What are Private Exchanges?

Employees have unique health care needs which are not always adequately reflected in the types of health care coverage offered to them by their employers. For example, some employers only provide limited choices of health care coverage, such as plans which incorporate the cost of maternity coverage and which not all employees require. Private exchanges allow employers to choose from a variety of health care plans based on defined contributions. Defined contributions are the costs that employers are able to contribute to their employee’s health care premiums. As a result of private exchanges, employers are then able to choose from a selection of plans and offer this selection to their employees to choose from.

Private exchanges provide a market place for employers to view and choose health care coverage. However, they also offer additional services such as consultation. Consultants can help to educate companies regarding the changes in health care regulations, help to guide employers in choosing the most appropriate health care coverage, and help them to analyze their current and future health care needs. They may also offer additional administrative services, helping to coordinate payments, help companies with their annual renewals, and provide ongoing customer support. They are also useful options for companies who are not eligible to use public exchanges which are currently being set up across the country, or for employers who choose not to work with these.

Exchange programs help to streamline the benefit process and they are often more cost effective for companies. Due to the technological advances in which plans can be accessed through an exchange portal and compared side by side, choosing plans becomes easier for employers. Exchanges also allow companies to choose benefit portfolios which can be customized to meet their needs. Providing employees with the choice between several health care plans are attractive options, and can greatly empower employees to take a more active involvement in their own health care.

Many exchanges also help to simplify the administrative process which can also reduce the costs associated with continuing to provide health care coverage. Although companies must also ensure that they have effective software solutions and applications which can support benefit administration, sharing administrative responsibilities and receiving customer support, can greatly reduce the burden companies may feel when managing all aspects of the process. This is particularly the case with the current changes being seen as part of the affordable care act in which companies may be concerned regarding their new responsibilities, such as choosing benefit plans which meet state and federal regulations. Before submitting their plans to the exchanges, carriers seek approval to ensure that their plans meet these new regulations, such as covering preventative care, pre-natal and maternity care amongst many other new requirements. Private exchanges provide many benefits for employers who wish to continue to provide health care insurance that meets new regulations in ways which are cost effective for the company and their employees.

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