Brokers’ role ‘more important’ in private exchanges
Many employers are turning to private exchanges to rollout a wider swathe of benefit offerings to their workers. With increasing interest in exchange platforms, a skilled benefit adviser is needed more than ever.
“There has been a fear among brokers that a private exchange intermediates or replaces them, but I actually think it’s the opposite,” says Alan Cohen, co-founder and chief strategy officer of Liazon. “In a private exchange world, a broker or adviser is even more important than in the old world."
Private exchanges offer multi-carrier options and in Liazon’s case, 18 or more different categories of benefits that often go beyond what a typical company offers. HR professionals need an adviser who can manage all these moving parts.
“The most successful brokers are the ones who drive this themselves," says Cohen, who adds that brokers should work with their clients and the private exchange vendor to design communication materials from the start.
“I think brokers are doing themselves a disservice if they’re not running the communication campaign, especially for the first year," he says.
With strong benefits communication around a new exchange, employee good will can increase significantly, thereby retaining and recruiting top talent.
According to a new Liazon study, private exchanges help to increase employee retention.
Nearly three-quarters (72%) of employees using a private exchange say they are more likely to remain with their employer because of their benefits program. Retention can be driven by increased engagement and awareness around benefits, including a better understanding of their value as part of the total compensation package.
In fact, 85% of respondents using an exchange for the first time reported that they are more aware of their company’s contribution to their benefit costs and 81% said that they value their company’s contribution more.
Transparency in private exchanges demonstrates clearly to employees what their company contributes on their behalf. For industries competing fiercely for top talent, this can be a key retention tool.
“If you’re in an industry where you don’t have to worry much about recruiting or retaining employees then maybe the status quo works well for you. But if you’re in a competitive job market where you have to demonstrate every day what your employee value proposition is, those are the organizations that we find do the best with a private exchange," says Cohen.
Private exchanges by nature offer more choice. Employers and their advisers can be cautious that too much choice might overwhelm workers. Yet the study found that 87% of employees feel they had the right amount of choices or wanted even more.
Employees who take the reins on their healthcare choices make for smarter consumers. As the paternalistic paradigm of benefits becomes a thing of the past, many employers express concern that employees will miss the days when employers selected their benefits for them. But, 95% of employees prefer to select their own benefits, according to the Liazon study, so employers can breathe easy putting benefits decisions in the hands of their workers.
As employees become more informed consumers, they’re more engaged in their health decisions, as 83% of employees reported feeling, and 77% said their value their benefits more than they did previously.
And this applies to employee groups across the board.
“When an adviser recommends anything, they’re putting their reputation on the line. That’s more true for recommending a private exchange than recommending a health plan because an exchange is so comprehensive in its service offerings."
“When we started [Liazon] we thought we’d find industries that were more adept to use an exchange than others, but what we’ve found [is exchanges] cross industries. We have lots of manufacturing companies, lots of white collar companies; we have hedge funds and fast food locations. The common factor is an organization that’s not satisfied with the benefits they have today,” Cohen explains.
Employers with diverse employee groups and who aren’t satisfied with off-the-shelf benefits would find private exchanges especially customizable to their employee base, he says.
But advisers must take especial due diligence when recommending a private exchange to their clients and be even more hands on when helping to implement it.
“When an adviser recommends anything, they’re putting their reputation on the line. That’s more true for recommending a private exchange than recommending a health plan because an exchange is so comprehensive in its service offerings,” says Cohen.
Setting up an exchange can be “invasive and intensive,” he says, so brokers must make sure they’re doing everything right down to the last detail — whether that’s communicating how to use the exchange during in person meetings, setting up call centers with the third party vendor, providing administrative support to HR, or handling transactions with medical, dental and voluntary providers — a broker’s role is paramount in making sure private exchanges run smoothly.