Most sales pitches about private exchanges position them as a game-changing way to cut benefit costs while offering employees more choices. While the market will determine whether the private exchanges can deliver on their cost-savings promise over time, they may prove to be appealing for some organizations even if they are cost-neutral, given their other attributes.
The prospect of spending several months forecasting health and benefit budgets, and then either gaining approval or spending even more time refining the budgets by tweaking the plan design, can exhaust a weary human resources (HR) benefits staff. Here are four questions for your organization to consider.
1. Is the HR team keeping up with all of the latest requirements of the Patient Protection and Affordable Care Act (ACA), including the new reporting requirements?
2. Does HR spend more time reviewing budgets and plan designs annually than makes sense?
3. Are the number of vendor contracts and meetings still manageable?
4. Does HR have the support of the management team to hire staff to effectively deal with all of the above?
If you answer no to any of these questions we recommend evaluating an outsourcing solution, or an outsourcing upgrade. In addition, you could also consider a private exchange. Below we show a comparison between outsourcing and private exchanges:
|Manage Enrollment and Vendor Data Feeds||Yes||Yes|
|Outsource Vendor Renewals||No||Yes|
|Rate and Budget Setting||No||Yes|
While the private exchange solution offers a couple of key advantages, it also comes with some downside. Once your organization is committed to exploring either of these options, we encourage you to also consider the following:
• To what degree is your organization’s culture consistent with the change?
• Is there a risk to your organization’s reputation for making this type of change?
• Will your new vendor improve the employee/dependent experience in dealing with enrollment and issues?
• Will the cost of the additional administration be offset by decreases in soft dollars within your organization? Will you be able to show that to decision makers?
• How long is the contract? Are there early termination penalties?
• What if, two to three years down the road, the private exchange decides to evolve to a platform that you are no longer comfortable with? Can you take it back in-house?
Milliman is here to help you work through issues with HR fatigue to find the best solution for your organization.