Demystifying the private exchange solution

Benefit advisers remain confused about the ins and outs of offering a private exchange solution to their employer clients, but industry experts say offering one is crucial to where this industry is headed. Private exchanges also promise returns on investment for employers and brokers, said Joseph Bucci of Strategic Benefits Consultant GBAC Inc. on Tuesday at EBA’s Workplace Benefits Renaissance in Atlantic City.

“As a broker dedicated to this industry, I don’t see how I stay in business without embracing technology — and private exchanges are technology,” he said.

Benefit advisers need to embrace private exchanges, he told attendees. They’re a “a powerful tool” he said, and “one we’re going to need to survive in this industry.”

Introducing the idea of a private exchange to employer clients, Bucci said, is “about getting your client to think differently,” but it’s

an ongoing sales process, he said, and one that brokers are not accustomed to performing.

“That’s not what this industry was built for, but the Affordable Care Act is forcing us to become trusted advisers,” he said.

And while brokers may not have a breadth of experience implementing a private exchange solution, doing so will not only add value to your relationship with the employer, it will also open up a new client base in the employees, said Bucci.

Engaging the client

Client reception to private exchanges will vary, he said, and that’s why benefit advisers should consider the capabilities of a private exchange and what clients they will be suitable for before approaching clients with a discussion about one.

So what are the requirements of a good private exchange? Bucci said payroll integration is critical.

“Payroll integration is the common denominator to the ACA. Everything is going to drive off of it, including affordability, earnings, etc.,” he said.

Bucci even suggests the sometimes difficult conversation introducing the idea of a private exchange can begin with a broker inquiring about a client’s payroll vendor.

“Ask your client who their payroll vendor is. If your client doesn’t know who the payroll vendor is, ask to take it over. Create value,” he said. 

Also critical to a successful private exchange platform is its ability to manage benefit communications, said Bucci.

“A good private exchange platform should operate as an intranet,” he said, simplifying the delivery of benefit communication to employees and their engagement with information about their benefit choices and elections.

How a private exchange is integrated with carriers is also a vital piece of the platform that benefit advisers should understand, Bucci said.

There are a lot of ways the communication to carriers works, he said, including EDI, CSV file upload and through the proprietary enrollment process.

“It will be hard for you. As a broker, you will have to figure out how the carrier works. You’re becoming more of a solution provider and less of a health care agent,” said Bucci.

Employee relationship

An easy tool Bucci has used with clients to understand what private exchange solutions to implement with an employer is an employee survey.

“An employee survey takes 80% of the guess work out of the implementation of a private exchange,” he said. It also supports employer engagement with the implementation because the employer knows it’s giving employees what they want and need, not just making blind offerings, he says.

At its core, Bucci said the private exchange aspect is about empowering employees, but added, “the fear about that is that they don’t know how to be a consumer.”

Brokers can be the trusted adviser to those employees, he said, and in return, each of those employees becomes a new client.

“If you position that properly, it goes a long way,” Bucci said.