XYZ Company

Are Private Exchanges for My Organization?
Presented by: Robert Crisan, SVP
Healthcare Reform and Strategic Growth
Employee Benefits
Thursday, October 2, 2014
History
Employee Benefits
History - Exchanges
•
ehealth, inc. was founded in 1997
– ehealthinsurance.com
– Online individual
•
Extend Health provided the first
Medicare exchange in 2004 for
Chrysler
– IBM, Time Warner and more
than 300 other major
corporations have outsourced
their retiree plan administration
to an exchange
Employee Benefits
Important Employer Sponsored Health Insurance Concepts
• Employer Subsidy – Not taxed as income
• Employee Portion/Contribution – Done pre-tax
• Overall expense is tax deductible to Employer (If for profit)
What a Private Exchange
Looks Like
Employee Benefits
The Private Exchange Model
Online Mall
•Consumer shops for services
Employer
Private Exchange
(Technology)
•Decides on Partner/
Technology/Insurer
•Deposits money on behalf of each
member into account (HRA) or
makes credits/cash available
through cafeteria plan
$
$
Created by:
Insurer or Agent or Technology
Health
Insurance
Pharmacy
•Insurer or agent partners with
technology
•Manages health accounts for employees
Wellness
•Has various products and services “on
the shelf”
Consumer
•Uses dollars to purchase
insurance and other
benefits
•Educated about available
options and tradeoffs
Source: Society of Actuaries - 2013
•Helps individuals buy services tailored to
their needs
Ancillary
•Can offer many more options than most
employers can offer outside of exchange
Other
•Brings stakeholders closer to impending
health care reform changes (Can be
designed with metal tiers to look like
Health Insurance Marketplace)
Employee Benefits
POS
$$$$
POS
$$$$
DENTAL
LIFE
LONG TERM
DISABILITY
VISION
HMO 1
$$$
DENTAL
3 OPTIONS
LIFE
10
OPTIONS
HMO 2
$$
LONG TERM
DISABILITY
3 OPTIONS
SHORT
TERM
DISABILITY
6 OPTIONS
POS HSA
$$
CRITICAL
ILLNESS
HMO HSA 1
$$
ACCIDENT
TELEMEDICINE
HMO HSA 2
$
WELLNESS
3 OPTIONS
PET
7
Private Exchange
Characteristics
Employee Benefits
Core Characteristics of a Private Exchange
• A set of health plans
– Defined plans to pick from
• ACA compliant environment
• Ability to switch to defined
contribution
– Technology
Source: The Henry Kaiser Family Foundation – Examining Private Exchanges in
the Employer-Sponsored Insurance Market
Employee Benefits
Additional Private Exchange Elements
• Decision assistance and
Support
• Ancillary offerings
• Health and wellness programs
• Benefits Administration
– Payroll and 401(k)
administration for smaller
employers
Source: The Henry Kaiser Family Foundation – Examining Private Exchanges in
the Employer-Sponsored Insurance Market
Employee Benefits
Private Exchange Models – Primarily Group Population
Single Carrier
Originated by Insurer
Players
•BCBSM,
Wellpoint,Highmark
(Bloom)
•Aetna
•UHC
•CIGNA
Single Carrier
Originated by
Technology
•Liazon – Bright
Choices in 2007
Single Carrier
Originated by
Agent/Broker/
Consultant
Multi-Carrier Originated by
Agent/Broker/Consultant
•Mercer-Benefit Focus
•Hylant-Liazon
•Towers-Liazon (owns)
•Gallagher–Liazon
•Others
•Aon Hewitt – Developed own
•Mercer-Benefit Focus
Description
•Designed to keep
membership
•More choice than if you
don’t enter exchange
•Started to “sell” their
technology
•Various arrangements
with insurers by state
•Possibly multiple
insurers to pick from
but then choose one
•Funding can vary
•Fully insured, fixed plan
design
•Funding can vary
Approximate
Size of
Employer
•Varies but generally
larger (50+ depending
on Insurer)
•Started smaller, target
is over 50 employees
•Varies (50+)
•Large to Jumbo (Darden,
Walgreens, Sears)
•Large = 1,000+
•Jumbo – 150,000
Employee Benefits
Current Stats - 2014
•
Estimated 2.5 Million
– 1.7 Million group plan enrollees
– 700,000 Individual Medicare
– 100,000 Individuals
•
Total Employer-Sponsored Health
Insurance Coverage
– 149 Million, nearly 56% of the U.S.
