Since the exchanges were announced, there's been a lot of talk about how these marketplaces have the potential to change the entire landscape of employee benefits. But what's really happening?
The results of surveys with both employers and brokers say change has been slow. Based on a survey of more than 900 employers with 10 to 10,000 employees, about 21 percent say they're using exchanges for benefit offerings. Of these, more than half are offering benefits through a private exchange. Six percent are using a public exchange for medical but continue to offer other benefits, while 4 percent use a public exchange and no longer offer any benefits.
Most (55 percent) of those using a public or private exchange send all employees to the exchange. Almost one-third (28 percent) use some type of exchange but for active employees only, while 17 percent are using these for retirees only.
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Brokers also aren't rushing their clients to the private exchanges. Our 2014 Benefits Selling/Eastbridge survey found that most brokers suggest a private exchange to less than 5 percent of their clients. Brokers are somewhat more likely to suggest this than the voluntary broker.
Both surveys found that the use of private exchanges is more likely among larger employers and/or brokers focused on large cases.
But just because private exchanges haven't taken over the market yet, it does not mean they aren't going to have an impact. There are two other aspects to consider. First, what exactly is a private exchange? For many, exchanges are simply an enrollment platform that's used by an employer for offering benefits, with products tailored to each employer's needs. Defined contribution may or may not be offered. If that's the case, employers may not even realize they are a part of an "exchange."
Second, how many employees are open to using a private exchange for providing benefits, including voluntary, to their employees? Of those surveyed in a recent Eastbridge study, 30 percent are open to it. However, 35 percent are still unsure (maybe suggesting they are unsure of what is and is not an exchange).
The bottom line is that it is still too early to tell. Up until 2014, employers have wanted to maintain a status quo, not looking at making too many changes about benefits as they tried to understand PPACA.
But they're beginning to revisit the issue and are considering making some adjustments. What does this mean? Brokers need to talk to, and educate, their employer clients about the uses and types of exchanges. Taking the "mystery" out and explaining how exchanges can be used to offer a broader selection of products will help increase the usage of exchanges.
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