Want to Compete? Go Private

July 8, 2015

What’s the first question a job candidate might ask you during an interview? It’s not about their hours, your culture, or even your management style – it’s about your benefits package, specifically, healthcare coverage. Savvy candidates know that employer-sponsored health care programs are changing and shifting. Savvy employers know that to compete, they must offer job candidates a worthwhile benefits package.

Defined contribution retirement plans have been around for ages. The defined contribution plan for healthcare is relatively new but these plans are gaining momentum. Placing a defined contribution plan into a marketplace or private exchange is starting to make the most sense of all. Gone are the days when employers made all the choices and decisions for employees. New hires know enough about their needs and their interests to make decisions on their own. They want to be empowered to do so.

An estimated 6 million individuals enrolled in private health exchanges through their employer in 2015 so far, according to a recent Accenture study. Many pundits believed employers would simply drop health insurance, forcing individuals into public exchanges. This hasn’t happened, mainly because employers recognize the significance of having a solid benefits package for employees. The Accenture study notes “76 percent of consumers see health insurance as the primary or an important factor for continuing to work at their current employer. As employers seek a compelling alternative, the private exchange model of reducing costs and administrative burden emerges as a clear favorite.”

Reducing costs and administrative burdens – a win for employers. Having options and empowerment – a win for employees.

Private exchanges offer employees the opportunity to spend their allotted contribution in a way that best suits their needs. Ancillary products within the private exchange marketplace give employees the option to choose wellness programs, retail rewards, term life insurance and many more. Something the traditional employer sponsored plans lack.

Employers get greater predictability in benefit costs and since the private exchange is built on a technology platform designed for employee use, employer administrative loads are greatly diminished.

Need more reason to shift to a private exchange? The Cadillac Tax should do it. A 40% excise tax on high cost plans goes into effect in 2018. The American Health Policy Institute expects the Cadillac Tax to hit 17% of all businesses to the tune of $5 billion in new taxes. A private exchange that is compliant with the Affordable Care Act is the perfect solution to this potential tax burden.

So imagine your next job candidate being told that if they come to work for you they will get to decide which healthcare plan they want, they get to choose from a plethora of ancillary products AND they get to manage it all themselves. It will be a slam-dunk for you.

Originally posted by Maura Donley of CieloStar on June 10, 2015.

Michigan’s Insurance Exchange is brought to you by the Michigan Chamber of Commerce and powered by CieloStar. Learn more about this single source health care solution for individuals, employers and agents at www.michambermarketplace.org.