Intelligent Advisor

How did Jellyvision get into the benefits market?

We cut our teeth, of all things, as a gaming company where we made virtual game show hosts like Regis Philbin for “Who Wants to Be a Millionaire?” We got out of the gaming business when the CD-ROM market died and moved from virtual game show hosts to virtual advisors.

We wanted to go where there was fertile ground and where people were doing something complicated and boring, but important, online. We would make software that talks them through it. We learned persuasion is really, really important, because it’s not just about getting you to pay attention and be entertained but convincing you to make better decisions. That led us to ALEX.

Who uses ALEX?

It was licensed to large employers to help employees choose and use their benefits. Comcast was our first employer. And now we are bringing it to the mid-market through brokers.

How do AI programs help people improve benefits selection?

Ultimately what we try to sell is math. We want people to understand annualized out-of-pocket cost for plans. It’s a mathematical formula based on maximizing money and reducing out-of-pocket spending on benefits while getting the coverage you need.

It’s about your goals and asking what is your contribution to your 401(k) and what is your match or what is the likelihood you will burn through your health savings account (HSA) or do you have emergency savings.

Based on an employee’s responses, ALEX says what is available, what it will cost, and lets them work out different scenarios like what the price would be for extra doctor visits or trips to the ER. It gets into demystifying the jargon and allows them to understand when fees occur and how they work so people can make decisions with much more confidence.

So your focus isn’t necessarily on reducing costs for employers?

It is absolutely about the best interest of the employee. We have occasionally had employers ask to tilt the algorithm, and we won’t do it. We have to be a trusted advisor and provide agnostic and transparent advice to the employee. Thankfully, a vast majority of the time that accrues substantial value to the employer as well.

You mentioned the importance of persuasion with AI programs. How is that accomplished?

Substantial behavioral science. There are studies that show if you give people a 10-ticket hole punch—buy 10 get one free—and then you give them a 12-punch card with two already punched out, the 12-punch ticket is 40% more likely to be completed. The lesson here is that progress gives people a sense of motivation. So, as you look at the progress bar in ALEX, early on it jumps forward a little bit faster so it gives them a sense of success and progress. We apply all kinds of behavioral science to help people get to the right decision.

Why is AI needed in this space?

One in four people would rather clean a toilet than select benefits, and that is the reality in which we live. There is aversion, fear and worry when talking about frailty and reality. The industry is largely driven by actuary, and we have come in and helped people navigate with humanistic language and devices to help them pay attention.

Humor is also a very important component. Science has proven you can’t be stressed and learn at the same time, so our comedy has purpose. You have to be able to reduce the levels of stress so people have a greater capacity to learn.

What is the consumerization of employee engagement tools?

The tools out there now are sophisticated widgets and calculators where people can run benefit scenarios. But here’s the challenge: people don’t want to run scenarios. No one wants a Ph.D. in benefits. They want to quickly make a good decision and be done with it.

When we invented ALEX, we tried to model off conversations people had when they threw up their hands and needed help and called a sister or an uncle or someone who worked in benefits. Instead of calling an expert and saying, “You know about these products. What’s right for me,” people ask family or friends, “You know me. What’s the right product?” We try to bring that phone call to the advisor who knows you and cares about you and wants you to be in the best position.

Isn’t it ironic that AI offers a more human approach to doing things?

The old way of doing things was too expensive and didn’t scale. This is modeling the best of the decision tree that human advisors would walk someone through. But it is available 24/7/365 at a much lower cost per contact than you can get with a live human being. And it is consistent and compliant, and the math is always right.

Our product averages about four marriage proposals a year. People get to the end of it and it asks if you have any comments, and they write in asking if ALEX is single. They say things like, “I wish my hubby listened to me like this.” There are so many positive reactions where people feel helped and served and supported. That’s a squishy thing to say and we usually talk more about things like ROI, but there is a big squish factor when you are trying to engage employees.

People seem to enjoy it, but engagement starts at getting that first click. How does that happen?

We provide ALEX and ALEX Central, which is an all-in-one marketing effort, to get a click. We help employers become expert marketers, send emails and text messages, and teach how to curate a campaign around open enrollment. And right before someone goes into open enrollment, they can put up a banner with ALEX’s URL saying, “This is how we choose benefits. This is ALEX.” We average north of 30% of employees using ALEX, which is extraordinary for a decision-support tool.

