Editor’s Note: The following is adapted from the book"Employee Benefits and the New Health Care Landscape: HowPrivate Exchange are Bringing Choice and Consumerism to America’sWorkforce" by Alan Cohen, former head of product forthe exchange solutions segment of Willis Towers Watson and theco-founder of Liazon. It includes commentary from benefitsconsultant Barbara Gniewek, a principal in PwC’s Global HumanResource Services practice.

Choice in products and plans is at the core of most onlinebenefits marketplaces operating today. Without meaningful choice, asolution would be hard pressed to deliver the results for employeesatisfaction that the industry is currently realizing. Together,these two industry experts offer six items to consider whenmoving to a marketplace solution.

Online benefit marketplaces, aka, private exchanges, have the ability todramatically change an employer’s human capital strategy. Not onlydo they help employers control the escalating costs of healthinsurance and other benefits for their employees, but they alsoempower employees to choose their own benefits from a wide array ofofferings, rather than have their employer make these decisions forthem. Degree of choice in benefits products aside, following aresix additional factors to consider when making the move to anonline benefits marketplace for active employees.

1. Is elasticity built into its foundation?

The shift to employee choice has motivated carriers and newentrants into the benefits landscape to innovate and experiment.The expansion and improvement of product lines by carriers is apositive outgrowth of the private exchange paradigm shift, one thatencourages them to create products that people want to buy. Onlinebenefits marketplaces often include varied products such asaccident, critical illness, and hospital indemnity insurance;telemedicine; health coaching; identity theft protection; paid time off (PTO) buy-up options; petinsurance; legal plans; and more.

Each of these product lines can be thought of as an aisle in thestore. Each shelf on the aisle has different plans from differentcarriers that you can compare, just as you would buy products inthe supermarket. Benefit stores were built on the concept of anaisle — medical insurance, which may be right next to the dentalinsurance and vision insurance aisles, and surrounding these areaisles that can expand to meet a broad range of products and needs,some of which may not even have been introduced yet. Who even heardof telemedicine 20 years ago? Within the store framework,innovation can be fueled such that aisles can be easily expanded toinclude new options, and that is the central concept of productmerchandising within a benefits store.

2. Does it include decision support and educationaltools?

Without decision support, shopping in an online benefits storeis like visiting a supermarket where the packaged goods offer nolabel information. Decision support tools are necessary to delivera positive customer experience. Employees who face too many optionscan become confused and overwhelmed if they can’t readily discernor understand the differences between products or make a valuedetermination about how many products they need and at what cost.Numerous executives involved in adopting online benefitsmarketplaces have spoken about the importance of state-of-the-artuser interface and decision support tools in increasing employeeengagement.

“Giving employees choice and help in understanding the healthcare system is essential,” said Barbara Gniewek. “They want thetools to identify the doctors they need and understand the costs.They want to make really good decisions like how much to put intotheir health savings accounts (HSAs) each year, how to pay fordifferent benefits and how to determine if they need disability ordental coverage and, “if so, how much.” Gniewek pointed out thatemployees—especially Millennials—want to be able to minimize theirout-of-pocket costs and payroll deductions. In a 2017 survey fromWillis Towers Watson, 96% of employees consider extensive educationand decision support tools an important aspect of the benefitsmarketplace, and 84% found the recommendation engine helpful.

3. Are prices transparent?

Defined contribution, in which employers give employees moneywith which to shop in the marketplace to choose their own products,is best optimized when employees are aware of the value of employercontributions. As employers consider the offerings of exchangeproviders, one thing that should be top of mind is the ability tomake the cost information about those benefits transparent.Transparent pricing—about both the full cost of benefits as well asthe employer’s and employees’ shares—is key to a good shoppingexperience.

Barbara Gniewek explained the importance of pricetransparency:

Understanding that the price for an MRI is not the same in adoctor’s office, an outpatient clinic, and a free-standing MRIfacility is very important to employees.

Employees need to know the best places to go, the bestproviders, and all of the costs. There are also advocacy and secondopinion programs interspersed in exchange programs. While someemployers also offer similar programs, it is difficult to getemployees to be aware that these tools are available. When someoneneeds to find a facility or compare prices, he may not rememberthat he can use an employer resource to get help. However, with amarketplace, if all the resources are available on one easy-to-usedashboard, the employee will have a very different — and favorable— experience.

Displaying how much employers are spending on their employees’benefits is a form of transparency. With defined contribution,behavioral economics are at work when the employee sees howgenerous the employer is being and that some of these plans end upcosting the employee very little or nothing. However, someemployers may prefer not to disclose this information but ratheropt to display the “net cost” of plan prices in their marketplaces.This is the cost of the plan minus the employer’s contribution(which is not visible to employees) so that what is displayed isexactly how much the plan will cost employees.

4. Does it integrate with value-addedservices?

As the private exchange landscape grows, more companies arecropping up to help benefits consumers reap new forms of benefitsand also make sense of it all. The best marketplaces provideintegration with third-party providers to enhance the non-insuranceofferings available through the system. With wellness and well-being offerings a key focusfor employers over the past few years and various value-addedprograms such as cost transparency tools, health advocacy services,and provider lookup becoming more widespread, the best marketplaceswill allow for seamless integration of these types of services andmore to round out their offerings.

“While health care has been the most important benefit in theemployer–employee relationship, companies are now looking atbenefits more broadly,” Barbara Gniewek noted. “The idealmarketplace, in my view, would not just offer health care andhealth and wellness programs but an overall rewards platform thatcould include education credits, credit and financial services,retirement planning, and an overall learning platform.” Gnieweksaid that she has seen dashboards covering all aspects of financialplanning. “Today’s workforce is so diverse,” she said, “thatemployers must give people what they want, and a ‘one size fitsall’ approach is not giving them the right care. The exchanges givepeople access to the right information so they can make the rightchoices. It is about giving them tools and engaging people to helpthem.”

5. Does it provide year-round support?

Enabling employees to choose benefits during open enrollment isthe key function of an effective private exchange, but it’s not theonly function. A benefits marketplace should be available all yearso employees can review their benefits at any time, make changes inthe event of major life events (for example, marriage or birth of achild), make changes to their HSA contributions, and track andmanage their health care spending.

Direct support for employees should be provided through themarketplace in the form of customer service representatives who canbe reached via phone or email to answer questions about benefits orusing the system. Often a person signs up for dental insuranceduring open enrollment and has no idea who her insurer is when shegoes to the dentist six months later. With a marketplace, shecan log into her home page and see all her benefits informationright there. And in certain platform configurations, she can easilycontact someone if she has a question about what’s covered—evenwhile she’s visiting the dentist!

6. To what extent does it handle benefitsadministration?

A marketplace should be able to handle basic benefitsadministration functions when it comes to online benefits enrollment (such as eligibilityrequirements, processing new hires and terminations, life events,payroll deductions, carrier integration, billing, reportingrequirements). However, a benefits administration system is notnecessarily in and of itself considered a benefits marketplace.What distinguishes a benefits marketplace is the ability to shopfor benefits.

Further, a benefits marketplace is built to cover variousaspects of not only thebenefits enrollment process but thebenefits usage process. It should be able tohandle basic benefits administration functions such asincorporating spending/health care accounts, billing and paymentservices, dependent verification services, and COBRA. But benefitsmarketplaces go beyond these core capabilities of offering strongadministrative functionality on the employer side, in that they arebuilt with the employee user in mind.

Summary

Armed with this information and these key questions to ask anyprivate exchange operator or provider, you can feel morecomfortable about the prospect of identifying the onlinemarketplace solution that can best meet the needs of your company –and your employees.