March 12, 2014

Presented by:Brent Wick

Private Exchanges

Understanding Private Exchanges

What is a private exchange

The competitive landscape

Carriers and exchanges

Determining if this is a good solution for your company

Private Exchanges

Defined Contribution model or Fixed ContributionOffer greater choice to employees

Create employee ownership of benefit choices Remove the employer from deciding the best benefit plan

Can include all benefit optionsPrivate Exchange is the distribution system…think

of a grocery store for insurance products.

What a Private Exchange is not….complicated!

Take a Look!

It is Very Simple!

Today’s Approach Private ExchangeEmployer determines benefits

to offerEmployer determines benefits

to offer

Employer sets employee contribution

Employer sets employee contributions

Benefit education meetings are held

Benefit education meetings are held

Employee makes elections based on what benefits they

want

Employee makes elections based on what benefits they

want

Employee enrolls via paper, electronic system, etc.

Employee enrolls via the Private Exchange platform

The Mechanics of a Private Exchange

Employer

Insurance Carrier

Health Reimbursemen

t Account

Technology Solution

Decision Support

Determine the products to offerFully Insured or Self-Insured

Establish contribution amount

Higher an administrator of the HRABuild connectivity with employer and carriers

Online benefit enrollment systemPotentially call support to facilitate enrollment

Determine how employees will be educatedOnline tools to assist in decision making

Critical component to make this successful

Provide the productEstablish rating of each product

Interface with the enrollment system

Employer

HRA

EnrollmentSystem

Decision Support

InsuranceCarrier

Defining the Mechanics

The Private Exchange Market

100’s of platforms to administer an exchange

Nearly all consulting/brokerage firms have a solution Including Russ Blakely & Associates

These are almost all technology platforms

The critical component is the Insurance Carriers

The Key to Insurance Company Participation

Single Carrier OptionMost all solutionsEliminates anti-selectionAllows any fundingTypically 4-6 optionsAvailable today for

larger employersMore limited in smaller

markets – but developing

Preferred Carrier Option

Multiple Carrier OptionExamples: AON, Buck,

Extend Typically fully-insuredMostly in place for very

large employersValue of transferring risk

and defined cost

The Local Private Exchange Market

• Single carrier only• 5 plans over 100

employees

• Insured or ASO• 3 plans only under 50

employees

•Under 50 3 packages of plans

•Over 50 developing

•Large single carrier

•Some of the national solutions

• Large single carrier

• No under 50 solution yet

• Some of the national solutions

• Single carrier only• Any funding option• 4-6 plans larger

employers• No small employer

solution yet

BCBSTN UHC

AetnaCigna

Critical Fact to Consider

Year 1•66% buy down•11% buy up•23% stay in similar AV plans

Year 2 •70% stay in the same plan•30% move to a different plan

Statistics from Bloom Health

How Are You Going to Control Cost?

If majority stay in the same plan Cost increase by 10% Employer contribution only increase 3-4% Employee will see significant increase in cost year-over-year

Cost control are even more important in Private Exchanges Clinical programs Wellness Limited networks Managed Pharmacy

Private Exchanges don’t take you out of managing benefits!!

Is a Private Exchange For You?

What are your long-term goals?

Can employees effectively use technology?

Do you need greater predictability on Company cost for benefits?

Will you benefit from greater choice?

Would there be a benefit of having employees take more control of their own needs?

Who will help you build the total Exchange solution?

Questions?