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Private Exchanges: Are They Right for Your Company?

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We have more ways to purchase our benefit programs than ever before. We are able to choose between a government-run marketplace, a private exchange or the traditional procurement process. Private …

We have more ways to purchase our benefit programs than ever before. We are able to choose between a government-run marketplace, a private exchange or the traditional procurement process. Private exchanges have become the early leader… at least in the media. And, the strong interest by employers in the private exchange solution may leave you wondering if it is the right solution for your organization. This article explores that topic.

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  • 1. BIZGROWTH STRATEGIES Special Health Care Reform Edition Article reprinted from Winter 2014 IDEAS TO HELP GROW YOUR BUSINESS Employee Benefits Private Exchanges: Are They Right for Your Company? W e have more ways to purchase our benefit programs than ever before. We are able to choose between a government-run marketplace, a private exchange or the traditional procurement process. Private exchanges have become the early leader… at least in the media. And, the strong interest by employers in the private exchange solution may leave you wondering if it is the right solution for your organization. The good news is that a skilled benefits advisor can guide you through the maze of these options, helping you find the option best suited for your company. © Copyright 2014. CBIZ, Inc. NYSE Listed: CBZ. All rights reserved. A private exchange is a non-government entity run platform that offers companies and their employees the vehicle to customize their benefit portfolios to meet their personal needs. The first step in evaluating a private exchange is to determine if a defined contribution model fits your corporate culture. In a defined contribution model, a set dollar amount is set aside for each employee to use to purchase their benefits. As the employer, you select the carriers and products to offer within your exchange. The employee then enrolls online and spends their allotted amount of money on the benefits they find best meet their needs. What is the upside? For the employer, the financial view is easy to forecast. It’s simple to calculate what your cost will be based on the set-per-employee dollar amount. In addition, the format allows you to offer a broader array of choices to your employees. You no longer have to try to please all employees with one or two medical options, for example. Within the private exchange you could potentially offer five to eight medical product offerings. In addition, it is much easier for you to offer more ancillary product offerings with less administrative burden. Your employees can choose a high deductible health plan and have enough money left to buy the additional life insurance or dental coverage they may desire. The level of employee satisfaction increases due to the greater choice in customizing their own benefit portfolio. The private exchanges are a convenient way to manage your benefits program and not worry about your our business is growing yours compliance with the Affordable Care Act. A professional benefits advisor can ensure that the programs you offer meet and comply with the requirements under the new legislation. As it stands today, the private exchange path offers greater choice of carriers and products than the State or Federal Marketplaces. In addition, the information about these offerings is easily obtainable. Employee assistance is offered through a call center to answer any questions they may have about their choices. It is important that network information is at your employees’ fingertips to make a wise choice. The narrowing of networks to reduce premium cost has definitely taken a prominent role within the government and private exchanges. It is critical to make sure your employees are armed with all data points to make the best decision. Be sure to work with a skilled advisor to ensure you choose the optimal solution for you, your organization and your employees. BONNIE EVELYN CBIZ Benefits & Insurance Services, Inc. Boca Raton, FL • 561.544.6366 bevelyn@cbiz.com