Working with Private Exchanges
Offering benefit packages are great ways for companies to stand out from their competitors, helping them to both attract and retain workers. However, offering health care coverage in ways which are cost effective can be difficult for smaller companies with a limited budget. Advances in technology are making it easier for service providers or carriers to automate many of their health care plans, meaning they are able to offer a wider range of plans through a private health care exchange. These are also known as group market private exchanges or simply private exchanges. An employer will work with the health insurance carrier, giving them criteria such as their budget and the amount that the company is willing to contribute towards their employee’s health care costs, including the deductible amounts. The health care carrier will suggest a selection of plans to suit the company’s specific needs. The company can then choose a few plans which they in turn will offer their employees. This allows companies to choose health care coverage from a marketplace, based on specific and individualized criteria, to find plans which are cost effective. It also provides them with the ability to offer a greater choice and flexibility to their staff. This is in contrast to previous standard or defined contribution models. Private health exchanges may be offered as either single carrier exchanges, in which companies choose several products from an individual carrier, or multi-carrier exchanges, which connect employers with products offered by several carriers.
Private exchanges are particularly beneficial for companies who may not have access to the new public exchanges being set up as part of the health care reform. They are also beneficial for companies who, despite the rising costs in health care, wish to continue to provide coverage whilst retaining some flexibility over their choices. Another benefit of these exchanges is that companies may receive more guidance during the decision making process and customer service support from the carrier, after the benefits have been implemented within the company.
Employers may choose to work with consultants to help determine the best private exchanges to work with. Employers should also consider how benefits will be administrated within the company, including how to integrate the carrier’s software and applications within their own existing processes. For example, some insurance carriers may offer full administration and customer service support, whilst others may offer limited administration. Employers should therefore determine the level of administrative support offered by the carrier, including how to adapt current company applications and processes to ensure that these are compatible with those of the carriers. For example, data, billing, and accounting, will need to be integrated and compatible with those of the carrier. Moreover, HR departments and accounting departments will still be required to closely monitor employee activity and quality assure the process. The ability to apply analytic tools to these processes is important, as this helps to guide employers in future decision making, such as determining the most popular coverage to ensure employers choose the most suitable health plans to meet their employee’s needs.