Editor’s Note: The following is adapted from the book "Employee Benefits and the New Health Care Landscape: How Private Exchange are Bringing Choice and Consumerism to America’s Workforce" by Alan Cohen, former head of product for the exchange solutions segment of Willis Towers Watson and the co-founder of Liazon. It includes commentary from benefits consultant Barbara Gniewek, a principal in PwC’s Global Human Resource Services practice.
Choice in products and plans is at the core of most online benefits marketplaces operating today. Without meaningful choice, a solution would be hard pressed to deliver the results for employee satisfaction that the industry is currently realizing. Together, these two industry experts offer six items to consider when moving to a marketplace solution.
Online benefit marketplaces, aka, private exchanges, have the ability to dramatically change an employer’s human capital strategy. Not only do they help employers control the escalating costs of health insurance and other benefits for their employees, but they also empower employees to choose their own benefits from a wide array of offerings, rather than have their employer make these decisions for them. Degree of choice in benefits products aside, following are six additional factors to consider when making the move to an online benefits marketplace for active employees.
1. Is elasticity built into its foundation?
The shift to employee choice has motivated carriers and new entrants into the benefits landscape to innovate and experiment. The expansion and improvement of product lines by carriers is a positive outgrowth of the private exchange paradigm shift, one that encourages them to create products that people want to buy. Online benefits marketplaces often include varied products such as accident, critical illness, and hospital indemnity insurance; telemedicine; health coaching; identity theft protection; paid time off (PTO) buy-up options; pet insurance; legal plans; and more.
Each of these product lines can be thought of as an aisle in the store. Each shelf on the aisle has different plans from different carriers that you can compare, just as you would buy products in the supermarket. Benefit stores were built on the concept of an aisle — medical insurance, which may be right next to the dental insurance and vision insurance aisles, and surrounding these are aisles that can expand to meet a broad range of products and needs, some of which may not even have been introduced yet. Who even heard of telemedicine 20 years ago? Within the store framework, innovation can be fueled such that aisles can be easily expanded to include new options, and that is the central concept of product merchandising within a benefits store.
2. Does it include decision support and educational tools?
Without decision support, shopping in an online benefits store is like visiting a supermarket where the packaged goods offer no label information. Decision support tools are necessary to deliver a positive customer experience. Employees who face too many options can become confused and overwhelmed if they can’t readily discern or understand the differences between products or make a value determination about how many products they need and at what cost. Numerous executives involved in adopting online benefits marketplaces have spoken about the importance of state-of-the-art user interface and decision support tools in increasing employee engagement.
“Giving employees choice and help in understanding the health care system is essential,” said Barbara Gniewek. “They want the tools to identify the doctors they need and understand the costs. They want to make really good decisions like how much to put into their health savings accounts (HSAs) each year, how to pay for different benefits and how to determine if they need disability or dental coverage and, “if so, how much.” Gniewek pointed out that employees—especially Millennials—want to be able to minimize their out-of-pocket costs and payroll deductions. In a 2017 survey from Willis Towers Watson, 96% of employees consider extensive education and decision support tools an important aspect of the benefits marketplace, and 84% found the recommendation engine helpful.
3. Are prices transparent?
Defined contribution, in which employers give employees money with which to shop in the marketplace to choose their own products, is best optimized when employees are aware of the value of employer contributions. As employers consider the offerings of exchange providers, one thing that should be top of mind is the ability to make the cost information about those benefits transparent. Transparent pricing—about both the full cost of benefits as well as the employer’s and employees’ shares—is key to a good shopping experience.
Barbara Gniewek explained the importance of price transparency:
Understanding that the price for an MRI is not the same in a doctor’s office, an outpatient clinic, and a free-standing MRI facility is very important to employees.
Employees need to know the best places to go, the best providers, and all of the costs. There are also advocacy and second opinion programs interspersed in exchange programs. While some employers also offer similar programs, it is difficult to get employees to be aware that these tools are available. When someone needs to find a facility or compare prices, he may not remember that he can use an employer resource to get help. However, with a marketplace, if all the resources are available on one easy-to-use dashboard, 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 how generous the employer is being and that some of these plans end up costing the employee very little or nothing. However, some employers may prefer not to disclose this information but rather opt 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 is exactly how much the plan will cost employees.
4. Does it integrate with value-added services?
As the private exchange landscape grows, more companies are cropping up to help benefits consumers reap new forms of benefits and also make sense of it all. The best marketplaces provide integration with third-party providers to enhance the non-insurance offerings available through the system. With wellness and well-being offerings a key focus for employers over the past few years and various value-added programs such as cost transparency tools, health advocacy services, and provider lookup becoming more widespread, the best marketplaces will allow for seamless integration of these types of services and more to round out their offerings.
“While health care has been the most important benefit in the employer–employee relationship, companies are now looking at benefits more broadly,” Barbara Gniewek noted. “The ideal marketplace, in my view, would not just offer health care and health and wellness programs but an overall rewards platform that could include education credits, credit and financial services, retirement planning, and an overall learning platform.” Gniewek said that she has seen dashboards covering all aspects of financial planning. “Today’s workforce is so diverse,” she said, “that employers must give people what they want, and a ‘one size fits all’ approach is not giving them the right care. The exchanges give people access to the right information so they can make the right choices. It is about giving them tools and engaging people to help them.”
5. Does it provide year-round support?
Enabling employees to choose benefits during open enrollment is the key function of an effective private exchange, but it’s not the only function. A benefits marketplace should be available all year so employees can review their benefits at any time, make changes in the event of major life events (for example, marriage or birth of a child), make changes to their HSA contributions, and track and manage their health care spending.
Direct support for employees should be provided through the marketplace in the form of customer service representatives who can be reached via phone or email to answer questions about benefits or using the system. Often a person signs up for dental insurance during open enrollment and has no idea who her insurer is when she goes to the dentist six months later. With a marketplace, she can log into her home page and see all her benefits information right there. And in certain platform configurations, she can easily contact someone if she has a question about what’s covered—even while she’s visiting the dentist!
6. To what extent does it handle benefits administration?
A marketplace should be able to handle basic benefits administration functions when it comes to online benefits enrollment (such as eligibility requirements, processing new hires and terminations, life events, payroll deductions, carrier integration, billing, reporting requirements). However, a benefits administration system is not necessarily in and of itself considered a benefits marketplace. What distinguishes a benefits marketplace is the ability to shop for benefits.
Further, a benefits marketplace is built to cover various aspects of not only the benefits enrollment process but the benefits usage process. It should be able to handle basic benefits administration functions such as incorporating spending/health care accounts, billing and payment services, dependent verification services, and COBRA. But benefits marketplaces go beyond these core capabilities of offering strong administrative functionality on the employer side, in that they are built with the employee user in mind.
Armed with this information and these key questions to ask any private exchange operator or provider, you can feel more comfortable about the prospect of identifying the online marketplace solution that can best meet the needs of your company – and your employees.