Fidelity to sell health insurance plans to employers

Fidelity has entered the private health exchange market with Fidelity Health Marketplace, which it plans to integrate with its 401(k) record keeping business to provide a one-stop solution for small and medium-size employers health and financial needs. The platform, which is already being used by some of its clients, gives employers the ability to choose from a network of medical, dental, vision and life insurance carriers. 

Under the program, employers can offer a larger number of health plans for their workers than they could as a single business, according to Fidelity. Employers will still control what insurers their employees can choose from.

The Boston-based investment giant said it is developing a so-called private exchange that will offer small and mid-sized employers medical, dental, and vision benefits, as well as life insurance and other products. Fidelity will act as a broker, selling the plans of traditional insurance providers and competing against hundreds of other agents and brokers for that business.

Fidelity Investments is launching a new business outside its usual domain of managing money: selling health insurance plans to employers.

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"We're using our technology to make that process easier for everyone involved,'' said Joe Laurin, president of Fidelity Health Marketplace. Particularly at smaller companies, with 100 or 200 people, he said, "They might have one person in HR managing this," along with a host of other duties.

The company sees this as an extension of its already deep ties with corporate human resources offices. Fidelity manages $1.5 trillion nationally in 401(k)-type retirement plans and is aiming at employers with up to 2,500 workers for the benefit plans.

The company said it's negotiating with major national and regional insurers and is rolling out the product to employers in Massachusetts and New York, with plans to expand beyond that over time. It's been testing the offering with a small number of employers over the past year.

Fidelity did not name the insurers it has signed on. Harvard Pilgrim Health Care, a large Wellesley-based company, is not participating, according to spokeswoman Mary Wallan.

Tom Connors, president of the Group Benefits division at the Newton-based brokerage Sapers & Wallack, said health insurance exchanges can come with some of the same complexity as too many 401(k) plans, and shift responsibility to workers.

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"There hasn't been great success in these exchanges,'' Connors said. "The American public is not quite ready."

The new line of business potentially puts Fidelity in direct competition with large insurance brokers such as Mercer Global and Aon Hewitt, as well as regional and local insurance agents who sell employee benefits plans.

Frank Mancini, chief executive of the Massachusetts Association of Insurance Agents in Milford, said Fidelity will find stiff competition in the market.

"There are many, many thousands of brokers in Massachusetts that offer those products now, and that have long-term relationships with their clients,'' Mancini said.

Fidelity, like other brokers, would be paid by the insurers to market their plans.

Fidelity appears to be counting on its online interface as an advantage. In an age when consumers manage most aspects of their lives online, many smaller employers still handle the details of costly and important benefits with paper mailings and phone calls.

Fidelity says it will make benefit choices clearer and less laden in industry jargon, so employees can make decisions most suited to their situations.

Fidelity said it will be selling long- and short-term disability plans, flexible spending accounts, and health savings accounts, in addition to medical and life coverage. It can also manage benefits like wellness offerings and second opinions.

Beth Healy can be reached at beth.healy@globe.com. Follow her on Twitter @HealyBeth.