Several trends and market conditions came together to make private exchanges possible. Joe Markland of HR Technology Advisors sums them up well in this piece for Employee Benefit Advisor:
- Employers want simpler ways to offer benefits to employees, i.e. online tools vs. employee meetings.
- Employers are looking for more and better outsource services, i.e. single signup for payroll and benefits.
- Employers want predictable costs for benefits, i.e. defined contribution payment model.
- Employees want more financial wellness information as they take more responsibility for their healthcare costs, i.e. investment strategies for 401(k)s and HSAs.
Another trend that has surfaced recently is the combination of private exchanges and voluntary benefits. hCentive added Assurant Employee Benefits, Chard Snyder, and Guardian, among other benefits, to its WebInsure Benefits offering. Liazon partnered with Aflac to offer critical incident, accident, and hospital indemnity. And employees are signing up: Liazon reported that “nearly half of employees buying a qualifying health plan purchased a voluntary offering during 2015 open enrollment.” About 35% of employees in Mercer’s Marketplace bought at least one voluntary benefit in 2015.
These offerings are more than the traditional dental and vision plans that have become commonplace in employee benefits. Employee Benefit News/Employee Benefit Advisor and SourceMedia Research surveyed 273 organizations representing a broad spectrum of employers. These employers expressed interest in a wide range of nonmedical benefits:
The top three benefits, wellness, retirement, and financial/retirement services, are traditionally included to some degree in large company benefit packages. Private exchanges make these capabilities more accessible to smaller companies although the survey’s authors note “relatively few (11%) of employers in the under-100-employee segment reported being ‘very interested’ in the prospect of incorporating wellness and retirement benefits into private exchanges.”
Other categories on the list such as privacy protection, legal services, and gym memberships have been included in expanded benefit offerings for some time. The strong representation in the neutral and somewhat interested levels could indicate that since these benefits are already voluntary, there’s no need to move them to an exchange. This thinking could change as exchanges become more prevalent.
Defined contribution funding for employee benefits takes the art of workplace marketing to a whole new level. Is there an opportunity for your business?