Private Exchanges
Private exchanges are marketplaces with many insurance product offerings. It will be a place where most employees can meet their risk coverage needs through a single portal. Product offerings may include coverage for health, dental, vision, disability, critical illness, and even home and auto coverage. The private exchanges help small group employer’s move to a defined contribution model. This model shields the employer from cost increases with traditional small business insurance products. The employer can decide how much they want to contribute as a flat month amount per employee. Employees may consider this arrangement sub optimal, however, insurers will have to be competitive to compete in the marketplace. The new consumerism approach will drive less expensive insurance products that may have a lower rate of cost increases.
Private exchanges will change the employer’s roles and responsibilities. A small employer will no longer need to choose carriers, plan design, or worry about provider network choices. The exchange sponsor will provide all benefit management functions including compliance complexities of ACA, and drive the consumer experience.
