Determining if a Private Health Exchange is Right for Your Business
Private health insurance exchange enrollment increased by 35 percent in the first half of 2016 (as compared to 2015), according to global professional services company Accenture. But, as the buzz on private exchanges increases, you may be wondering if a private exchange is right for your business. According to the Society for Human Resource Management (SHRM), when employers consider a move to a private exchange, they usually focus on three areas: finance, administration, and the experience of employees/enrollees. Financial considerations include plan option costs, the financial stability of the exchange (its history and experience), fees, financingl transparency, and fully insured group options. The administrative priorities include exchange administration and claims advocacy, implementation assistance, data and reports, health and wellness programs, fees, and financing transparency. Employee experience priorities include ease of use, years of experience and track record, employee communication support, integration of claims and case management with the employer’s existing portal (or ease of establishment of a new benefits portal), call center and instant chat capabilities, and portal integration with external providers. A private exchange is a convenient way for employers of any size to manage their benefits. But smaller businesses may be particularly attracted to a private exchange because it offers:
- a unique way to control costs (through the use of Defined Contribution),
- increased choices for employees and dependents, and
- guaranteed compliance with Affordable Care Act compliance regulations.
A private exchange can also streamline benefits administration by offering online enrollment, a single bill for coverage, one website for employee support, and one toll-free number for service and answers to employee questions. A private exchange approach utilizing Defined Contribution offers your business an easy way to forecast. If you’re setting your contribution to your employees’ health care premium based on a fixed dollar or fixed percentage of plan costs, it’s easy to predict your future expenses. Moving to a private exchange also relieves you of the burden of making the wrong plan choice for your employees. Instead, you’re able to give employees (and dependents, if applicable) a broader array of health care choices. With a private exchange, you can offer multiple health care options – and, often, ancillary benefits, too – giving employees the ability to mix and match based on their specific health care needs and budget. And, all the while, you’re able to reduce (or at least rein in control) on your health and benefits expenses. Ask your CaliforniaChoice broker about whether a private exchange is something that could help your business.
Four Benefits of a Multi-Carrier Health Insurance Program
Although multi-carrier health insurance programs, such as the CaliforniaChoice small group private health insurance exchange, have been operating for years, many businesses and individuals had little awareness of exchanges before the Affordable Care Act (ACA) took effect and the federal marketplace opened. Today, more and more employers of every size have access to one or more multi-carrier exchange, and it’s easy to understand their growing appeal. A multiple-carrier health insurance program offers several benefits – for businesses and their employees.
1. Competition Among Insurers / Reduced Costs
When you offer multiple insurers in a health insurance program, the participating health plans are competing for your (and your employees’) business, so they are more likely to offer competitive pricing (and cost savings for you and your employees). Using a Defined Contribution approach gives your business another way to control costs, while still offering a range of plan choices for employees and dependents. It also help guard against over-insuring, which can mean savings for employees and your business, according to the Healthcare Trends Institute.
2. Greater Employee Choice
Multi-carrier health insurance programs are very appealing to employees because they are able to shop and purchase the coverage that works best for their individual or family health insurance needs. After all, your health care needs are likely not the same as those of your employees. “Bob” and “Elaine” certainly have different health care needs from one another, so giving each of them a choice in what coverage they elect helps them find the right plan at the right price to fit their budget.
3. Simplified Administration
A multi-carrier health insurance program like an exchange offers streamlined administrative support for your business, your employees, and enrolled dependents. Participants can typically enroll online and can often use a single website and toll-free customer care number for answers to questions and problem resolution. They may also help reduce a business’s administrative burden by offering assistance with the rigorous compliance requirements of health care reform – a welcome relief in today’s changing regulatory environment.
4. Shared Responsibility / Reduced Financial Risk
A multi-carrier health insurance program shifts more of the responsibility for decision-making and buying power to employees. While employers are still involved in selecting the carriers and plans (or the private exchange packaging the options for employees), the ultimate decision regarding health coverage is left with employees (and their dependents). If an employee chooses a higher deductible plan (or chooses not to take part in supplemental or voluntary coverage), that decision can reduce the employer’s financial risks and costs. You can find a local CaliforniaChoice broker to speak more about your employees’ health insurance needs and whether a multi-carrier program makes sense for your business.
Four Ways Small Businesses Can Save on Health Insurance Costs
As the Affordable Care Act has redefined minimum essential health benefits and changed health care over the past five years, more employers than ever before are looking for ways to rein in their costs for health coverage. Some employers are shifting more of the costs of health insurance to employees; however, for many that is not a viable, long-term strategy because employees may begin to jump ship if their health care costs are increasing while wages remain relatively flat. There’s also the issue of the nation’s declining unemployment rate, which means greater competition for employees (who may enjoy lower costs or reduced cost sharing at other firms).So, you may be asking, what else can I do to save on health insurance? Below are four ways you can limit your out of pocket costs.
- Shop around: If you’ve been with the same carrier or health plan for years, you may think all coverage is pretty much the same and the costs are all similar. That’s not at all true. Shopping around can make a real difference. If your region has a new insurer that’s just entered the market, they may be more aggressively priced than other health plans. Many PPOs offer different provider networks, which can dramatically affect costs. Narrow-network plans are typically less expensive, while broader network plans may have higher costs but offer the hospitals and doctors you and your employees may prefer. Your insurance broker can help you investigate your coverage and provider options.
- Consider Defined Contribution and a SHOP or Private Exchange: A great way to control costs is to move to a Defined Contribution plan and implementation of an exchange. California firms with up to 100 employees can select either the Small Business Health Options (SHOP) exchange set up as part of the Affordable Care Act (ACA) or a private exchange, such as CaliforniaChoice, which has been serving California since 1996. Both exchanges give employers the ability to define the amount they want to contribute to employee premiums, while giving employees access to a variety of health plans from major insurers. Talk with your broker to find out more about how an exchange can help you control your health benefits costs, while offering your employees more health care choices than ever before.
- Combine a High Deductible Health Plan (HDHP) with a Health Savings Account (HSA): A high deductible health plan typically offers lower premium costs, while an HSA allows employees to use pre-tax money to pay their higher deductible and save for the future. HSA contributions are tax-deductible or if made through payroll deduction are pretax. Interest earned is tax-free. And withdrawals are tax-free for qualified medical expenses costs. Unlike Flexible Spending Accounts (FSAs), HSAs have no limit on carry-overs or when funds can be used. Money in an HSA belongs to the account owner, so there’s no annual “use it or lose it” provision like with an FSA. For 2017, the HSA contribution limited is $3,400 for an individual (up $500 from 2016) and $6,750 for a family.
- Move from Employer-Sponsored to Voluntary Coverage: One proven way to reduce your benefits costs is to make ancillary benefits – like Dental or Vision coverage – voluntary. Then all of the costs are paid by those who participate. Another way to reduce costs is to eliminate Medical coverage for spouses. While the ACA requires employers to offer coverage to employees and dependents, it does not define a spouse as a dependent. The ACA’S affordability requirement also uses employee-only coverage as the criteria in determining whether coverage is affordable, so raising costs for spouses and dependent children is still an option some employers may want to consider.
Be sure to discuss your insurance needs and your company’s financial goals with your CaliforniaChoice broker to determine which of these ideas makes sense for your business. Get a quote today.