People Want Choices. In Health Insurance, A Private Exchange Fits The Bill.
People are accustomed to making choices every day based on their personal preferences and individual tastes -- from what they wear and drive to the restaurants they frequent. With the "individualization" of the market (think Amazon, Netflix, and DoorDash), more and more industries are serving up options to stay relevant in a world where choice isn't just a nice to have, but the expectation.
It should come as no surprise that the health insurance industry is not immune to these expectations. In the past, employees were limited to a single health insurance option (selected by the employer) that did not necessarily address their individual needs. However, that model is quickly becoming a thing of the past and the private health exchange is leading the way.
What is a Private Health Exchange?
A private health insurance exchange gives employees access to multiple health plans through a single program. It enables you and your staff to individually shop, compare, and enroll in an array of coverage options and receive one bill for all of your employees’ insurance.
Many people became acquainted with insurance “exchanges” when the Affordable Care Act (ACA) was signed into law in 2010. The ACA created a national public health exchange and established the framework for states to take part or create their own state-run exchanges. California was among the first group of states with a state-run exchange.
However, California small businesses have been able to choose coverage through a private health exchange since 1996, when CaliforniaChoice opened its doors. The Word & Brown Companies' co-founders John Word and Rusty Brown created the state’s first private health exchange and modeled it after large group and government employee insurance programs offering enrollees access to multiple health plans.
Choice Matters to Employees
Today’s workforce is dramatically different from the past. It’s fairly common to find a business with employees ranging in age from 20-somethings to baby boomers. Also, on the rise is workplace diversity of gender, religion, race, ethnicity, cultural background, sexual orientation, and language.
With so much to consider, it can be a challenge for employers to provide health insurance to an employee population with such variance. For example, the preferences and needs of an older, married employee are going to be vastly different than those of a younger, single person who is just starting out in the workforce.
An exchange program gives employees a way to find coverage that best fits their health care needs and budget. One employee might select a PPO because of a particular doctor or hospital in the PPO’s network. Another employee who rarely visits the doctor might choose a HMO. A third employee might select an EPO (Exclusive Provider Organization) plan because it has a slightly lower premium, but offers direct access to in-network specialists without a Primary Care Physician referral. A fourth employee might choose a Health Savings Account-compatible plan due to cost and tax considerations.
It is your employees’ choice when you offer them access to a private health exchange.
Cost Control for Your Business
In addition to offering you streamlined administration and one bill for all of your employees’ health coverage, a private exchange program also offers you the ability to control your employee benefits cost. The CaliforniaChoice exchange lets you set your own budget for benefits using Defined Contribution.
You decide what you want to contribute to your employees’ benefits. You can select between a Fixed Percentage (50% to 100%) of a specific plan and/or benefit, or a Fixed Dollar Amount for each employee. Employees then apply your contribution to whatever health plan and benefits they prefer. If employees selects a plan that costs more than your contribution, they simply pay the difference.
When you renew, you have the option to adjust your premium contribution – up or down – giving you complete control over your benefits cost for another 12 months.
Finding Coverage That’s Right for Everyone
Offering a greater level of choice to your employees — without increasing your cost as compared to a single health plan solution — sets a private health exchange apart from other health insurance options. It also gives your business a recruiting advantage and a powerful tool to retain your current employees.
If you have an employee benefits agent, ask about a private exchange quote for your business. If you’re not currently working with a benefits professional, go here to find a licensed expert in your area.