Automatic Data Processing Inc., the payroll-processing giant, will offer companies a new way for their employees to select health benefits, challenging firms like Towers Watson & Co. and Marsh & McLennan Cos.

ADP is introducing an online service known as a private exchange that will let workers shop for insurance coverage among multiple health plans, much the same way consumers can select policies on a government-run exchange under Obamacare. One new feature is designed to help companies limit costs: Employees can be given a fixed sum of money to spend on the plan they pick, with any extra cost coming out of each paycheck.

Exchanges have caught on in recent years as a way for employers to give employees more choices of coverage and potentially shift more of the cost to them as well. About 40 million people will pick a health plan for 2018 through an online exchange, up from 6 million for this year, according to Accenture Plc.