We have more ways to purchase our benefit programs than ever before. We are able to choose between a government-run marketplace, a private exchange or the traditional procurement process. Private exchanges have become the early leader… at least in the media. And, the strong interest by employers in the private exchange solution may leave you wondering if it is the right solution for your organization. This article explores that topic.

1. BIZGROWTH
STRATEGIES
Special
Health Care
Reform
Edition
Article reprinted from Winter 2014
IDEAS TO HELP GROW YOUR BUSINESS
Employee Benefits
Private Exchanges: Are They Right for Your Company?
W
e have more ways to purchase our benefit
programs than ever before. We are able to
choose between a government-run marketplace, a
private exchange or the traditional procurement process.
Private exchanges have become the early leader… at
least in the media. And, the strong interest by employers
in the private exchange solution may leave you wondering
if it is the right solution for your organization. The good
news is that a skilled benefits advisor can guide you
through the maze of these options, helping you find the
option best suited for your company.
© Copyright 2014. CBIZ, Inc. NYSE Listed: CBZ. All rights reserved.
A private exchange is a non-government entity run
platform that offers companies and their employees the
vehicle to customize their benefit portfolios to meet their
personal needs. The first step in evaluating a private
exchange is to determine if a defined contribution model
fits your corporate culture. In a defined contribution
model, a set dollar amount is set aside for each employee
to use to purchase their benefits. As the employer, you
select the carriers and products to offer within your
exchange. The employee then enrolls online and spends
their allotted amount of money on the benefits they find
best meet their needs.
What is the upside? For the employer, the financial
view is easy to forecast. It’s simple to calculate what your
cost will be based on the set-per-employee dollar amount.
In addition, the format allows you to offer a broader array
of choices to your employees. You no longer have to try
to please all employees with one or two medical options,
for example. Within the private exchange you could
potentially offer five to eight medical product offerings. In
addition, it is much easier for you to offer more ancillary
product offerings with less administrative burden. Your
employees can choose a high deductible health plan
and have enough money left to buy the additional life
insurance or dental coverage they may desire. The level of
employee satisfaction increases due to the greater choice
in customizing their own benefit portfolio.
The private exchanges are a convenient way to
manage your benefits program and not worry about your
our
business is growing yours
compliance with the Affordable Care Act. A professional
benefits advisor can ensure that the programs you offer
meet and comply with the requirements under the new
legislation.
As it stands today, the private exchange path offers
greater choice of carriers and products than the State or
Federal Marketplaces. In addition, the information about
these offerings is easily obtainable. Employee assistance
is offered through a call center to answer any questions
they may have about their choices. It is important that
network information is at your employees’ fingertips to
make a wise choice. The narrowing of networks to reduce
premium cost has definitely taken a prominent role within
the government and private exchanges. It is critical to
make sure your employees are armed with all data points
to make the best decision.
Be sure to work with a skilled advisor to ensure you
choose the optimal solution for you, your organization and
your employees.
BONNIE EVELYN
CBIZ Benefits & Insurance Services, Inc.
Boca Raton, FL • 561.544.6366
bevelyn@cbiz.com