Employers are now looking at alternatives to traditional health care coverage, and private exchanges offer the ability to fulfill different needs for different employees. Instead of offering only one choice for all employees, a private exchange lets your employees chose what works for them.
What Is a Private Exchange?
A private exchange is typically administered by an insurance consultant, broker or insurance company that sells insurance options online. What sets a private exchange apart from other options is the ability to allow an employee to make selections from a wide variety of health plans and insurance products, such as hospitalization, dental, vision, accident and disability. Some exchanges have logic based decision support tools to help an employee select coverage that best fits their unique needs. A private exchange also offers administrative support to ensure that employers have a full-service plan.
Why Are Employers Looking at Private Exchanges?
A good health plan is an excellent means of attracting and retaining high-quality employees. However, health plans can be costly, and business owners are looking at alternatives that will provide affordability and options to both themselves and their employees. With a private health care exchange, employees choose their coverage through an employer-based system in which you (the employer) pay a set dollar amount toward their coverage. This gives employees the option to choose a plan that balances an appropriate amount of coverage and a premium cost that they’re willing to pay.
Advantages of Private Exchanges for Employers
Private exchanges allow you to provide a defined benefit, or predetermined dollar amount, to employees in order for them to purchase their health care coverage. You will need to offer equal contributions to equally classified employees. Employees then use the contributed funds toward their health coverage. This gives more control in health plan expenses to both the employer and employee. By using a private exchange, you can avoid a health care plan that offers specific benefits that may not be needed by all employees.
Employers are also finding that using the option of a private exchange eliminates tedious logistics and administrative burdens, as the enrollment is handled online and can automatically feed appropriate operating systems.
Thanks to the ACA’s rules against medical underwriting, all offered individual health care plans in a private exchange guarantee issuance, so all employees can be covered. For employers, private exchanges offer an affordable, flexible and unbiased health care option.
For a quick overview on how private exchanges work, watch our new video.
Allison Hutton is an experienced writer, editor, communications professional, researcher and social media consultant. During her more than 15 years of communications and writing experience, Allison has worked with a variety of clients, from small-business owners to Fortune 500 companies. She has an M.S. in entertainment business, a B.A. in communication and lives in Pittsburgh, Pennsylvania, with her husband and four children.