When you are considering health insurance options for employees at your small business, a “private exchange” may not be the first thing that comes to mind. However, it is something you might want to consider because it offers advantages for you, your business, and your employees.
So, you may be wondering, “What is a private exchange?” At its core, a private exchange is sort of like a health insurance shopping mall that offers your business coverage from multiple health insurers. It may also offer other related products, like Dental and Vision insurance.
In California, the most-successful private exchange is the CaliforniaChoice multi-carrier exchange, which has been offering employee benefits to small businesses in the Golden State since 1996. With CaliforniaChoice, employees can choose from seven different health plans and dozens of coverage options, including PPO, HMO, EPO, and Health Saving Account (HSA) compatible plans. CaliforniaChoice also offers optional benefits like Dental and Vision insurance as well as Chiropractic and Acupuncture benefits.
Why offer employee benefits – and a private exchange?
Offering employee benefits can help you attract and retain employees. Benefits are a key factor in recruitment and job satisfaction. Not offering benefits (or offering lesser benefits) could put you at a disadvantage in attracting and retaining top talent. In fact, according to a survey by Benefitfocus, 78% of workers base their acceptance or rejection of a job offer in part on the employer’s benefits package.
When it comes to Health Insurance, a report by the Society for Human Resource Management (SHRM), 2016 Strategic Benefits—Leveraging Benefits to Retain and Recruit Employees, found 95% of employees rank health care benefits as among the most important. The report suggests that to appeal to the widest range of employee demographics, businesses need to position themselves as an “employer of choice” by offering benefits employees want.
A private exchange can help you do that. It gives your business and your employees access to multiple health insurers and plans, instead of just one carrier and one plan type for everyone. With a private exchange, you and your employees have the flexibility to shop and compare health coverage and find the plan that best suits your individual and family health care needs.
With the CaliforniaChoice multi-carrier, employee-choice program, one of your employees might choose PPO coverage from Anthem Blue Cross because it includes his or her preferred doctor or a specific hospital in its network. Another employee who visits the doctor less frequently might select a Kaiser Permanente HMO plan. A third might select HSA-compatible HMO coverage from UnitedHealthcare or another carrier. It is their choice with CaliforniaChoice.
Another reason to offer employee benefits is you can deduct the cost of your employees’ health benefits as a routine business expense. Offering employee benefits can also help you improve your employees’ health (by giving them access to health care); that can help lower employee absenteeism at your company.
You are in charge. With a private exchange, you determine what you want to spend on the premium for your employees’ health benefits. (A broker can help you with this, if you like.)
For example, with an employee benefits program like CaliforniaChoice, you can set up your health care budget in a way that makes sense for your business. You can decide to contribute either a fixed dollar amount or a fixed percentage of a specific plan’s premium. The minimum you can pay is always 50% of the lowest-cost health plan, so you have a lot of flexibility in deciding what you want to spend.
Once you define how much you can contribute to your employees’ benefits, they use those funds to find the health insurance carrier and plan design (HMO, PPO, HSA) they like best. If an employee likes an option that costs more than what you’ve decided to contribute, he or she simply pays the difference.
Once coverage begins (on your selected effective date), your employees are responsible for all of the medical expenses they incur, like costs for doctor office visits and prescriptions.
And, the amount you decide to pay is locked-in for 12 months. When it is time to renew your benefits, you have the flexibility to change what you are paying for employees’ benefits and your employees can either stay with the carrier and benefit plan they have or change to something new.
How you can get started
The best way to get coverage for your employees through a private exchange is by working with a broker. An experienced broker will have the expertise to help you sort out all of your options, get a quote, and guide your employees through the enrollment process. And, of course, he or she can help you after your group is enrolled if you hire new employees, want to make changes to your coverage, or have a claims or administration question.
Contrary to what you might think, using a broker does not cost you anything. In fact, a broker could save you money because he or she has the knowledge and technology to help you find the most competitive benefits for your company, while ensuring you and your employees have access to the health care providers you want.
If you would like to learn more about how a multi-carrier exchange like CaliforniaChoice can help you attract and retain employees, deliver more choice, and still allow you to control your benefits costs, contact your broker. If you do not already have one, we can help you find a CaliforniaChoice broker to speak with about a quote for employee benefits for your business.