Choosing Private Exchanges

The Affordable Care Act has led many companies to consider if they should begin to provide health care coverage to their employees. As part of this act, employers can now purchase health care coverage in ways which are cost effective. Public health care exchanges are new options for smaller business or individuals, but another alternative are private exchanges. These are sometimes known as cafeteria exchanges, as they offer multiple coverage options and provide a sales portal in which companies can analyze health care options and choose coverage based on their specific needs. As providing health care coverage can be an attractive feature, helping employers to retain their staff, companies are recognizing the benefits of providing health care coverage. However, before choosing a private exchange plan, companies should engage in thorough planning and decision making. Employers should determine the amount they are able to contribute to their employee’s premiums, the types of plans they wish to provide and the current and future needs of their workforce.

Companies should also consider how they will administrate their benefits. For example, in certain cases, the carrier will manage some aspects of the benefit’s administration but not all of them. Companies must therefore determine which aspects of the administrative process they will be responsible for, including how to update their software and applications to support the process.

Joining a private exchange may have an impact on the company’s own billing and payroll processes. Companies may therefore choose to utilize software solutions and applications which are flexible and which enhance communication between departments to share relevant benefit information. It also allows the company’s systems to communicate with those of the carrier, streamlining the process. Cloud computing may be a useful option, enabling internal applications to link to carrier websites.

For companies who have never offered health care coverage and who may not have any processes or software in place, they may find it beneficial to work with carriers who offer full levels of support. However, companies should consider what will happen if they choose to change carriers and are no longer able to utilize the carrier’s software. Employers may therefore also consider purchasing their own software, in addition to using those of the carrier, whilst ensuring that these applications are compatible.

Many companies are choosing to work with HR consulting companies who specialize in benefits administration, to help them make these choices. HR consulting firms can help guide companies in how to choose integrated software solutions or how to adapt their current IT solutions to make use of private exchanges. As rapid changes are being seen within the health care reform, including changes to private exchanges, applications, and IT solutions should be flexible enough to ensure they remain relevant in the future.

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