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San Diego
Wednesday, May 22, 2024

Online HR Benefits Business Remains on a Good Track

Talk of the economy slowing or contracting hasn’t affected San Diego-based Benetrac, which has been adding clients since it was acquired in August by Rochester, N.Y., based Paychex Inc.

“We went from 50 employees to 62, and we’ll probably be at about 100 employees by the end of 2008,” said Brad Flipse, the firm’s president.

As the name suggests, Benetrac provides online access to health coverage and other benefits to employees and human resource administrators, mainly to small and medium-sized businesses.

Since it was acquired, the company has picked up more clients in the eastern part of the nation, Flipse said, requiring the hiring of more folks at the Old Town office.

Flipse said the firm has boosted its client count by 200, bringing the total to 1,000 in the past five months, with many new clients signed through benefits brokers.

The services cost from $3.50 to $4.25 per employee per month, with implementation fees equaling about two months service, a company spokeswoman said.

“This is sort of a recession proof business,” Flipse said. “Most of the new jobs are in operations, customer service and information technology.”

Another factor driving growth is a trend for smaller businesses to move their human resource functions online.

Benetrac’s gains caused the firm to expand its Old Town offices by 4,000 square feet, increasing the total to 15,000 square feet over two floors.

The company was founded in 1999 by Jerry and Jan Hawthorne, who developed the software for online management of workers’ benefits, allowing them to do such things as enroll in health plans, manage 401(k) retirement plans, and keep track of spending for health services.

The online benefits management business has plenty of competition. An array of professional employer organizations usually offer this sort of service as part of a menu of services that usually starts with payroll.

TriNet Group in San Leandro provides its customers with a similar service as Benetrac that can be tailored to each client company.

The service has worked out well at Carttronics LLC, a Carlsbad provider of anti-theft devices for retailers, said Lynne Krauss, vice president of finance and administration.

“As an employee the site is really easy to follow, and as an administrator for the plans, I can look up employee data and get it the information very quickly,” Krauss said.

Besides the cost savings from not having to hire a benefits manager, the firm also saves money in having much lower insurance premiums for health and dental plans gained from the leverage of TriNet’s 1,800 customers.

Online employee benefits management was once provided only by large corporations, but because of PEOs, which are professional employer organizations, and firms such as Benetrac, many smaller companies are putting HR functions online.

Today, Benetrac’s clients range from small startups to large publicly traded firms, Flipse said.

Being part of Paychex has also helped spur growth, since the parent company has more resources and counts more than 560,000 customers nationwide, mainly for payroll services.

The firm is the No. 2 provider of such services behind market leader ADP, with $1.9 billion in revenue.

Following the acquisition, Paychex decided to maintain Benetrac’s operations in San Diego for a few reasons, Flipse said.

First, the intellectual property and key support personnel were here, and second, San Diego is an excellent place to find similar experienced technology workers, he said. “This is a hotbed for technology, so if you want to get good people, why wouldn’t you be here?”


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