Private exchanges are growing fast, but changing rapidly. Benefits platforms and private exchanges continue robust growth, with 12 million enrollments projected in 2016, but the technology landscape is set for shake-out. Employers are focusing on value — better cost management, benefits choice, and user experience. While more than 15 percent of brokers plan to spend $1 million+ on technology in 2016 to assist employers, they will need to leverage the right technology platforms to take on both established and emerging competition and fulfill employer (and employee) expectations with value.
Employers feel the squeeze and seek solutions: Small to mid-size employers often lack the resources to access a range of benefits and affordable choices in a convenient way, even as they compete with large employers to attract and retain employees. In a pulse survey of 30 small to mid-sized employers in the Mid-Atlantic and Northeast conducted by hCentive, nearly 75 percent said they use an agency or broker for employee benefits. However, employer experience with brokers is inconsistent in involvement and support. Cost containment is an overwhelming concern for employers and they look to brokers to assist them in remaining competitive and controllling costs at the same time (e.g., propose different carrier or plan design or alternate contribution strategy).
Employers want transparent choice of benefit designs to control costs but also to configure benefits and contribution strategies that fit best with their business, employees and budget. For example, decide between changing carriers due to high premium increase or selecting http://www.benefitspro.com/2015/09/24/many-employees-regret-choosing-high-deductible-pla paired with a health savings accounts (HSA).
Employers rely on brokers to provide better choices that are easy to understand as well as offer tools to help guide the decision. Small to mid-size employers are underserved and hold growth potential, but face challenges in benefits choices and making the administration simple for all.
In 2016, we expect continued strong demand from the broker and employer community for benefits marketplace platforms and private exchange solutions that specifically include solutions for small and mid-size employers. Employers who bypassed their brokers and turned to technology vendors promising easy-to-use “freemium” offerings across HR/payroll/benefits realize they still need broker guidance and robust compliance support.
Brokers who adopt a benefits marketplace platform to efficiently serve the group market clients (employers and employees) to select, configure and package the right benefits will win in this market.
Product range is a key driver of value: A variety of health plan models (narrow networks, ACOs, HDHPs) allow brokers and employers to take control and trade-off plan design veruss cost to employees. We see growing demand for ancillary, voluntary and non-insurance products that augment core medical to provide a comprehensive offering on benefits marketplaces or private exchanges – particularly life and disability insurance, hospital and illness worksite benefits, financial and wellness products.
Brokers who offer an expanded product range accessible through a single marketplace platform for employers and employees to have control and flexibility will gain advantage.
Brokers must go digital to compete and differentiate with value: In the post-ACA world, brokers need to maintain their status as “trusted advisors” and become the ultimate go-to for health insurance and benefits education, experience, and engagement. For example, addressing the millennial workforce with different attitudes and understanding on health insurance and benefits. One in three American workers is a millennial, making them the largest segment of the U.S. workforce. Employees spend little time on benefits decisions — nearly half spend 30 minutes or less. Thus the majority (90 percent) simply keep the same benefits year after year, which can be costly. Forty-two percent of employees estimate they waste up to $750 a year due to mistakes with their benefits, according to Aflac. Decision-support tools can tackle this challenge as they get more sophisticated and offer ease of use and convenience in benefits shopping and selection. Smart decision support tools serve as intuitive aids for employees/individuals backed by personal support from brokers.
The employee benefits landscape is changing rapidly. Brokers can lead the way by investing in the right benefits marketplace solutions to offer better value and service that combine the quoting of core benefits and expanded ancillaries, decision-support, enrollment, and benefits administration into one integrated experience for brokers, employers and employees.
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