Why Providing More Employee Benefits Choices Creates a Better Workforce
In response to the changes introduced by the Affordable Care Act (ACA), a paradigm shift has occurred in employers’ health insurance strategy. Instead of offering a defined benefit model of health insurance, an increasing number of employers are switching over to the defined contribution model offered by private insurance exchanges. This switch is analogous to the changeover from employer pension plans to 401K retirement accounts. It enables employers to cap their health care expenditures in the face of rising provider costs, while also improving employee morale and health by supporting their needs for more control over their own health care through enhanced employee benefits choices. Here’s a brief overview of how this model works and how it benefits both employer and employee.
Private Benefits Exchanges
Private benefits exchanges are somewhat similar to the public exchanges created by the ACA, but they go beyond offering basic health insurance. Instead, they provide a more comprehensive menu of benefits including such ancillary services as vision, dental and life insurance as well as Health Savings Accounts. Your employees can choose from among a selection of plan options and designs, while your contribution is standardized and capped. As an employer, you are freed from the escalating costs of the “defined benefit” approach, in which employers are required to pay for a specific portion of each health plan option.
Consumer-Driven Health Care
Health care is becoming more consumer-driven. The National Center for Policy Analysis points out that this trend is leading to better overall health care, because consumers are able to compare prices and shop online for the medical services they need. In response, doctors are repackaging their treatments in ways that meet consumer demand. A white paper by Booz & Company on private health insurance exchanges comments that “Private health insurance exchanges with a defined contribution approach represent a significant step toward catalyzing this change [towards a model driven by employees and consumers.]” Using the set amount of their employer’s contribution, workers are given the freedom to assemble the exact benefits that make the most sense for their family situation.
A Growing Trend In Offering More Employee Benefits Choices
Because private health insurance exchanges meet their real-life needs, more and more employees are eager to participate in them. In fact, enrollment in private exchanges doubled b, with the number of enrollees going from 3 million to 6 million in just one year. A survey published by the Society for Human Resource Management points out that employees feel empowered by their ability to sort and filter their options: “Almost 80 percent of exchange enrollees said they were confident they chose the health plan that offered the best value for them and their family, and almost all (93 percent) indicated they liked being able to choose among multiple carriers.”
To determine the scope of plans that will best suit your employees, as well as your legal obligations under the ACA, talk with the employee benefits team at Lawley to determine if Lawley Marketplace would be the right solution for your workforce.
