Aligning Employee Benefits with Their Personal Goals

Posted on: May 1, 2014
By: Dr. John Reynolds

Keeping Private Exchanges Competitive 

Rarely is there talk of the upside to the Affordable Care Act, but there really are many positive aspects to the law. Well, maybe not the law itself, but what the law has done to push forward the inevitable – defined contribution plans, and private health exchanges for the delivery of benefits to employees. With each new study, and employer survey, we see that more and more employers are embracing the defined contribution model and looking to private exchanges to deliver benefits.

Here’s what we’re learning:

• 47% of employers surveyed will launch their own proprietary private exchange by 2015.*

• 40% of Brokers are eager to sell health insurance on private exchanges and 30% are eager to sell ancillary products. *

• 47% of Employers report that they are already moving to a defined contribution plan.*

• In a defined contribution plan, employers indicate that 75% of the money provided will go towards health insurance, dental and vision. The remaining 25% will be used for ancillary products like life, disability, accident or critical illness insurance.  *

 (*Click on the link to view the full reports from Prudential and Wells Fargo)

These figures show a dramatic change for brokers, and employers, and have led to a frenzy of acquisitions in the benefits consultant marketplace. This could be a slippery slope for some and employers should be wary. One of the biggest advantages of a private exchange is its flexibility and variety of carriers and benefit offerings. No private exchange should be limited to single carriers like we’re starting to see.

A truly private exchange has many choices for the employee, with offerings that will meet their personal goals. These goals may range from premium amounts, deductibles, wellness programs, supplemental insurance or ancillary products like life insurance or ID theft, just to name a few.

Transparency, selection and competition are the keys to a successful private exchange. Employers should look for nothing less and employees should demand exactly that.

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