BY ROB HOUGHTON
If you”™re not educated on the topic of private health insurance exchanges, now is the time to become informed about this trend.
A private health insurance exchange is an online benefits marketplace that lets employees shop for insurance products based on an employer”™s defined dollar contribution. For instance, an employee may be allotted $5,000 that works like a gift card to purchase the benefits that best meet that employee”™s needs.
Similar to pension plans moving from defined benefit plans to defined contribution plans, such as 401(k)s, group medical plans for employees are poised to see a similar trend in the form of private health insurance exchanges.
Whether you”™re a business owner or an employee, the chances are good that you will soon begin to have interaction with this type of online benefits marketplace. According to research, nearly 1 in 5 Americans will purchase benefits from a health insurance exchange by 2017.
As a Stamford-based benefits consulting company, we expect to show our private exchange platform, CBP Select, to 80 percent of our clients in the next 12 months. Employers will want to ”” or should want to ”” explore this emerging technology solution as a way to ease administration and contain health care costs. And as a result, employees will benefit from more flexibility and more choices when it comes to their health care options.
Business owners are perpetually in search of ways to be more effective in controlling costs, and a private health insurance exchange allows them to do so with regard to employee benefits. Private exchanges make it easy for business owners and finance departments to set their budgets with greater predictability and, thus, control costs more effectively. It becomes as easy as setting a budget for employee allowances, then inviting employees to shop for the options that best fit their needs using the private exchange platform.
The exchange also includes tools and reports for compliance with the Affordable Care Act, hot-button topics for all business owners.
The private exchange model is also enticing to employers because it allows them to wash their hands of deciding which medical plans make the most sense for employees, while alleviating employees”™ worries of which benefits they will and will not receive.
Instead of trying to decipher the best benefit plans, employees use the defined contribution amount to purchase their own benefits via the online benefit store and enrollment center, which is branded and customized for the organization. As the marketplace evolves, it”™s absolutely critical for business owners to be aware of all viable options, and this is certainly one they”™ll want to explore.
Private exchange platforms offer employees greater choice and flexibility than is traditionally available through a retail-like shopping experience that for the first time gives employees the liberty to build a personalized benefits portfolio based on individual needs. An allocated dollar amount can be used to purchase insurance products including health, dental, vision, life, disability, auto, home and more. Employees can select from a broader range of medical plan options as well as other products and services that might appeal to them, such as wellness solutions, pet insurance and identity theft protections. Contributing toward a health savings account or health reimbursement account is also an option.
On the bottom line, private exchanges will help employers better manage their costs and reduce their administrative tasks, while ensuring employees have easy access to a variety of customizable medical plans. Because of these advantages, CBP predicts this will be a viable choice for more employers in 2014 and beyond.
Rob Houghton is president of Stamford-based CBP, a privately owned, midsize consulting firm founded in 1996. CBP provides services in the areas of group benefits, business insurance, risk management, executive benefits, population health management, wellness programs and Affordable Care Act compliance. Besides Stamford, CBP maintains offices in New Jersey and New York and in-state offices in Fairfield and Plantsville.
Comments 2