If you are a mid-size employer (50-5,000 employees), you are likely considering a private exchange to affordably handle your benefits complexity (eligibility management, payroll deduction, billing and reconciliation, enrollment and claims issues, defined contribution automation, etc.) while reaping the benefits of cost certainty from a defined contribution model. Indeed, beyond the many advantages of private exchanges, they are particularly appealing to those who can’t afford high reliability organization (HRO), human resource information services (HRIS), Benefits Administration outsourcing and other similar services, since these services are all built in. However, you may not know about three other advantages of private exchanges
- “Leakage” control
- Reduction in “Over Insured Syndrome”
- Amazon-izing the user experience
“Leakage” is when overpaid premiums and under-deducted payroll deductions sap your bottom line. UBA has found that its private exchange program model has proven to decrease this traditional group insurance phenomenon. In fact, an audit discovered that before moving to the program, which included comprehensive benefit accounting services, one 3,000 life company was losing $50,000 per month in leakage!
UBA Partner Firm Hanna Global also studied their traditional group coverage claimants and found that 60-70% have claims under $1,000 and yet they bought plans that cost and cover a lot more—“Over Insured Syndrome!” Private exchanges more effectively provide decision support and, as a result, 80% of employees are migrating to lower cost plans! In fact, UBA recently weighed in on a CFO article detailing how employees are choosing more appropriate coverage levels on private exchanges.
Health care insurance shopping is the last paper dinosaur — forms to fill out… excel grids showing costs and benefits… a PowerPoint presentation to employees gathered in a conference room. Why is it that way? For the first time, private exchanges allow us to “Amazon-ize” the shopping experience, and employees LOVE it! Finally, HR can offer a “big company experience” without the big company cost!