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XYZ Company
Are Private Exchanges for My Organization? Presented by: Robert Crisan, SVP Healthcare Reform and Strategic Growth Employee Benefits Thursday, October 2, 2014 History Employee Benefits History - Exchanges • ehealth, inc. was founded in 1997 – ehealthinsurance.com – Online individual • Extend Health provided the first Medicare exchange in 2004 for Chrysler – IBM, Time Warner and more than 300 other major corporations have outsourced their retiree plan administration to an exchange Employee Benefits Important Employer Sponsored Health Insurance Concepts • Employer Subsidy – Not taxed as income • Employee Portion/Contribution – Done pre-tax • Overall expense is tax deductible to Employer (If for profit) What a Private Exchange Looks Like Employee Benefits The Private Exchange Model Online Mall •Consumer shops for services Employer Private Exchange (Technology) •Decides on Partner/ Technology/Insurer •Deposits money on behalf of each member into account (HRA) or makes credits/cash available through cafeteria plan $ $ Created by: Insurer or Agent or Technology Health Insurance Pharmacy •Insurer or agent partners with technology •Manages health accounts for employees Wellness •Has various products and services “on the shelf” Consumer •Uses dollars to purchase insurance and other benefits •Educated about available options and tradeoffs Source: Society of Actuaries - 2013 •Helps individuals buy services tailored to their needs Ancillary •Can offer many more options than most employers can offer outside of exchange Other •Brings stakeholders closer to impending health care reform changes (Can be designed with metal tiers to look like Health Insurance Marketplace) Employee Benefits POS $$$$ POS $$$$ DENTAL LIFE LONG TERM DISABILITY VISION HMO 1 $$$ DENTAL 3 OPTIONS LIFE 10 OPTIONS HMO 2 $$ LONG TERM DISABILITY 3 OPTIONS SHORT TERM DISABILITY 6 OPTIONS POS HSA $$ CRITICAL ILLNESS HMO HSA 1 $$ ACCIDENT TELEMEDICINE HMO HSA 2 $ WELLNESS 3 OPTIONS PET 7 Private Exchange Characteristics Employee Benefits Core Characteristics of a Private Exchange • A set of health plans – Defined plans to pick from • ACA compliant environment • Ability to switch to defined contribution – Technology Source: The Henry Kaiser Family Foundation – Examining Private Exchanges in the Employer-Sponsored Insurance Market Employee Benefits Additional Private Exchange Elements • Decision assistance and Support • Ancillary offerings • Health and wellness programs • Benefits Administration – Payroll and 401(k) administration for smaller employers Source: The Henry Kaiser Family Foundation – Examining Private Exchanges in the Employer-Sponsored Insurance Market Employee Benefits Private Exchange Models – Primarily Group Population Single Carrier Originated by Insurer Players •BCBSM, Wellpoint,Highmark (Bloom) •Aetna •UHC •CIGNA Single Carrier Originated by Technology •Liazon – Bright Choices in 2007 Single Carrier Originated by Agent/Broker/ Consultant Multi-Carrier Originated by Agent/Broker/Consultant •Mercer-Benefit Focus •Hylant-Liazon •Towers-Liazon (owns) •Gallagher–Liazon •Others •Aon Hewitt – Developed own •Mercer-Benefit Focus Description •Designed to keep membership •More choice than if you don’t enter exchange •Started to “sell” their technology •Various arrangements with insurers by state •Possibly multiple insurers to pick from but then choose one •Funding can vary •Fully insured, fixed plan design •Funding can vary Approximate Size of Employer •Varies but generally larger (50+ depending on Insurer) •Started smaller, target is over 50 employees •Varies (50+) •Large to Jumbo (Darden, Walgreens, Sears) •Large = 1,000+ •Jumbo – 150,000 Employee Benefits Current Stats - 2014 • Estimated 2.5 Million – 1.7 Million group plan enrollees – 700,000 Individual Medicare – 100,000 Individuals • Total Employer-Sponsored Health Insurance Coverage – 149 Million, nearly 56% of the U.S. non-elderly population Source: The Henry Kaiser Family Foundation – Examining Private Exchanges in the Employer-Sponsored Insurance Market 1.14% Employee Benefits Trends for Employers • Shift to defined contribution • Large employers moving to insured • Decrease