non-elderly population
Source: The Henry Kaiser Family Foundation – Examining Private Exchanges in
the Employer-Sponsored Insurance Market
1.14%
Employee Benefits
Trends for Employers
• Shift to defined contribution
• Large employers moving to
insured
• Decrease employer
involvement in the
administration of health
insurance
• Evolving employer approaches
to wellness
• Increased access to data
Source: The Henry Kaiser Family Foundation – Examining Private Exchanges in
the Employer-Sponsored Insurance Market
Employee Benefits
Implications for Consumers
• More Choice
• Increased enrollment in
consumer-directed health plans
• Increase selection of ancillary
products
• Potential for increased financial
burden
• Decreased plan switching over
time
• Provisions of services to
consumers beyond enrollment
Source: The Henry Kaiser Family Foundation – Examining Private Exchanges in
the Employer-Sponsored Insurance Market
Employee Benefits
Potential Unintended Consequences of Moving to Higher OOP?
• When I underinsure myself, what happens?
– Docs/Hospitals don’t get paid
– Start demanding payment up front
– Employees get bills
– Employees get collection notices
Employee Benefits
Employer Attitudes
Employee Benefits
Up from 9% in 2013
Employee Attitudes
Employee Benefits
Employee Benefits
Employee Benefits
Employee Benefits
Percentage of employees who strongly agree, “I am looking to my employer for
more help in achieving financial security through employee benefits.”
Older Boomers
39%
55%
Younger Boomers
42%
60%
Gen X (1965-1979)
53%
55%
Gen Y (1980-2000)
61%
64%
Total Employees
50%
2012
Source: MetLife – 12th Annual U.S. Employees Benefit Trends Study
58%
2013
Defined Contribution
Employee Benefits
Defined Contribution
Medical
Dental
Life
Disability
Employee Benefits
Defined Contribution
Medical
Dental
Life
Disability
Employee Benefits
Defined Contribution Example
Platinum
Single Rate
Administration
Total Rate
Silver
Bronze
$456.26
$396.75
$345.00
$300.00
$6.00
$6.00
$6.00
$6.00
$462.26
$402.75
$351.00
$306.00
$75.60
$30.60
ER Defined
Contribution =
90% of
Bronze Plan
Employee
Contribution
Gold
$275.40
$186.86
$127.35
Communication
Employee Benefits
Tips for Communication
•
We are changing from employees to consumers
•
We need to help with where the differences are
• Competition (choice of carriers)
• Choice
• Control (cost)
• Flexibility
•
Need to answer WIIFM and WIIFE
•
The #1 Hero of the story needs to be the consumer/participant
Employee Benefits
Tips for Communication
– Checklists for consumer
– Word can give us the grade
level we are writing at, we
need to write at 8th grade
level
– Shorter sentences and less
jargon
• (I think this goes for our
seminars as well)
Employee Benefits
Tips for Communication – Other Items
– Key elements to focus on
• Care transition – How will current care be handled with possible
new network and different docs?
• Pharmacy – there will be major changes in rules, steps, copays and
available drugs
– Plan of Action has to include:
• Understanding – I know what I need to do
• Emotions – My fears are being addressed
• Ability – I am confident I can do this
• Intent – I intend to do what I need to do
Hurdles
Employee Benefits
Hurdles
• Just invested in enrollment
technology
• Bad experience with insurance
company
• Population not tech savvy
• Great benefits with high % of
employer contribution
Employee Benefits
Hurdles
• To replicate exact benefits from
current employer plan to private
exchange may cost more
• Defined contribution is a really
new concept and may be
difficult
Employee Benefits
Price May be More – But Reduction of Choices May reduce Cost
Current
Cost for One
Employee
Example of voluntary
coverage pricing on a
Private Exchange
Medical
$400.00
$400.00 +
$6.00(technology)
Dental
$40.00
$48.00
Vision
$8.00
$9.60
Life
$10.00
$12.00
Short Term Disability
$15.00
$18.00
Long Term Disability
$20.00
$24.00
Total
$493.00
$517.60
$442.00
Total
Summary
Employee Benefits
Summary
•
Today, Private exchanges tend to be for:
– Employers who are tired of making unappreciated choices for their employees
– Want enrollment technology
– Want more choice for their employees
– Want to control their spend through defining their contribution
– Employees seem to want more choice but want employers continued help
Questions and Discussion
Bob Crisan –
Sr. Vice President, Health Care Reform & Strategic
Growth
For questions after today’s webinar, contact your
Hylant representative or email questions to:
EmployeeBenefits@Hylant.com