Benefitfocus provides a leading cloud-based benefits management platform for
consumers, employers, insurance carriers, and brokers. The Benefitfocus Platform
simplifies how organizations and individuals shop for, enroll in, manage and
exchange benefits. Our employer and insurance carrier customers rely on our
platform to manage, scale and exchange benefits data seamlessly. Our web-based
platform has a user-friendly interface designed to enable the insured consumers
to access all of their benefits in one place. Our comprehensive solutions support
core benefits plans, including healthcare, dental, life, and disability insurance,
and voluntary benefits offerings such as income protection, digital health and
financial wellness. As the number of employer benefits plans has increased,
with each plan subject to many different business rules and requirements, demand
for the Benefitfocus Platform has grown.
The Benefitfocus Platform enables our customers to simplify the management
of complex benefits processes, from sales through enrollment and implementation
to ongoing administration. It provides consumers with an engaging, highly intuitive,
and personalized user interface for selecting and managing all of their benefits
via their desktop browsers or mobile devices. Employers use our solutions to
streamline benefits processes, keep up with complex and changing regulatory
requirements, control costs, and offer a greater variety of plans to attract,
retain, and motivate their employees. Insurance carriers use our solutions to
more effectively market offerings, simplify billing, and improve the enrollment
process. We also provide a network of more than 1,500 benefit provider data
exchange connections, which facilitates the otherwise highly fragmented interaction
among employees, employers, brokers, and carriers.
We serve two separate but related market segments. The employer market consists
of employers offering benefits to their employees. Within this segment, we mainly
target large employers with more than 1,000 employees, of which we believe there
are over 18,000 in the United States. In our other market segment, we sell our
solutions to insurance carriers, enabling us to expand our overall footprint
in the benefits marketplace by aggregating many key constituents, including
consumers, employers, and brokers. We believe our presence in both the employer
and insurance carrier markets gives us a strong position at the center of the
benefits ecosystem.
We sell the Benefitfocus Platform on a subscription basis, typically through
annual contracts with our employer customers and multi-year contracts with our
insurance carrier customers, with subscription fees paid monthly, quarterly
and annually. The multi-year contracts with our carrier customers are generally
only cancellable by the carrier in an instance of our uncured breach, although
some of our carrier customers are able to terminate their respective contracts
without cause or for convenience.
The administration and distribution of benefits to employees is a mainstay
of the U.S. economy. Providing these benefits is costly and complex and requires
the exchange of information, application of rules, and transfer of funds among
a wide variety of constituents, including consumers, employers, insurance carriers,
brokers, benefits outsourcers, payroll processors, and financial institutions.
The variety and complexity of core benefits plans, including healthcare, dental,
life, and disability insurance continues to grow. This added complexity places
greater potential cost burden on employees and creates a greater need for employers
to educate employees on becoming more informed healthcare consumers. To help
employees cover added cost burdens, employers are increasingly offering a wider
range of voluntary benefits plans, such as critical illness, supplemental income,
and financial wellness programs. Current point and legacy systems are inadequate
to efficiently manage the complexity, regulation, and the involvement of multiple
parties, driving the need for an enterprise benefits management system to improve
operational efficiency along the entire benefits value chain.
Currently, we believe there are over 18,000 entities that employ more than
1,000 individuals in the United States. Employers recognize the importance of
offering a greater variety of core and voluntary benefits as a means to attract,
motivate, and retain employees. They must maintain relationships with multiple
insurance carriers and many other benefits providers, placing a substantial
administrative burden on their organizations.
Employers’ distribution, management, and administration of employee benefits
has historically consisted of error-prone, paper-based processes, and a patchwork
of customized software tools, which are costly to maintain, often lack necessary
functionality, and fail to address the increasing complexity of the benefits
marketplace. As benefits offerings become more complex and employees bear more
of the cost of those benefits, HR software solutions that streamline information,
simplify choices, and engage employees are increasingly in demand. Employees
desire tailored, dynamic, and interactive communication of critical benefits
information as they become accustomed to receiving personalized content through
various consumer applications on a range of devices.
Legacy HR systems were generally designed as extensions of enterprise resource
planning, or ERP, systems, built for back-office responsibilities like finance
and accounting. As a result, these systems lack functionality and ease-of-use
for employees. Many legacy HR systems were not designed to integrate with the
broader benefits ecosystem, including brokers, carriers, and wellness providers.
This results in expensive, error-prone, and frustrating experiences for employers
and employees. Benefits outsourcers have attempted to compensate for the shortcomings
of legacy HR systems, but they have generally lacked adequate technology solutions
necessary to keep up with the rapidly evolving benefits landscape. As a result,
employees are often not provided with the appropriate functionality and information
required to select and manage their benefits effectively.
Modern technology, changing communication patterns, and a constantly evolving
benefits ecosystem have changed the employee-employer relationship. HR executives
continue to search for effective strategies to increase efficiency and contain
costs, while increasing employee engagement and satisfaction. Employers are
increasingly interested in SaaS solutions that can help capture and analyze
benefits data and ultimately lead to healthier, happier, and more productive
employees. In order to manage the distribution and administration of benefits
effectively, employers need an integrated platform, capable of handling all
benefits in one place and providing a highly personalized experience for employees.
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