Making Sense of Private Exchanges

Originally posted by United Benefit Advisors (UBA)

How will private exchanges fit into a crowded, complicated health insurance ecosystem?

It’s a question without a precise answer at this point. Similar to their public exchange counterparts, private exchanges will provide health insurance for many, but just how many is uncertain. Several experts see a promising future for these platforms.

According to a recent Christian Science Monitor article, more than 1 million workers are set to purchase plans on a private exchange in 2014 and there are estimates that enrollment in private exchanges could hit 40 million by 2018.

Reaching the estimate of 40 million would require widespread adoption of the private exchange model — which is designed to combine efficient purchasing, limited employer cost through defined contribution health care and participant choice. A few high-profile companies have already made the jump and many other employers are evaluating these options closely.

The private exchange model has significant potential advantages in providing more cost predictability for employers and more choice for employees. (Note: UBA has launched two private exchanges. Benefits Passport® is for organizations with 50 employees or more, while benefitbay™ is for organizations with less than 50 employees.)

Dean Carter, Chief Human Resources Officer for Sears Holdings, which has shifted more than 50,000 employees into a private exchange, told NPR that private exchanges are the future.

“In my 20 years of HR and working with benefits,” Carter said, “this fundamentally changes the game.”

So what should you look for in a private exchange? Consider these areas:

Proven technology. If we’ve learned anything from healthcare.gov, we know an established, proven platform already in use with customers is crucial. Furthermore, make sure it is mobile-friendly!

Multiple funding models. Make sure the platform can accommodate all of the funding options and plan types that you need — fully insured, self-funded, health savings accounts (HSAs), flexible spending accounts (FSAs), etc.

Plan choices. How many medical, dental and vision plans are on the platform and how closely do they match your typical offerings? Can they accommodate your carriers? Do they offer ancillary benefits? Do the carriers bear the full load of compliance?

Decision-making support. How effective are the online and call center support services at enrollment? What alternatives do they offer for those unable to use the website? Is the call center U.S.-based or offshore?

Employee advocacy services. Enrollment support is key, but then what? You need a platform that can handle new hires, terminations, status changes and ongoing claims support capable of understanding the intricacies of your plans.

Defined contribution modeling tools. For many, converting to a defined contribution model is complex. Ask to see what options and tools they have to help you make the best decisions.

Benefits accounting services. Having an enrollment platform is one thing. Reliably transferring data to carriers and payroll platforms is another.

Lastly, it’s a good idea to consider the advice of a benefits advisor to understand the different private exchange options and to determine which might best suit your employees’ needs. In addition to providing this advice, an advisor can also make the signing-up process easier for individual employees.