With public small-business insurance exchanges opening Oct. 1, two studies released this week show employer interest in private insurance exchanges is growing.
In its annual survey of employer health benefits released Tuesday, the Kaiser Family Foundation found that 29% of employers with 5,000 or more employees are considering private exchanges as an option for buying healthcare coverage for their employees. A day later, consulting firm Towers Watson released its Health Care Changes Ahead survey, which found that 37% of employers think private exchanges are a reasonable alternative to traditional employer coverage in 2014; 57% said they will be a viable option in 2015.
In private exchange arrangements, employers contribute a defined amount for each employee and let the employee select a plan from a number of options, with the employee paying out of pocket if the selected plan's premium exceeds the contribution. This caps premium costs for the employer and gives employees a financial incentive to choose less-expensive plans. Private exchanges are geared toward employers that buy fully insured products as well as self-insured companies. They are being offered by some of the largest benefits consulting firms and insurers in the country. Fully insured plans on private exchanges must comply with the insurance market rules and minimum benefit packages required by the Patient Protection and Affordable Care Act.