Private Exchanges
March 12, 2014
Presented by:
Brent Wick
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 Contribution
 Offer greater choice to employees
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Create employee ownership of benefit choices
Remove the employer from deciding the best benefit plan
 Can include all benefit options
 Private 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 Exchange
Employer determines benefits to
offer
Employer 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 Employee makes elections based on
what benefits they want
what benefits they want
Employee enrolls via paper,
electronic system, etc.
Employee enrolls via the
Private Exchange platform
The Mechanics of a Private Exchange
Insurance
Carrier
Decision Support
Employer
Technology
Solution
Health
Reimbursement
Account
Defining the Mechanics
Employer
•Determine the products to offer
•Fully Insured or Self-Insured
•Establish contribution amount
HRA
•Higher an administrator of the HRA
•Build connectivity with employer and carriers
Enrollment
System
•Online benefit enrollment system
•Potentially call support to facilitate enrollment
Decision
Support
Insurance
Carrier
•Determine how employees will be educated
•Online tools to assist in decision making
•Critical component to make this successful
•Provide the product
•Establish rating of each product
•Interface with the enrollment system
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
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Single Carrier Option
Most all solutions
Eliminates anti-selection
Allows any funding
Typically 4-6 options
Available today for larger
employers
More limited in smaller
markets – but developing
Preferred Carrier Option

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Multiple Carrier Option
Examples: AON, Buck,
Extend
Typically fully-insured
Mostly in place for very large
employers
Value of transferring risk
and defined cost
The Local Private Exchange Market
•Under 50 3
packages of plans
•Over 50 developing
•Large single carrier
•Some of the
national solutions
• Single carrier only
• 5 plans over 100
employees
• Insured or ASO
• 3 plans only under
50 employees
• Single carrier only
• Any funding option
• 4-6 plans larger
employers
• No small employer
solution yet
BCBSTN
UHC
Cigna
Aetna
• Large single carrier
• No under 50 solution
yet
• Some of the national
solutions
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
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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
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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?