9 Reasons Why Employers are Moving to Private Exchanges
by Abbey Yvon
Twelve sessions, 13 hours, and countless tales told from the front lines of private exchange adoption provide an apt description of the Conference Board’s 2016 Private Exchanges Conference last week in Chicago. In attempting to summarize the sentiments of employers who have implemented a private exchange, the analyses of thought leaders who have devoted the past decade to studying them, and the reactions of an audience eager to understand how they can benefit from making the move, I am reminded of how much there still is to examine about this evolving industry. So rather than offer the entire Mary Poppins bag of goodies, here is a summary of a few of the light bulb moments I gleaned during my time in the Windy City.
- Paternalism is passé. Employers with traditionally paternalistic viewpoints tend to be concerned about giving up decision making responsibilities when it comes to the employee benefits they offer. However, by acknowledging the extensive data confirming that their employees are capable of making their own decisions, employers have been able to re-channel that desire for control toward helping equip their employees with the tools they need to select the best plans for them, and ultimately, end up better off than before.
- You’re doing this for employees not to them. No one denied that change management can be tough, but ultimately, it’s worth it! Ways to ease the challenges of change management include communicating early and often, getting buy-in from all key players in advance, and ensuring employees know you’re doing this for and not to them.
- Everyone loves a compliment. “Has anyone ever had an employee compliment them? We actually got compliments!” said David Chianese, Head of Operations for LivingSocial. When HR says there’s a benefits change coming, employees typically expect less choice for more money. Several employers at the conference remarked that their employees actually thanked them for moving to a private exchange because of their improved benefits and experience. Happy employees mean happy employers.
- Open enrollment is only the beginning. Traditionally, people think of benefits engagement as happening only during open enrollment. But if your employees are engaged, then benefits should be top of mind all year. Make this happen through events, activities, updates, and more – for example, discounts and incentives offered by your medical carrier, wellness initiatives throughout the year, ongoing communications about benefits usage…
- Employers like choice too! If you’ve seen one exchange you’ve seen one exchange… Exchanges can vary based on who runs them (carriers, technology companies, broker/consultants), products offered, decision support features, benefits administration capabilities, and more. Add to that the decisions of single vs. multi-carrier, self- vs. fully-insured, and type of funding strategy, and the ways of tailoring an exchange are as diverse as the options they offer employees. Ultimately, employers are trying to achieve the appropriate benefits strategy for their company’s needs, so choice must be a part of that.
- Savings can be a win-win for employers and employees. Some employers are aligning employee motivation with rewards when it comes to benefits. After moving to a private exchange, one company saw such a significant decrease in overall health care costs that they decided to reward employees for their increased engagement in health care decisions. The savings were distributed to their employees’ HSA accounts as a way to show that what’s good for the company is good for everyone in the company as well.
- HR professionals are embracing their role as change agents. By bringing private exchanges to the attention of upper management, and then leading the charge of change for employees, HR leaders are tackling the changing benefits world head on. Once they do, they find their time is freed up to focus on the reason they were hired in the first place – finding new ways to attract and retain employees.
- HSAs means Health Savings Abound. Companies are seeing a significant number of their employees selecting HSA-qualified plans on a private exchange, compared with the national average. Data from HSA Consulting Services and Consumerdriven LLC estimate the number of employees picking an HSA-qualified plan on private exchanges at 40-70 %, versus 7-10% of privately insured employees.1 Furthermore, it’s easy to move the needle with HSAs. One speaker noted that their small HSA contribution increased employee enrollment in HSAs by as much as 20%.
- It’s about more than just good benefits. Many employers who are using private exchanges already offered robust benefits packages to their employees, but by moving to a private exchange, they now offer their employees a good benefits experience as well.
Abbey Yvon is a Marketing Director at Liazon, creating a voice for the company in today’s evolving market, and a voice for herself as mom of two raucous girls. With more than 15 years’ experience at industry innovators, Abbey is comfortable with market disruption and rallying on behalf of change agents. In fact, it’s a welcome calm before heading home at the end of the day.
1 “The Power of Choice: The Game-Changing Combination of Private Exchanges and Health Savings Accounts”, a study by HSA Consulting Services and Consumerdriven LLC.