Benefits Get Personal: A Q&A exploring the challenges and opportunities faced by benefit administrators

In a follow-up to his presentation at this year’s National Association of Professional Benefit Administrators (NAPBA) conference, we asked Shandon Fowler, principal of HR & benefits technology consulting firm Four8 Insights, to share some thoughts and observations from the event. What emerged were compelling insights into the challenges faced by administrators, as well as the value of flexible healthcare payment solutions in an increasingly personalized benefits world.

What was your top takeaway from the conference?

The obvious answer here is to share some thoughts about trends, or perhaps where the industry is headed. But what has stuck with me most was a moment during a lunch conversation, when speaking with a 20-year industry veteran about the changes and consistencies he’s seen in that time.

The thought struck me in that moment, so I shared it with him, that professional benefits administration is a very blue-collar white-collar profession. He nodded and reiterated that it wasn’t for those looking for a cushy experience, especially this time of year.

Being a professional benefits administrator means navigating an incredibly complex obstacle course of compliance, strategy and administration. It’s a daunting but crucial job, and one that will remain relevant so long as employer-sponsored benefits continue to evolve and add layers of complexity and strategic nuance. These are the imperatives that benefits administrators must fulfill on behalf of their clients – know the small details that will keep benefits programs compliant and on the rails, but also know enough strategically to help lead your clients to better, more efficient and effective solutions.

Those are great insights. Bearing those in mind, were there any trends you picked up on that administrators should be aware of?

The biggest topic of conversation in more than half of the sessions was “lifestyle” accounts. What are they? Why are they trending? Are they here to stay?

It does seem like something that came out of nowhere – these once obscure spending accounts that aren’t tied to an FSA or HSA but rather just money for certain kinds of things for employees – and has been the main thing a lot of brokers and employers want to talk about. A major part of the interest, I think, can be tied to what’s happening in the world and what employers have available to them in the form of benefits to address the wants and needs of their employees and their own businesses.

We are living, and planning our benefits programs, through an unprecedented environment of high inflation, a looming recession, and high demand for labor in many industries. Add to that the lingering anxiety of the COVID-19 pandemic and you have a growing sense of physical, mental, and financial well-being uncertainty.

So how do lifestyle accounts factor in?

Traditional voluntary benefits, which are mostly underwritten insurance products and which some crafty brokers have started calling “lifestyle benefits,” largely aren’t flexible enough to tackle a broad array of personalized employee needs without adding massive administrative burdens for already-swamped benefits administrators.

Lifestyle spending accounts, or LSAs, by contrast, are relatively simple and flexible: Just decide what you want to make available to your employees – say, a clothing allowance for returning to the office or home office supplies for converting to remote work – how much you want to give them, and then give them a card and let them make their own choices.

Yet that’s a big shift from the traditional mindset, so it’s yet to be seen how large adoption might be this year and in the coming years. When asked the question of whether I thought they were a fad, my answer was that they may take a while to catch on but that the need for personalization is strong regardless of economic factors.

Lifestyle spending accounts have the right combination of flexibility and ease to make them something worth considering for many employers. We’ll just collectively need to lean in on making sure that employers get the value of them and that employees get to benefit from that value.

As for other trends, certainly the cyclical appeal of high-deductible health plans for cutting insurance premium costs, for both employers and employees, during economic downturns. This was brought up as something to watch because of its impact on HSA adoption.

Definitely worth keeping an eye on! What are some of the challenges employers face as they plan their benefits programs this year?

One unique aspect of being in the benefits administrator business is that you are not just an administrator on behalf of others but you’re “eating your own dog food,” so to speak. The NAPBA attendees had a fantastic conversation around some of what they’ve done over the past several years to transform their own benefits and work strategies – and the issues and opportunities they’re facing are the same as the customers that they serve. Things like remote vs. hybrid vs. return-to-office, finding and keeping great employees, new ways to offer benefits, strategies for bracing yourself for economic uncertainty, and much more.

There is no shortage of challenges ahead. But the companies and industries that keep themselves open to new ideas and new ways to drive efficiency in their business will come out the other side primed for increased success.

What can we expect for the future of benefits programs?

I often think of these future-facing questions in terms of five C’s: cost, competition, complexity, compliance and consumerism. Employers and their brokers, consultants and administrators constantly struggle to balance the first two C’s – keeping ever-rising costs in check while still managing to have highly competitive benefits and compensation packages.

The next two are a measure of how much work and headache the programs might cause for administrators. And the last one, consumerism, can also be seen as consumer experience, which is 1) table stakes these days, and 2) becoming more and more focused on personalization.

It’s an incredibly tall order for any company to optimize for all five, so companies whose benefits programs will be most successful are the ones that are able to engage employees in a way that shows measurable results without breaking the bank or keeping administrators working around the clock.

That lofty goal will take one more C: compromise. The administrators and technology solutions that will help employers succeed the most will be the ones that are able to help employers get the most out of their programs with the least amount of compromise.

How can employers improve employee satisfaction through the lifestyle benefits cycle?

Track progress. Some people might be thinking “Why do I need a lifestyle account? Why not just give my employees a gift card or a raise?” The answer is that lifestyle accounts are, or should be, intended to help employees address unmet needs, both for their own good and for the employer’s good.

Let’s consider return-to-office again. If you are really committed to getting people to come back to the office but are still leaving the choice up to them, make it easier for them by giving them allowances – for lunches, gas, or business clothes. Then track your progress. Was gas the most utilized expense? Lunch? The data you gather on an ongoing basis can help you to refine your programs to increase engagement and effectiveness. And unlike an FSA, you can do this refinement throughout the year.

Another way to improve employee satisfaction is right at the very start: If your goal is to provide more personalized benefits to your workforce based on what you perceive as diverse wants and needs, then run a survey in which you poll your employees on what might be most beneficial to them. Then use that information to inform the setup of your LSA programs – enable your employees to spend their LSA on what matters most to them.

That approach may not hit on a specific action that you want employees to take, but it will certainly impact their satisfaction with your benefits offerings and their employment as a whole.

Is the market moving toward benefits administrator value messaging?

Getting back to the five C’s, there are two that often fall into the administrator wheelhouse: complexity and compliance. As benefits programs continue to evolve and expand, tackling complexity keeps getting more critical. And compliance is never not critical.

In that sense, yes, the value messaging for the benefits market is moving more towards the administrator narrative. But things like healthcare and lifestyle payment solutions are also moving administrators closer to the ideal value messaging, because they’re proving to be more flexible and personalized than traditional voluntary benefits.

So while I don’t know if what the market is looking for will ever be completely aligned with the benefits administrator message, they are in a tremendous position to make the most of their blue-collar work ethic, flexibility and commitment to help employers and employees alike get more out of their benefits programs.

As odd as it may sound, it’s a great time to be an administrator!