For the last year, Fidelity has quietly been operating Fidelity Health Marketplace, a private benefits exchange, for a small number of SMEs in Massachusetts and New York. Fidelity Health Marketplace is a natural progression for Fidelity, which has been providing H&W services to large market organizations since 1995.

Fidelity Health Marketplace is a one-stop shop that assists companies with less than 2k employees with many services that Fidelity has honed over the years, including decision support tools, self-service, and reporting tools for employers.

The exchange uses hCentive’s WebInsure Benefits private exchange technology platform, and includes a network of national and regional benefits including:

• Health insurance: medical, dental, and vision
• Life and AD&D insurance
• Long and short term disability insurance
• Flexible savings accounts: health, commuter, and dependent care
• Tax-advantaged accounts: HSAs and HRAs
• Wellness tools: telemedicine, mindfulness, and cost transparency tools.

Fidelity’s exchange model includes full service support beginning with assisting clients in determining the right plans to offer their employees (i.e. multi-carrier for employers, single carrier to employees), with Fidelity assuming the role of insurance broker.

In addition, organizations have the opportunity to leverage other benefits administration services from Fidelity, such as DC administration and HSAs. Employee helpdesk services are also included.

A key differentiator for Fidelity is that the exchange integrates with Fidelity’s NetBenefits platform, providing organizations using multiple Fidelity services with a seamless experience. In terms of market share, Fidelity dominates the DC administration market, and their small and mid-market DC business in particular has experienced strong growth since 2010. By adding a private health exchange offering, Fidelity is providing a holistic benefits experience for small and mid-market organizations.

This is a significant development for Fidelity, whose DC administration business is so strong it appears to overshadow its H&W administration offering, which is targeted on large market organizations and is often part of a TBO deal. However, the opportunity for Fidelity with this exchange offering is great because Fidelity has a large amount of small and mid-sized DC admin clients to cross-sell into, which keeps exhibiting solid continual growth. For example, in the first half of 2015 alone, DC sales for the small and mid-market were ~$8bn, compared to $9.5bn in the whole of 2014.

Historically, SMEs haven’t been a key target market for many of the top vendors providing H&W administration services, but with ACA’s employer shared responsibility provisions, companies within this segment need outside help. In addition, small and mid-sized organizations are the fastest growing segment adopting exchanges, which gives Fidelity an edge, as they already have established relationships with this market through their DC business.