Private Exchanges – What Your Employees Need to Know to Navigate Them

If you’re considering moving your company’s health insurance benefits administration over to a private exchange, you probably have concerns about how the transition will be embraced by employees. Going from a defined benefits model to a defined contribution approach puts employees in charge of researching coverage options and choosing the right fit for their needs; for some, this will cause anxiety as individuals worry about how to navigate a private exchange solution. The change doesn’t need to be stressful for employees, so long as they understand the basics.

Private exchanges are like a store for health insurance: The term “private exchange” is somewhat technical in nature, which can be rather off-putting for individuals not familiar with the concept. Basically, the exchange is an online store where employees can access options, read more about coverage and compare pricing and plans. They’re in control of researching their insurance plans, just as they would do when shopping for a car. Employees are also able to see how their funds are being spent, so they can prioritize options to make the most of their contribution.

You contribute funds for employees to purchase insurance: In a defined contribution model, the employer designates a fixed amount for each employee to use for themselves and/or family members; funds are deposited into an account earmarked for spending on health insurance benefits. Employees access the private exchange online store and research choices as described above, and then use the funds in the account to pay for them. Funds are deposited into the employee accounts before income taxes, ensuring they receive the maximum benefit from their income.

Employees choose the options they need: Each employee is unique and has detailed knowledge of what’s necessary to meet their healthcare needs, so they can go “shopping” accordingly. Individuals with certain conditions can plan for their care, while others may opt for benefits they’ll take advantage of most often. Private exchanges offer a range of options that go beyond basic health care, including medial, vision and dental. Some even provide choices like wellness plans, disability, legal coverage and life insurance.

It’s essential to have the right support: Of course, the transition from a health insurance model where employers choose options for a group of employees, manage the plan and define the benefits is a big step. Employees are now in charge of their coverage and accountable for their decisions, so it’s important that your private exchange solution offer a high level of customer support. Not only are employees new at making health insurance decisions, but they’re also getting used to the technology which enables them to do so.

Paypro is excited to offer the Bright Choices® Exchange as a private exchange for clients seeking to move away from the traditional defined benefits approach to health insurance. This online store offers an easy to navigate, straightforward marketplace for employees to explore options and put together plans that suit their needs. To learn more about the benefits of a private exchange, please contact us to request a consultation with one of our Benefits Specialists.