Private Exchanges Offer Ways to Help Employers Navigate Changes

At a time when changing healthcare legislation is creating uncertainty for businesses, private exchanges can help employers stay financially afloat in the choppy seas of benefit changes.

Private exchanges—online marketplaces where businesses and people can buy health insurance—are growing rapidly in popularity, a new survey found.

The Aflac Healthcare 2015 survey found 86 percent of employees said they were happy with private exchanges and 16 percent of employers expect they will move their employee health insurance benefits to a private exchange this year—up from 6 percent in 2014 and 2015.

The survey also found that 49 percent of workers who have used a private or public exchange say they were very or extremely satisified.

“By combining online enrollment and personalization, private exchanges allow health insurance consumers to research and choose benefits based on their unique situations, with support tools to help them make better decisions,” Brad Knox wrote in an article for BenefitsPRO.com. “With a variety of options to compare and choose from, combined with increased engagement opportunities in the benefits decision-making process, it is no wonder private exchanges have grown in popularity.

“Even with the consumer independence that typically accompanies moving benefits to a private exchange, brokers will still play a vital role in the enrollment and education process. Online enrollment coupled with personal consultation can help ensure that employers are selecting the right benefits to suit their individual needs, opening an opportunity for brokers to further position themselves as advisers.”

The authors of the Aflac survey noted that brokers will play a vital role in keeping employers’ shift to exchanges on track.

The increasing popularity of the exchanges grew out of the launch of the Affordable Care Act, which focused attention on the idea of a health insurance exchange. Under the ACA, people buying insurance by themselves can choose from various private insurance options in standardized coverage tiers through a federal or state sponsored exchange and, depending on their income, get tax credits to subsidize their premiums.

Now, private exchanges are emerging as an option for employers looking to provide coverage for their employees too.

“These private exchanges do not provide access to premium subsidies like the public exchanges, nor do they necessarily involve standardized coverage tiers,” wrote the authors of a Kaiser Family Foundation report titled, “Examining Private Exchanges in the Employer-Sponsored Insurance Market. “But, they do have the potential to reshape the employer-sponsored health insurance, which covers 149 million people, or nearly 56 percent of the U.S. non-elderly population.”

In an Employee Benefit Advisor article—“Are private exchanges meeting employer expectations?”—Bruce Shutan wrote that while most of corporate America is still on the sidelines, waiting to see how the emerging private health insurance exchange market develops, a growing number of small and midsize firms are reaping the benefits of technology platforms that simplify shopping for health coverage.

“I can see the smaller businesses really getting a turnkey solution where they don’t need to do much, whereas a larger business may get much more involved in things like picking the plans that are available, plan design and contracting,” Paul Fronstin, director of the Employee Benefit Research Institute’s Health Research and Education Program, told Shutan.

By 2020, the EBRI predicts private exchanges will have about 10-13 million enrollees. Currently, there are about 8 million enrollees in various private exchanges, mostly from companies with 100 to 2,500 employees.

Simplicity Sells

“These private exchanges have gotten so sophisticated now that what a midsize group sees is very similar to what a larger group sees,” Fronstin says. “What’s been really fun to watch for the last couple of years is seeing the quality of the user experience improve dramatically for even the smallest of employers.”

For more information on private exchanges or other health insurance options, please contact your USI associate.

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