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Explaining the Exchanges to Employees Won't Be Easy

May 17, 2013
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Related Topics: Benefit Design and Communication, Health Care Costs, Health and Wellness, Health Care Benefits, Featured Article, Benefits
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Liazon, along with Bloom Health in Minneapolis, eHealthInsurance, in Mountain View, California, and Aon Hewitt are among the first to jump into the private exchange market. But a number of competitors, including Buck Consultants, Mercer and Towers Watson & Co. have also launched exchanges in recent years.

Eric Grossman, a senior partner at Mercer, which launched the Mercer Marketplace in January, says that employers introducing a private health exchange must tell employees not only how their benefits are changing but also how they are not changing.

"Just because their benefits will be delivered through an insurance exchange, their employer is still sponsoring that plan and providing them with coverage and not washing their hands of benefits," Grossman says. "One way to reinforce that is to put the company's name on the exchange. When an employer goes into the Mercer Marketplace portal they will see their employer's name front and center."

Decision support tools, like online health plan comparisons and cost estimators, will be key in smoothing the transition to a private exchange model, says Ken Sperling, Aon Hewitt's national health exchange strategy leader.

"We have invested significantly in decision-support tools," he says. "Employees are getting more choice than they are typically used to seeing, so it's very important. People can come online, and just like Amazon and Zappos, they can filter those plans however they want."

Employees can sort options by price, carrier and/or plan type, Sperling says.

Aon Hewitt, which launched its Corporate Health Exchange last year, enrolled more than 100,000 participants in the fall, including employees at Darden Restaurants Inc. and Sears Holding Corp. According to a post-enrollment analysis, 42 percent bought less coverage, 26 percent bought more and 32 percent chose a plan similar to their current coverage. Sperling points out that two-thirds said they had a good understanding of how the exchange works.

But perhaps the greatest communication challenge lies ahead as employees whose companies are moving to an exchange also start sifting through information on the public exchanges, which expect to enroll between 20 million and 30 million people.

Under the Affordable Care Act, employers will be required to offer health care benefits to employees who work at least 30 hours a week starting in January 2014. Employee contributions are capped at 9.5 percent of their income, which means that some employees may find a better package of benefits on the public exchanges if their employer's plan is considered unaffordable.

Families with income between 100 percent and 400 percent of the federal poverty level (between $23,550 and $94,200 for a family of four under 2013 guidelines) who purchase health insurance on the public exchanges are eligible for a premium tax subsidy to reduce the cost of coverage. Families offered coverage through their employer are not eligible for a subsidy unless the company plan does meet the minimum actuarial value of 60 percent or unless the family must pay more than 9.5 percent for the premium.

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