An Overview of Private Exchanges
When looking at benefit options, some companies may find it more beneficial to purchase health care coverage through public or private exchanges. Sharing the risk between many consumers can often decrease the cost of plans offered through these exchanges, whilst providing employers with many options. These exchanges also help employers to choose plans which are more in line with their budget and the needs of their employees.
Under the health care reform, companies will face increasing responsibilities. For example, companies must monitor and track the number of staff they hire and the amount of hours their staff undertake, as employees who works over 30 hours will be considered to be full time. The number of full time staff that a business employs may influence their responsibilities and options for providing group coverage. For example, increasing the number of full time staff may affect the company’s status as a small business, affecting their eligibility to participate in public exchanges or to receive certain federal support services.
Companies will also be required to engage in reporting and analytics, reporting their company data to exchanges and the federal government. The federal government will then analyze data and determine if companies are compliant with new health care regulations or of they must face certain penalties. Payroll may also be required to update their processes, particularly if companies are required to engage in new W2 reporting. Employers will therefore see a large difference in their administrative processes and may choose to work with private exchanges to help support them during this period in time.
Private benefit exchanges can not only help to guide companies on their health care coverage choices, using data provided by companies to offer recommended plans, but they can also help to offer support in the areas of eligibility verification. They also offer administrative support such as online enrolment, customer service, and accounting services. Private exchanges act as an intermediary between the employer and the carrier, helping to resolve any problems or appeal claims, similar to other forms of outsourcing. Of particular benefit is how the plans offered through private exchanges will be Patient Protection and Affordable Care Act compliant. This will ensure that employers do not face penalties by offering non-compliant plans. Exchanges will also help to advise employers and employees on any subsidies or supports which are available to them.
Rather than choose a predetermined coverage or a one size fits all plan, employers are able to offer employees several plan options. This avoids the risk of employees purchasing plans which over insure them whilst also providing staff with the flexibility to choose more comprehensive or basic plans to meet their needs. Similar to the support offered to employers when choosing plans, many exchanges also offer decision support tools helping to guide employees, by offering user friendly cost comparisons and cost calculators.