Three Ways Employer Groups Benefit from Private Exchanges
- How do I pick the right coverage for employees that will also attract other great talent?
- How do I keep down the cost of insurance coverage?
- What can I do to make the enrollment process less of a nightmare?
- How can I simplify the administrative process so we’re not paying a billion bills at different times throughout the month?
Ask any human resources (HR) administrator and they’ll tell you that these questions haunt them, especially as open enrollment draws near. And as if these concerns were not enough, healthcare reform and private exchanges have now been added to the stew. Talk about stress! But what if these exchanges are actually the solution that employer groups and their benefits administrators have been looking for? You can be the broker of good news. Here are three ways employer groups benefit from private exchanges.
- Helps Avoids the Cadillac Tax - The Cadillac Tax, effective in 2018, is a major stressor for employer groups. This tax is a 40 percent penalty that will hit employers who have expensive health policies. What’s expensive? An individual plan that costs above $10,200 in premiums and a family plan that’s $27,500 in premiums. And come 2018, companies with these types of policies will pay a 40 percent tax on premiums above these amounts. So, shifting employees to a private benefits marketplace, especially multi-carrier exchanges, can actually shield employer groups from this tax. Here’s how:
A. Defined Contribution – Many private benefits marketplaces either have as an option, or require that groups move to a defined contribution model. This allows employers to decide and contribute a set dollar amount for each employee’s health benefits. Employer groups who move to this model, according to the Kaiser Family Foundation, are able to control and predict how much they will spend on healthcare.
B. Less Expensive Employee Choices - Once employees have a marketplace that clearly explains their plans to them and what they will pay per pay-period or per year, it’s possible that they will choose less expensive benefits. Bloomberg Businessweek found that when faced with rising premiums, workers in general choose cheaper plans.
- Reduces Administrative Stress - The right private exchange becomes the online version of the employer group’s HR department. So, no more drowning in paper work or being overwhelmed by the administrative burdens that often plague HR admins. Private exchanges help make life easier for employers, brokers and members by:
- Educating members about their plan and plan cost in an easy-to-understand way
- Streamlining the open-enrollment process
- Providing Real-Time Cost calculators for members and more
- Create Employee Loyalty - Multi-carrier exchanges encourage employee loyalty. Employees feel valued when their companies ensure that they have a choice when it comes to insurance carriers and plans, including ancillary benefits like dental and vision insurance. Additionally, these exchanges not only show what members pay for their benefits but they take it a step further and show what the employer is contributing. When they see what the company contributes in dollars and cents, they get it...their companies are investing in their health.
In the earliest stages of healthcare reform, there were questions surrounding how your role as a broker would be impacted. Yet it’s clear that this new chapter in healthcare has positioned you to be a subject matter expert to your groups. And as these exchanges continue to grow and you are able to show how transitioning to this type of marketplace is a great solution for reducing healthcare cost, administrative burdens and building employee loyalty, you will stand out as their best human resource in the area of employee benefits.