Don’t Be a Holdout!
There’s a reason why 32% of employers are looking into moving their employees into a private exchange in the next three years* and even added reason why more individuals will be in private exchanges by 2018** than the public exchanges. The reason is simple – defined contribution plans make sense.
Like it’s predecessor, the 401k plan, these defined contribution plans aren’t without some growing pains. Employers can’t jump feet first into a defined contribution plan without a strategy. Taking the time to do so will reap numerous rewards down the road.
There are three major factors to take into consideration as you head down the road to a private exchange – educate and ask, analyze and communicate:
Educate and Ask
Thankfully there is a plethora of information out there about what a defined contribution plan is and how it can benefit both you and your employees. Read. Talk to your broker, read some more. Synthesize the information into an easily understandable FAQ for your employees. Give them the chance to ask questions and become familiar with the concept way before implementation. There’s nothing worse than springing a new benefits package and platform on your employees and wishing them luck.
Remember – it’s not just about healthcare any more. Ask your employees what kind of ancillary products and services they’d like to have available to them and their families. This input will be invaluable as you look for the suite of products and services for your private exchange. Choices and customized products make for happy employees.
Analyze
Will a defined contribution plan save you money? Will it save you time? (time is money after all!) Only you and your accountant know best. A thorough short-term and long-term cost benefit analysis will help you decide what type of contribution can and should be made and what kind of increases in expenses you can expect in the out years.
Moving into a defined contribution plan in a private exchange isn’t all about the benefits contained therein. What you’re really buying into is a technology platform. A platform that facilitates the collection, management, processing, and transfer of all the pertinent data that is typically involved with benefits administration is key. If you’re not being offered an integrated, efficient and secure platform, keep looking.
Communicate
If you’ve engaged your HR professionals and your employees throughout your decision-making process, this last part should be a breeze but still essential to a smooth transition into a private exchange. Your employees now get to choose which health benefits and ancillary products and services best meet their needs. It’s new technology for them so taking the time to train everyone involved will be critical to your success. You no longer have to decide what’s important to your employees; they are empowered now to make those decisions for themselves.
The transition to a private benefits exchange won’t happen over night. Don’t be left wondering why you didn’t go down this path sooner. Don’t be a hold out. Begin the process, set a strategy. Start today.