What are private exchanges?

A private exchange is an online resource, usually a website, where employers (or employees themselves) can shop for health insurance and enroll in a plan.

Private exchanges now come now come in all shapes and sizes:

• Fully insured, self-funded, or a combination
• Comprehensive or simple
• Fully baked or customizable
• For active employees or for retirees.

Some employers have found these designs to be an attractive way to deliver health coverage that expands choices for employees and improves services and support.

They may even reduce costs. But other employers find the private exchange landscape complex and misleading and believe it to make promises without a return on investment.

Private exchanges: pros and cons

Before switching to a private exchange, ask yourself these questions. 

• Does the plan design meet the healthcare insurance priorities of your workforce?
• Will the cost and coverage keep you competitive?
• Who would be the named fiduciary of your plan?
• What components of the plan are required vs. customizable?
• Does the exchange provide data about workforce healthcare trends and utilization?
• What point solutions or vendors are part of the exchange and how are they paid?
• What are the service guarantees promised by the exchange?

Evaluating existing private exchanges

If you already sponsor a private exchange, is it doing everything it promised?

Some organizations that chose to join an exchange are now reevaluating their options and determining if it is still the right fit.

If that description applies to your organization, perhaps it’s time to take a fresh look at whether your exchange is doing all it promised.

For example, Segal is one of the only comprehensive full-service HR and employee benefit consulting firms that doesn’t offer a private exchange, because we believe that it would compromise our objectivity.

If you're looking to assess your existing sponsorship of a private exchange, or to begin sponsoring one, we can get help you evaluate. Get in touch.