Familiarity With Defined Contribution Health Plans, Exchanges High, But Misconceptions Abound


Sixty percent of employers have heard of defined contribution health benefit programs, and 56 percent have heard of private insurance exchanges, according to a recent study by Alegeus Technologies. But the study also revealed an education gap and numerous misconceptions among those who claim such familiarity.

Misconceptions. The study found that 45 percent of respondents believe that private exchanges are better suited for larger groups, while 39 percent believe private exchanges offer individual policies only, not group policies. The study also found that:

• Thirty-two percent believe private exchanges are the same as public exchanges.
• Thirty-two percent believe that private exchanges exist solely to support benefit enrollment and plan selection.
• Thirty-one percent believe that private exchanges are for health insurance benefits only.
• Twenty-nine percent believe private exchanges will cause employers to experience reduced control over benefit programs.

Benefits appreciated. Despite these misconceptions, employers see significant benefits regarding private insurance exchanges and defined contribution benefit programs, according to the study. Sixty-eight percent anticipate that exchanges and defined contribution programs will prompt employees to make more cost-conscious benefit decisions, while 66 percent believe they will allow them to offer a wider array of options for benefit plans. The study also found that 63 percent feel they will lead to better employee understanding of benefit costs. Furthermore, 58 percent indicated they will allow them to continue offering benefits that would otherwise be in jeopardy.

Adoption of programs. The study also found that 90 percent of respondents are interested in exploring defined contribution programs, while 85 percent are interested in exploring private exchanges. Of the 90 percent expressing interest, 36 percent claim to have already decided to move to a defined contribution model, while 35 percent may consider switching in the future. Of the 85 percent expressing interest in private exchanges, 30 percent claim to have already decided to adopt a private exchange, while 28 percent may consider adopting one in the future.

Important features. The study also asked survey participants to rank the top five most important defined contribution/private exchange features. The results are as follows:

1. Plan and cost comparison tools to evaluate plan designs in a meaningful way.
2. Combined benefit enrollment—single online form/process for enrollment in all benefits.
3. Progressive cost tracking tools to detail cost implications of benefit elections (relative to employer contribution and out of pocket).
4. Consolidated employer billing—single invoice/single payment for all employee benefits.
5. Portal access for administrators, brokers, employers and employees.

For more information, visit http://www.healthcarepayernews.com/sites/healthcarepayernews.com/files/AlegeusTechnologies_ResearchResultsUnveiled.pdf.

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