employer involvement in the administration of health insurance • Evolving employer approaches to wellness • Increased access to data Source: The Henry Kaiser Family Foundation – Examining Private Exchanges in the Employer-Sponsored Insurance Market Employee Benefits Implications for Consumers • More Choice • Increased enrollment in consumer-directed health plans • Increase selection of ancillary products • Potential for increased financial burden • Decreased plan switching over time • Provisions of services to consumers beyond enrollment Source: The Henry Kaiser Family Foundation – Examining Private Exchanges in the Employer-Sponsored Insurance Market Employee Benefits Potential Unintended Consequences of Moving to Higher OOP? • When I underinsure myself, what happens? – Docs/Hospitals don’t get paid – Start demanding payment up front – Employees get bills – Employees get collection notices Employee Benefits Employer Attitudes Employee Benefits Up from 9% in 2013 Employee Attitudes Employee Benefits Employee Benefits Employee Benefits Employee Benefits Percentage of employees who strongly agree, “I am looking to my employer for more help in achieving financial security through employee benefits.” Older Boomers 39% 55% Younger Boomers 42% 60% Gen X (1965-1979) 53% 55% Gen Y (1980-2000) 61% 64% Total Employees 50% 2012 Source: MetLife – 12th Annual U.S. Employees Benefit Trends Study 58% 2013 Defined Contribution Employee Benefits Defined Contribution Medical Dental Life Disability Employee Benefits Defined Contribution Medical Dental Life Disability Employee Benefits Defined Contribution Example Platinum Single Rate Administration Total Rate Silver Bronze $456.26 $396.75 $345.00 $300.00 $6.00 $6.00 $6.00 $6.00 $462.26 $402.75 $351.00 $306.00 $75.60 $30.60 ER Defined Contribution = 90% of Bronze Plan Employee Contribution Gold $275.40 $186.86 $127.35 Communication Employee Benefits Tips for Communication • We are changing from employees to consumers • We need to help with where the differences are • Competition (choice of carriers) • Choice • Control (cost) • Flexibility • Need to answer WIIFM and WIIFE • The #1 Hero of the story needs to be the consumer/participant Employee Benefits Tips for Communication – Checklists for consumer – Word can give us the grade level we are writing at, we need to write at 8th grade level – Shorter sentences and less jargon • (I think this goes for our seminars as well) Employee Benefits Tips for Communication – Other Items – Key elements to focus on • Care transition – How will current care be handled with possible new network and different docs? • Pharmacy – there will be major changes in rules, steps, copays and available drugs – Plan of Action has to include: • Understanding – I know what I need to do • Emotions – My fears are being addressed • Ability – I am confident I can do this • Intent – I intend to do what I need to do Hurdles Employee Benefits Hurdles • Just invested in enrollment technology • Bad experience with insurance company • Population not tech savvy • Great benefits with high % of employer contribution Employee Benefits Hurdles • To replicate exact benefits from current employer plan to private exchange may cost more • Defined contribution is a really new concept and may be difficult Employee Benefits Price May be More – But Reduction of Choices May reduce Cost Current Cost for One Employee Example of voluntary coverage pricing on a Private Exchange Medical $400.00 $400.00 + $6.00(technology) Dental $40.00 $48.00 Vision $8.00 $9.60 Life $10.00 $12.00 Short Term Disability $15.00 $18.00 Long Term Disability $20.00 $24.00 Total $493.00 $517.60 $442.00 Total Summary Employee Benefits Summary • Today, Private exchanges tend to be for: – Employers who are tired of making unappreciated choices for their employees – Want enrollment technology – Want more choice for their employees – Want to control their spend through defining their contribution – Employees seem to want more choice but want employers continued help Questions and Discussion Bob Crisan – Sr. Vice President, Health Care Reform & Strategic Growth For questions after today’s webinar, contact your Hylant representative or email questions to: [email protected]
