As every employer knows, we are navigating uncertain terrain through the health benefits landscape. I’m sure you’ve seen the reports of significant cost increases, with many projections well over 20 percent plus. Even though the “Pay or Play ” mandate has been extended to 2015, employers are actively seeking an employee health benefits solution that will help them predict and control costs associated with the Patient Protection and Affordable Care Act (PPACA). That’s why the concept of private exchanges (or marketplaces) is garnering so much attention.
What makes an insurance marketplace attractive to employers is the ability to retain control over their benefit offering. They’ll also avoid the perception they’re taking something of value away from employees (group insurance).
The employer using a private exchange can achieve the following benefits:
- Continue to reap tax benefits by providing employee access to health insurance
- Experience more predictable cost control through defined contribution
- Avoid compensation issues related to dropping coverage
- Reduce HR administrative burdens associated with annual enrollment and ongoing tasks
- Maintain employee loyalty by continuing to provide access to valuable benefits
- Empower employees to become smarter consumers of benefits
A private exchange/marketplace puts the power of choice into the hands of the employee. For instance, a 50-year-old-woman has vastly different healthcare requirements than a 22-year-old man. The 50-year-old can select coverage that suits her needs, while the 22-year-old can choose what fits his lifestyle. Of course, there is another side to that coin that must be acknowledged. Many employees who are accustomed to receiving group benefits are not equipped to take on the added responsibility of choosing their own health insurance on an exchange. Choice sounds great until you have to make an informed decision in a complex marketplace. If you’re considering a private exchange/marketplace, make sure to select one with a well-designed, intuitive user interface. A complicated online portal is a surefire way to create a bad experience for plan participants, and can lead directly to a less engaged employee.
Another imperative: A robust employee education and communications component that is delivered during open enrollment and throughout the plan year. Communications and support should extend beyond the online portal. The best private exchanges/marketplaces include an employee advocacy center staffed with knowledgeable people who can answer benefit questions and resolve claims issues. And you should also have access to compliance experts to help you navigate the complexities of the insurance industry and the PPACA. In other words, a private exchange can and should contain all the components of group insurance:
- Plan design and consultation
- Education and communication
- Decision support and enrollment
- Employee advocacy
- Administrative support
The promise of insurance marketplaces is appealing, but they need to be structured correctly in order to have maximum positive impact. Thinking through the potential pitfalls and how best to provide guidance and support for employees can help ensure a successful rollout. A robust private exchange can lead to that rarest of animals in today’s environment: Group employee health benefits that work for everybody.