Why is that other 70% not using it?

At some companies, we actually have 100% uptake. But it really depends on how many years they have had it and if they have had a plan change or passive enrollment. There is much higher utilization if there is active, rather than passive, enrollment. When you are forcing people to go through and make a selection, you have much higher utilization.

That’s one of the things we talk to employers about, and it’s not just self-serving. Their benefits may not be changing, but employees’ lives change all of the time. So, if there’s a way to get them to take a minute—think versus just auto-defaulting into what they had before—they will better invest in tax-advantaged vehicles and will plan-shift in ways that make financial sense. They will also take advantage of voluntary benefits that create that circle of protection they need to get through the year.

Are there groups of employees for whom these kinds of programs are best suited?

We help people navigate health and wealth, particularly for those who don’t have much of either, which we think is a really underserved market. There are robo advisors and financial advisors for people with money. The challenge is how to automate a high-touch, highly agnostic advisor for people who struggle to make ends meet, have limited dollars and can’t invest in everything. We try to guide decision making between HSAs, 401(k)s, emergency savings and other sorts of assets. We call it a sort of robo for the rest of us.

AI offerings like this seem to bridge both health and financial health spaces.

We are getting into the convergence of health and wealth and making employers look more holistically at health and wealth and where dollars go. Even though brokers tend to be largely segmented into health or retirement products, that world is going to merge together more quickly than people expect it to. Being able to be fluid and provide decisions between products like HSAs or 401(k)s is important, particularly when there is not enough money to max out both. It’s in the enterprise market now and will be mid-market within the next two years. And AI can help navigate between funding medical and planning for retirement.

What kind of results have you seen from your employer clients?

We have a closed-loop case, and it’s clear that employees who talk to ALEX behave differently from employees who don’t. You can see much higher take rates in high-deductible health plans, which save employers and employees money. There is much higher participation in HSAs: three times. And 165% more participate in deferrals for those who talk to ALEX than those who don’t. We average 40% more than national average deferral rates: 10.8% of salaries among these people go to a 401(k), and organizations like Fidelity get 8% and Vanguard gets 6%.

You’ve mentioned HSAs a couple of times. Are those an important vehicle you see playing a role in benefits in the coming years?

We are providing year-round guidance on HSAs, so people who have a high-deductible health plan with an HSA continue to run expenses through that and really take advantage of that asset.

According to Allegis, 83% of HSA eligible dollars don’t get run through the HSA. And you could say, “Great, people are saving; they are maxing it out and leaving money there and investing,” but that’s not the case. There is just rampant confusion around it, how it works and when you invest.

Is combining health and financial benefits in this way an advantage for employers?

Some employers ask, “Why would we want to go through this and get an employee financially and physically well if they will only be there for one or two years?” Our response is, “If it drives reduced payroll tax liability, will that be more interesting?” And funny enough, if you get employees to invest in their own 401(k) and HSA, it saves money on taxes as an employer.

Right now, 60% of employees don’t have $600 in savings, but they have deductibles in the thousands of dollars. That’s why there’s medical bankruptcies and stress. It’s hard to say generally that people who have savings are better employees, but we kind of know that. But if you can drive participation in HSAs and high-deductible health plans, you can provide material ROI, and that’s what employers are looking for.

Adobe tells us, for instance, they saved just under $5 million in reduced tax liability because of ALEX. Real money is being driven by this stuff. And more participation equals savings. For every dollar an employee puts into these plans, it helps employers reduce their tax liability by seven cents. When you drive 165% more deferrals, you are really reducing payroll tax liability for employers.

Anything else brokers need to know about AI in the industry?

I don’t think just shopping for Blue Cross Blue Shield plans anymore is a competitive difference for brokers, because anyone can go out there and get those quotes. Brokers are increasingly being asked how do you service my population; how do you educate and entertain employees. It’s not one of the top three things brokers are thinking about. But they do need to know how to create value and drive differentiation and prove they can drive savings. When we are on this unsustainable cost trajectory in healthcare, employers can’t afford it, and it’s not getting any cheaper.