Private Exchange vs. HealthCare.gov

by Holley Maher

The Affordable Care Act passed in 2010 and changed health care as we know it. Since then the public has responded with a variety of opinions and emotions. Regardless of your position, it’s important to know your options.

It is likely that everyone reading this article has heard of HealthCare.gov. Despite that, very few people can explain what it is. In short, it’s an exchange. An insurance exchange is a platform where individuals or businesses shop for insurance. In the public exchange, Uncle Sam may subsidize the cost of health insurance. In a private exchange, the employer contributes money toward insurance (health, life, flexible spending accounts, dental, etc.). According to research from Accenture, private exchange participation will approach public exchange enrollment levels as soon as 2017 and surpass them soon thereafter.  

So, if the government funds some of the cost on the public exchange, why are so many employers considering a private exchange?
• Control. Employers set rules around how the employer contribution can (or can’t) be used.
• Cost. Using defined-contribution technology, employers control cost for multiple years.
• Choices. Private exchanges offer more plan designs and vendors than HealthCare.gov.
• Compliance support. Many private exchanges offer robust tools to streamline and ensure compliance  
• Tax. Through Section 125 plans, many benefits are tax-deductible.  
• Employee engagement. Programs like telemedicine, 24-hour employee advocate support, and calculators and benefit counselors help employees understand and appreciate the benefits.  

Perhaps the most important reason employers consider private exchanges is because they provide small and midsize employers with a platform to compete with Fortune 1000 companies.

Holley Maher (hmaher@SmartBenefitsPlus.com) is a partner at Maher, Rosenheim, Comfort & Tabash LLC, specializing in group and individual insurance.