Many Employers Looking To Save On Benefit Costs Are Leery Of Private Exchanges

Fifty percent of employers have begun to evaluate new private exchange options and 71 percent are looking into adopting a self-insured model, according to recent research from HighRoads, a benefits plan management and health care compliance company. Because of their potential for cost containment and reduction in administrative overhead, both public and private exchanges have received much attention of late as new alternatives to traditional employer self-funded plans, according to Bridget Lipezker, HighRoads’ senior vice president of professional services. HighRoads reports, however, that many employers in the study are choosing to hold off on even evaluating new private exchange options, which may be attributable to employee communications and compliance dynamics of private exchanges.

The study also revealed that 20 percent of employers believed the use of private exchanges would have a significant impact on recruiting and/or retention, but 50 percent were unsure of private exchanges’ potential impact. Ten percent believed there would be no impact. Sixty-seven percent of employers agreed that a private exchange would be a viable option as an offering in a suite of benefits choices.

HighRoads recommends that employers consider the following compliance and execution issues with regard to private exchanges:

Plan participant communications. Benefit offerings and selection processes will change with the use of private exchanges, HighRoads points out, and the use of an exchange model for benefits may cause participants to have questions and concerns. HighRoads recommends that employers be prepared to deliver “robust” plan participant communications upon the rollout of a private exchange.

Ownership of compliance documents. It is still a matter of debate, HighRoads says, as to who possesses the responsibility of delivering such documents as summary plan descriptions and summaries of benefits and coverage, especially through private exchanges.

Monitoring of vendors. The defined contribution approach should be fully understood by employers opting for private exchanges, and they should have both an efficient request for proposal (RFP) process and they should monitor vendor performance with a strong supplier management system.

Data consistency. Solutions will be needed by employers, private vendors, and payers alike to ensure consistent plan data.

For more information, visit http://www.highroads.com/newsroom/employers-remain-uncertain-about-private-exchanges-highroads-study-finds/.

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