?
The short answer is no. We are a broker and so we’re going to employers directly, but I think the honest truth is we’re working with our existing good customers to help them solve a problem and we feel the best way we can do that is to bring this service offering to them, which includes us being a broker. We’re not targeting brokers, per se. We’re targeting our customers.
