What is a Private Healthcare Exchange…Really?

Here’s the short answer.

It’s simply a place (commonly a website) for people to buy health insurance that is run by a private company (as opposed to a government agency).

That sounds too simple, isn’t it more complicated than that?

There are many factors that need to be addressed for an exchange to be successful, however, setting up an exchange does not need to be difficult.  

The two most important factors to implementing an exchange are:

• Selecting the right software to administer the exchange
• Choosing the right plans to offer

What to look for in an Exchange software solution

• Employee decision support tool
• Does the software provide enough information to help your employees make the best decision for them?  Is there a recommendation engine to provide the best options based on an employees current situation?  
• Simple, well-defined interface
• Can a first time user easily understand what they’re seeing?  Is the information presented in a clear, straightforward manner?
• Interactive shopping experience
• One of the benefits of an exchange is that the employee has greater flexibility to create their own benefits portfolio.  The plan selection should be easy to understand, follow and complete.
• Automation
• Once elections are made, the exchange should simplify the transmission of elections to carriers, deductions to payroll, etc.  Re-typing any information is to be avoided at all costs.

Defined Contribution vs. Defined Benefit?

Defined contribution means the employer offers a fixed dollar amount to the employee for the selection of health coverage at their discretion.  The defined contribution model allows the employee greater freedom to create their own benefit portfolio, selecting benefits based on their individual needs. Quickly gaining prominence in the marketplace, this model gives the employer the ability to more accurately predict their total healthcare expense.

Defined benefit means the employer has a set health coverage plan in which the employee can enroll.  This model has more exposure to cost variations.

How can I set up an exchange at my company?

I strongly recommend that you work with your insurance broker to help you set up the exchange.  Your broker will work with carriers to negotiate the rates and terms so the plans you offer are right for your company.  Once your broker has helped you select appropriate plans, be sure to do your research and choose a software provider who will provide the right solution for your organization.

Give yourself at least 90 days before your open enrollment starts so the software can be configured for your company rules and all required data feeds can be built and tested.

For more information about WORKTERRA’s exchange capabilities, visit our website @ workterra.com or send me an email at dan (@) workterra.com