November 15 – the day open enrollment begins nationwide on the individual market – is just around the corner and you’re going to hear more and more about “exchanges” in the press. So, let’s address some of the basics of an exchange and a few things you may not have known about them.
First: What is an exchange?
In a nutshell, an exchange is a secure online marketplace available to certain employee populations: full-time employees, part-timers and sometimes 1099 contract workers. Typically, exchanges offer a wide range of plan options, along with tools to help consumers make good choices. They may have dedicated support, and they may be integrated into payroll systems and include financial products, too. Those are the fundamentals, and here’s where things begin to branch off…
Usually, exchanges come in (at least) two flavors: those that support group-eligibles and those that offer individual insurance (think: Healthcare.gov and Covered California). Many of these have some level of integration with those products and also offer additional coverage like vision insurance or a Health Savings Account (HSA) to go with your high deductible plan. Then there are a handful of marketplaces that serve both group-eligible employees and non-group eligible (part timers, 1099, or affiliates).
As an exchange provider, we’ve heard a lot of employers talk about the advantages of a benefits marketplace. And after being in the benefits business for more than two decades now, I’m happy to address some of the top comments and questions we get about exchanges from employers and health plans alike.
1. “My employees aren’t very knowledgeable about benefits. I really don’t want to throw them to the wolves and make them figure it out by themselves.”
An effective benefits marketplace can provide an online retail experience – something consumers are very comfortable with. Within this kind of context, benefits can be explained and offered in a way that makes sense to them. It can be like any other online retail shopping experience, and that’s a very good thing.
With an exchange, you can offer a similar shopping experience to different populations (group and individual), too – making the process for everyone seamless. Shameless plug: ConnectedHealth has worked hard over the years to develop our Recommendation Engine, which carefully guides people so that they understand the economics of their choice.
2. “If it takes an entire benefits organization to figure this out, how are our employees expected to deal with this on their own?”
Clear employee communication is obviously critical, no matter what the benefit strategy. Helping employees understand the value of what their employer is offering them, regardless of the form, goes a long way toward making the benefits enrollment successful.
Having said that, private exchanges typically give the employees much more flexibility and control than traditional benefits over how they spend their benefit dollars, and also provides a Recommendation Engine and other online resources (videos, knowledge center, FAQs) that make choosing and enrolling in a plan option quite simple.
Call center support can be key here, too – providing live support to help consumers feel reassured about their healthcare decisions.
3. “Exchanges won’t help me (as an employer) save money, so it’s not worth the hassle.”
The individual exchanges work well for employers who are looking for alternatives to traditional group insurance. Many organizations have saved money by using defined contribution to control expenses. A private exchange paired with defined contribution lets employers offer more options to employees with far less administrative burden (enrollment and beyond), and employees love being able to choose their own benefits – medical and ancillary.
4. “Everyone else is still offering traditional benefits; I won’t be able to attract and keep talent if I use an exchange to deliver my benefits.”
The same benefits (or better) that you are offering today can be offered on exchanges. You have tons of choice there. You can still choose to cover everything—but start to introduce “choice.” So, most importantly, your employees have more choice. They can choose the plans that are right for their family and life stage (whether they’re having a baby, getting married, etc.).
We have traditionally over-insured many employees – we have included pregnancy benefits for instance in group plans for male employees.
Ultimately, we believe that the employer’s role as the gateway to employee benefits will continue, and mechanisms – specifically exchanges – that make it easy for employers to administer benefits while reducing administrative hassles will play a critical role.
5. “Our employee population doesn’t have computers so these exchanges wouldn’t make sense.”
Just because people don’t have computers doesn’t mean they don’t want the opportunity to take advantage of a marketplace. Many of our clients put tablets, like iPads or Chromebooks, in lunchrooms during open enrollment. Our service center also spoke to many employees who were calling on Saturday from the local library.
Don’t underestimate your employees, and keep in mind that even the federal exchanges (we include their plans in ours too) is also a predominantly online experience.