The Benefits of Private Exchanges
Under the Affordable Care Act (ACA), many businesses will now be required to offer health care coverage or face a penalty. Companies must meet certain criteria, but there are an increasing number of options available to help support companies financially and to help make the purchasing process easier. For example, private exchanges provide market places for companies to select from a range of insurance products such as medical, dental, health, and life insurance. They help guide employers during the process, provide customer service, and also provide benefit administration support. Employers are able to choose their plans based on defined contributions. There are many changes being made to health care regulations under the ACA, including specific requirements that new health care plans must offer. Employers can be rest assured that the plans offered through the exchanges have been validated as meeting these new regulations. Private exchanges may also offer more cost effective plans, sharing the risk between all consumers who participate in the plans which drives down costs. Using the defined contribution helps companies pay for what they can afford.
Employers can choose from several plans and offer these options to their employees. This is an attractive feature, allowing employers to choose plans which best meet their individual needs and which may not have previously been possible with limited choices. Private exchanges are sometimes known as cafeteria style marketplaces, due to the flexible options that they offer. This allows employers to pick and choose or to integrate different benefit bundles and options to create their own unique and individualized benefit package. Under the ACA, insurance carriers are required to summarize their plans allowing for easier side by side comparison. Health care exchanges also make the decision making process easier, by utilizing user friendly dashboards which effectively communicate to employers their options. As private exchanges are offering plans from several different carriers, they are also able to give objective recommendations of these plans and provide consultation services to employers. These dashboards are also flexible and can be assimilated with the company software, allowing employees to access their insurance options and make their own choices based on predefined plans chosen by the employers. Dashboards can also be adapted to incorporate company logos. With this in mind, some administrative tasks will be managed in part by the private exchange but companies will still be required to carry out additional administrative tasks, such as integrating new benefit options with their billing and accounting department. Other considerations are how employees will also have access to the customer service support provided by the exchanges. This may help to reduce the queries received by the companies own HR department, freeing up HR staff to engage in other important tasks. Private exchanges are interesting options for companies who are choosing to provide health care coverage for the first time or for companies who wish to have greater control over the group plans the offer.