The Pros and Cons of Switching to a Private Exchange

Needless to say, it can be difficult to fully understand all of the talk about Healthcare Reform and the regulations that are coming out of it. As an employer, you've probably found yourself asking "what are my benefits options?" If you've found yourself asking this question, you may want to consider administering your employer benefits through a private exchange.

What is a Private Exchange?
An exchange can easily be understood as an online marketplace for your employees to select the health and wellness benefits that best suit their individual needs. With the onset of healthcare reform, the federal government has set up a federal exchange where individuals who do not have access to insurance, or determine they would prefer the exchange over company provided benefits, can go to obtain insurance coverage. Some states have established their own state exchange that will be made available to state residents vs. utilizing the federal exchange available to them. A private exchange allows organizations to set up their own exchange for their employees where they can select the benefits they desire.

Organizations that opt to provide insurance to their workforce through a private exchange work with the exchange to determine what selections are available to the employees. They then allocate a specific dollar amount to each employee on an annual basis for them to use towards health benefits coverage.

What are the Benefits of a Private Exchange?

• As an employer who utilizes a private exchange, budgeting healthcare expenses becomes a much simpler task. Instead of forecasting expected expenses that may or may not be incurred by employees, budgeting becomes the allocation of the same dollar amount to each employee in the organization's annual budget.
• Employees are able to determine how the dollars the company is spending on their healthcare benefits are allocated by selecting the benefits plans that they feel are the best fit for them and their families.
• Benefits administration becomes less cumbersome to the organization as the employees are enrolling and making changes directly through the private exchange.
• Organizations are able to select what options are available to their employees on the private exchange.

What are the Risks of a Private Exchange?

• The concept of a healthcare exchange is new in the benefits world. There may be a few unknowns to the private exchange owners that are left to be worked out.
• As employees are overwhelmed with the idea of Healthcare Reform and the impact it has on them as an individual, they may be hesitant to such a significant shift in the way your organization offers benefits. Your organization will want to consider offering training to employees on the "how, what, and why" of the private exchange within your company.
• As Healthcare Reform regulations continue to evolve, the private exchanges will have to adapt to meet federal requirements when providing healthcare.

With the continuous changes in federal regulations related to Healthcare Reform, it is important for your organization to understand all of your options and choose the best fit for your organization and employees, and a private exchange may be a perfect fit for your company.