Private Exchanges - How can They Help your Business?
Private exchanges allow individuals and employers to utilize a marketplace in which a variety of plans are offered by either single or multiple carriers. Coverage information can be accessed and analyzed using online web portals, making the consumer’s purchasing experience more user friendly. The descriptions and summaries of each plan will also be standardized, and may even include star ratings based on their cost and quality. This will make it easier for consumers to understand what their plans cover, in addition to making it easier to compare plans alongside each other. Employers can also search for plans using the exchange portal by entering specific information, such as a defined contribution amount, number of employees and specific coverage requirements. The marketplace will then offer a variety of plan recommendations in addition to offering advice and customer support, to help employers choose from the recommendations offered to them. Private exchanges also continue to offer ongoing customer support after the employer’s initial purchase. They may also provide administrative support, such as automatic billing, which can be a convenient option for many employers.
Within the private benefit exchange, employers are able to set a defined contribution, an amount which they will pay towards each employee’s premium. Employers can also access cafeteria plans, also known as section 125 cafeteria plans. These help to reduce costs by allowing employers and employees to pay for certain health care costs in ways with are federal tax free. Using private benefit exchanges, employers are able to offer their workers a choice between two or more plans, providing them with a greater flexibility of choice. Private exchanges also allow employers to purchase other benefit plans, such as dental, auto, life, and disability, which may be bundled together to reduce costs.
Additional advantages of using private benefit exchanges are how they offer a certain amount of administrative support, such as online enrolment services and automated payments, which can be integrated into one easy payment. This is useful for employers who have purchased plans from several carriers and mitigates paying several separate monthly payments. There are also many advantages for employees who will be able to access their plan information using the exchange or carrier website. They will also have direct access to customer service and other coverage information.
Those participating in private exchanges will not be able to access federal premium assistance subsidies or tax credits, as these are only available to those using public exchanges. However, private benefit exchanges do help to simplify and streamline the purchasing process, sharing the risk between several consumers. They provide more choices to both the employer and the employee. Although the exchanges serve as a marketplaces and offer many useful management tools, employers are still able to maintain control over their plans, such as choosing how to administrate these within their own company. Companies should therefore also engage in planning regarding internal processes and applications and find ways to effectively disseminate their new group coverage to their staff.