Private Exchange

Health care is changing. And Liazon is helping.

Rising costs. Changing laws. The health insurance world is changing, and it’s harder than ever for employers to offer employees quality benefits that keep them protected against financial risk.

Now there is a better way to administer benefits to your employees — with a private exchange.

Since 2007, Liazon has been at the forefront of the growing private exchange movement.

Here’s a Private Exchange 101 to get you up to speed:

What is a private exchange?

A private exchange is an online store or marketplace where employers purchase benefits using funding contributed by the employers.

Employers set an amount of money for their employees' benefits

Employers set an amount of money for their employees' benefits

Employees choose the benefits that make sense for their unique needs

Employees choose the benefits that make sense for their unique needs

Transparent pricing lets employees see the true cost of benefits and the value of their employer's contribution to their financial well being

Transparent pricing lets employees see the true cost of benefits and the value of their employer's contribution to their financial well being

What are the advantages to a private exchange?

For Employers:

  • Gain cost control and predictability
  • Streamline administrative tasks
  • Get out of the benefits business
  • Enhance employee benefits experience

For Employees:

  • Gain control over benefits costs
  • Find the plans that best fit their unique needs
  • Understand and appreciate the value of their benefits
  • Become better health care consumers

What are the key features to a successful exchange?

1

Funding for coverage

A system where the funds for health care coverage are seamlessly transferred from the employee and/or the employer to the insurance carrier providing the coverage.

2

Inventory of medical plans

Ability to choose from a meaningful selection of medical plans with varying plan designs.

3

Supplemental insurance products

Access to supplemental products such as dental, vision, disability and wellness programs, giving employees a wider range of choice and potentially greater protection for their unique risks.

4

Decision support

Ability to provide the support employees need to determine the package that is right for them, including education and plan recommendation tools, and price transparency on products.

5

Comprehensive support services

Service provided at the front-end of the purchasing process as well as the necessary services to ensure the employee gets coverage on the back-end.

How does a private exchange differ from a public exchange?

Private Exchange
Public Exchange
Who uses it?
Active and retired employees of companies who provide benefits
Primarily individuals purchasing insurance on their own for themselves and their families
Who operates it?
Private companies
Government bodies - individual states or the federal government
What products are available?
Often a wide range of benefits including health care plans across a range of price points, dental, vision, life, disability, critical illness, wellness, legal plans, and even pet insurance and telemedicine
Medical, dental and vision
Are subsidies available?
No
Yes

What is a benefits exchange?

A benefits exchange is an online store where employees can purchase benefits. Exchanges offer multiple health insurance options, and may also offer other benefits, such as dental, vision, life, disability, and exchanges that are “private” are run by businesses including brokers and insurers, while “public” exchanges are run by state and federal governments.

How does a private exchange work?

In most cases, the employer uses a defined contribution funding strategy to give each employee a set amount of money to purchase benefits. Employees and their families can then go shopping in the exchange with the money allocated by their employer and add their own if they choose to. Some private exchanges like Liazon give employees guidance and education about the plans to help them make smart purchasing decisions.

How do private health exchanges fit in with Health Care Reform?

The Affordable Care Act (also referred to as Health Care Reform and Obamacare) mandated the creation of highly regulated, public health insurance exchanges. These public exchanges for purchasing individual and family coverage have been rolled out across the country. Public exchanges allow for a federal tax subsidy when household income is less than four times the federal poverty level and when there is no other coverage available (through employers, Medicaid or Medicare).

For employers and individuals, private exchanges have been created that offer more options and innovations. In fact, private exchanges have existed for years – mainly for retiree/Medicare individual plans. Now sophisticated private exchanges, like Bright Choices®, offer tremendous advantages to employers that pay for all or a portion of the costs of employee benefit plans.

Why are employers choosing private exchanges?

Employers face a number of challenges in today’s market. Health insurance costs keep increasing. Costs are hard to predict from year-to-year, and employers often find themselves tweaking benefits and switching carriers – but they find there are limited options when it comes to plans. Add to this that employees don’t fully understand or value their benefits, and it’s a recipe for confusion.

How can employers simultaneously control costs while offering valuable benefits to employees that helps them take a more active role in their own health care decisions?

Many employers are finding the answer in private health care exchanges like Bright Choices which allow employees to choose their own coverage using defined contribution dollars allocated by their employer.

Private exchanges help to:

  • Control costs, provide predictable budgeting and streamline benefits administration
  • Empower employees to make informed purchasing decisions about benefits
  • Provide a wide range of benefits to better lower financial risk
  • Maximize the value of benefits as a recruiting and retention tool while increasing cost transparency

How does Liazon fit in?

The Bright Choices Exchange, Liazon's flagship product, is an online benefits store that is changing the way employers and employees buy benefits. Bright Choices helps employers save money on their health care costs by setting predictable budgets while allowing employees to personalize their benefits package with a selection of health, dental, vision, life, disability, and other benefits from top national and regional providers. Award-winning decision support and education helps employees make smarter benefits selections.

“In the next three to five years, 33% of employers plan to begin offering group-based health benefits to active employees through private health exchanges.”
– Business Management Daily

“Giving employees transparency, control, and skin in the game unlocks value.”
– Todd Hixon, Forbes.com