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March 12, 2014
Presented by:Brent Wick
Private Exchanges
Understanding Private Exchanges
What is a private exchange
The competitive landscape
Carriers and exchanges
Determining if this is a good solution for your company
Private Exchanges
Defined Contribution model or Fixed ContributionOffer greater choice to employees
Create employee ownership of benefit choices Remove the employer from deciding the best benefit plan
Can include all benefit optionsPrivate Exchange is the distribution system…think
of a grocery store for insurance products.
What a Private Exchange is not….complicated!
Take a Look!
It is Very Simple!
Today’s Approach Private ExchangeEmployer determines benefits
to offerEmployer determines benefits
to offer
Employer sets employee contribution
Employer sets employee contributions
Benefit education meetings are held
Benefit education meetings are held
Employee makes elections based on what benefits they
want
Employee makes elections based on what benefits they
want
Employee enrolls via paper, electronic system, etc.
Employee enrolls via the Private Exchange platform
The Mechanics of a Private Exchange
Employer
Insurance Carrier
Health Reimbursemen
t Account
Technology Solution
Decision Support
Determine the products to offerFully Insured or Self-Insured
Establish contribution amount
Higher an administrator of the HRABuild connectivity with employer and carriers
Online benefit enrollment systemPotentially call support to facilitate enrollment
Determine how employees will be educatedOnline tools to assist in decision making
Critical component to make this successful
Provide the productEstablish rating of each product
Interface with the enrollment system
Employer
HRA
EnrollmentSystem
Decision Support
InsuranceCarrier
Defining the Mechanics
The Private Exchange Market
100’s of platforms to administer an exchange
Nearly all consulting/brokerage firms have a solution Including Russ Blakely & Associates
These are almost all technology platforms
The critical component is the Insurance Carriers
The Key to Insurance Company Participation
Single Carrier OptionMost all solutionsEliminates anti-selectionAllows any fundingTypically 4-6 optionsAvailable today for
larger employersMore limited in smaller
markets – but developing
Preferred Carrier Option
Multiple Carrier OptionExamples: AON, Buck,
Extend Typically fully-insuredMostly in place for very
large employersValue of transferring risk
and defined cost
The Local Private Exchange Market
• Single carrier only• 5 plans over 100
employees
• Insured or ASO• 3 plans only under 50
employees
•Under 50 3 packages of plans
•Over 50 developing
•Large single carrier
•Some of the national solutions
• Large single carrier
• No under 50 solution yet
• Some of the national solutions
• Single carrier only• Any funding option• 4-6 plans larger
employers• No small employer
solution yet
BCBSTN UHC
AetnaCigna
Critical Fact to Consider
Year 1•66% buy down•11% buy up•23% stay in similar AV plans
Year 2 •70% stay in the same plan•30% move to a different plan
Statistics from Bloom Health
How Are You Going to Control Cost?
If majority stay in the same plan Cost increase by 10% Employer contribution only increase 3-4% Employee will see significant increase in cost year-over-year
Cost control are even more important in Private Exchanges Clinical programs Wellness Limited networks Managed Pharmacy
Private Exchanges don’t take you out of managing benefits!!
Is a Private Exchange For You?
What are your long-term goals?
Can employees effectively use technology?
Do you need greater predictability on Company cost for benefits?
Will you benefit from greater choice?
Would there be a benefit of having employees take more control of their own needs?
Who will help you build the total Exchange solution?
Questions?