By Joseph Torella, Employee Benefits National Practice Leader

Since 2010, the Affordable Care Act (ACA) has thrown a lot of twists and turns at employers with 50 or more employees. In addition to contemplating how the many different aspects of compliance might impact them, employers have also grappled with how they might continue to offer an attractive employee benefits program in an environment of rising costs and increasing competitive pressures.  

As jumbo employers like Walgreens and Sears announced in 2013 that they were switching to a defined contribution strategy and launching their own private exchange solution, the inevitable questions arose:  Can mid-size or even small employers offer a private exchange to their employees?  Are there affordable technology platforms available?  Is a defined contribution strategy appropriate for groups as small as 15 lives? 

The answer to all of these questions is yes. 

A private exchange (or 'marketplace') solution is a viable alternative to traditional employee benefits for small, mid and large employers -- and one that you should examine to determine if it is the right fit for your company.

Clients of HUB International are already taking advantage of a marketplace solution designed by HUB to meet the needs of mid-market companies.  These early adopters are taking advantage of the Bright Choices Exchange and enjoying three key benefits:

  • Plan option flexibility for their employees;
  • Web-based decision support tools to facilitate the education and enrollment process;
  • Defined contribution strategy to control the employer's annual health benefits spend.

Following are two examples that illustrate how the HUB marketplace solution is helping employers control costs while increasing employee satisfaction:

Case Example 1

A technology services company in New Jersey with 70 employees was seeking a solution to control their rising health care costs. Their current medical carrier had presented them a 29% increase for 2013.  The employer engaged the services of HUB in the fall of 2012 to help them develop a new strategy that would enable them to continue offering a competitive employee benefits program. 

Together with the client, HUB conducted an employee survey and determined that in this particular situation, employees were very interested in having more choice in health plans. HUB identified an alternative carrier with a very strong provider network who was able to offer plans comparable to the incumbent carrier at a more competitive premium.   

HUB designed a "marketplace" specifically for this employer that included a choice of eight different medical plans (all from the one medical carrier selected by the employer).  The enrollment process went smoothly, thanks to the web-based tools available to help employees select plans based on their own personal needs. 

A key factor in the first year success of this new program was a wide array of benefits available on the platform that included everything from dental insurance to life insurance-- and even pet insurance, which turned out to be more popular with employees than dependent life or telemedicine options.

Plan

Enrollees

Participation

Medical

51

73%

Dental

46

66%

Vision

38

54%

Employee Life Insurance

31

44%

Supplemental Health

24

34%

LTD

21

30%

STD

18

26%

Spousal Life Insurance

9

13%

Pet Insurance

9

13%

Dependent Life Insurance

6

9%

Telemedicine

6

9%

Case Example 2

A non-profit organization with 90 employees had a premium medical spend of about $1.3 million with employees contributing approximately $236,000.  The renewal would have increased premium to approximately $1.4 million with the employees' stake rising to about $250,000.  The client elected to move to a HUB-defined contribution marketplace instead and was able to offer a wide array of benefit plans customized for their workforce.

With the enrollment now complete, employer and employee contributions will be approximately $200,000 less than what the traditional plan renewal would have been. With the money saved, employees were able to select additional coverage options that were not previously available to them under their traditional plan, including Long-term Disability, Short-term Disability, Voluntary Life, and Critical Illness insurance.

While a marketplace solution won't work for every client, setting a firm budget, widening the number of benefit options that are available for employees and providing a web-based decision support tool will not only help keep costs under control, but ensure a more effective approach to your employee benefits investment.

If you are interested in getting started but unsure of exactly how a defined contribution strategy might look like for your company, visit www.hubbrightchoices.com or talk with your HUB benefits consultant to learn how you can take control of your employee benefits costs while providing more options for your employees.