Health care reform will usher in a new era in providing benefits to employees of medical practices, clinics and hospitals. As we continue to look for ways to control costs and optimize employee benefit dollars, we will increasingly seek the best strategies and opportunities in this changing landscape.
In the first article of this series, we discussed the reality that health care reform and the Patient Protection and Affordable Care Act (PPACA) will provide you few new opportunities, tax credits or subsidies. We discussed a health benefits funding concept to define benefit selection under a tax friendly defined contribution approach.
About the private exchange
Health care reform has prompted development of a new benefits technology and distribution model called a private exchange that is nothing more than an online store allowing employers to offer Fortune 500 benefits. Ten or more health plan options, three dental plans, multiple disability plans, life insurance and a variety of ancillary and voluntary plans round out the offerings.
The cornerstone of the private exchange is a decision support tool that helps guide employees to the plans best suited for their current financial situations, risk tolerance and health status. Benefit education and communication are better than ever before – with the addition of videos-on-demand, live chats and phone support.
New technology provides employees and their families the best opportunity to fully understand their benefits and options available. They become better consumers of insurance and health care services. They can participate in wellness programs, health care advocacy and coordinated care programs.
JD Power queried more than 6,500 employers in May 2012 and “almost half of the respondents, 47 percent, say they definitely will or probably will switch to a defined contribution model within a private exchange, allowing employees to select the coverage that best fits their needs.”
Yes, the employer-provided benefits marketplace is changing.
A more consumer-centric approach to providing benefits will be the future, where individual employees are more engaged with their benefit plan decisions with a set benefit allowance to buy the plans that best fit their needs. This basic change will dramatically impact the real cost of benefits over the next several years.
By understanding how your practice may be impacted (or not) by PPACA, combined with a forward thinking strategy, you can continue to offer benefits to attract and retain valued employees.
* B. Michael Haffey, CLU, has more than 25 years of employee benefits experience and is the managing general agent for the ISMA’s group health insurance plan. Contact him here.