As the health insurance exchange marketplace continues to expand, industry trailblazers and benefits experts are weighing in on what it takes for employers to succeed within this new health care model. And for employers to succeed, they will need brokers behind them.
Acknowledging there is great concern that exchanges will diminish the role of the broker, Alan Cohen, chief strategy officer for New York City-based private exchange firm Liazon, says in reality, he expects the total opposite. "I think brokers are the centerpiece of an employer's strategy and [really] the maestro. They are part of" the big picture.
Drawing on insight from Cohen and guidance from Jennifer Benz, founder and chief strategist at Benz Communications in the San Francisco Bay area, here are '3 C's' for employers and their brokers as they consider whether or not to send employees out on their own to shop for health coverage.
Brokers must help their clients determine how they want to present an exchange to their employees and how to set it up - customizing it for their use.
The first step is choosing what type of exchange such as public or private, Cohen says, and then the "critical role" of determining funding. "Figuring out how much and how to divide it is very consultative, a lot more consultative then looking at a spreadsheet to determine copays," Cohen says. "What is the purchasing power of these dollars and what does it mean to allocate $5,000 versus $6,000?"
Next, the way the exchange is visualized must be determined."Do you present it as a [brand name], as a broker's name or as ABC Company," Cohen says.
An exchange represents a significant shift from health care in the past - allowing employees to pick from dozens of health care plans and features, compared to the two or three within the traditional employer-sponsored system.
A broker can help a client "figure out what their employees want and need." He likens it to walking down the aisles in a store and making sure the options are appropriate both product- and pricing-wise for the employee population.
"In a lot of cases we found brokers are going to make changes, say, 'It should be a different provider and I don't think there should be three options, it should be six options,'" Cohen explains as an example. "They are using consultative options that they developed over the years."
Cohen explains that a broker might say, "I know this client really well and they need to have life insurance that goes up to $1 million." "We need to customize the store and that again is multi-dimensional consulting. It's a whole new world and incredibly valuable," Cohen says. "No company can do that themselves, you need deep insurance expertise to do that."
Even among a workforce of 1,000, Cohen says, "What we hope for [is] that every employee will make their own individual benefits package.
It just makes sense, because people make different life choices - they live in different homes, drive different cars, make different investments in their 401(k)s, and they want to make their own health care choices," he adds.
Cohen points out that a shift to the exchange model requires a different type of partnership than many HR/benefits practitioners are accustomed to. "We've seen that HR people actually adapt the most slowly, because they're used to controlling this process," he observes. "But [the exchange model] allows them to focus on the most strategic aspects of the business. And that's what should happen. This model doesn't work if we're offering all of these options, but the employer is the one that has to figure it out."
And among that collaboration, that with the broker is most important, he maintains. "In the exchange, you are letting the company step back from the role as the chooser," he says. "Companies only have to make one choice - how much money they want to allocate.
"That needs a significant level of trust to do that," he adds. "Imagine a head of human resources stepping back and saying, 'If I allocate $500 a month to each employee they are going to find what they need, they are going to have the service they need.' I think that is critical the partnership between HR and the broker to have that level of trust."
Speaking from his experience within the exchange, he says that Liazon has found that insurance brokers who have that kind of trust are more able to manage their clients' transition to into an exchange versus ones who don't have that trust.
He also notes that the model forces employers to work with employees in a different way as well - specifically, trusting them to make their own choices without needing to protect them from themselves, so to speak.
"It's been surprising how quickly employees adapt," Cohen says, "but when you think about it, it makes sense. This is what people do in every other part of their lives. You hear all the statistics about how people spend 10 hours deciding what TV to buy, but only five minutes on benefits. But that's not because people don't understand it; it's not because they don't think it's important. It's because in the past, there hasn't really been a choice. It was A or B."
Within the communications realm, there are certain things employers must do from a legal perspective to comply with the Patient Protection and Affordable Care Act, Benz says.
"As of now, March 1, 2013 is the PPACA-mandated deadline for employers to notify employees of state exchanges," she says. "While the Department of Labor hasn't yet released proposed regulations, the information required in the notice is going to be complicated for employers of all sizes. No matter what deadline the DOL ultimately sets, employers need to be prepared to include this in their communication plans for 2013."
Specifically, employers are required to communicate three items:
1. A description of the state exchange, what services the exchange provides and how to contact the exchange (website and customer service number). Refer to the Kaiser Family Foundation's continuously updated map to learn the status in your state(s).
2. Whether employees will receive at least 60% coverage of essential health benefits and whether an employee might be eligible for a premium tax credit if they purchase a plan on the state exchange.
3. Tax implications. Because the money an individual spent on employer-sponsored coverage is not taxed, buying coverage through the state exchange may change the individual's tax obligation.
Beyond what the law requires, though, Cohen says that an initiative to send employees into an exchange has to be centered on education and communication - across various formats. "We ask [consumers] a series of questions so that we can make recommendations to employees and show them the different choices they'll have."
In addition, Liazon offers call-center support to answer consumer queries, educational videos, online support tools and paper catalog-like books of what the exchange offers.
Cohen also emphasizes using plain language to communicate to employees about the exchange and other health plan terms. For example, "We try not to use the word exchange, because people don't shop in an exchange; they shop in a store."
NAIC APPOINTS NEW CEO
The National Association of Insurance Commissioners has appointed former Nebraska Sen. Ben Nelson as CEO, effective Jan. 21.
Nelson, who served two terms as senator and was previously governor of Nebraska, joins NAIC as a leader of the group's Washington-based operations.
"Senator Nelson's impressive credentials and deep knowledge of state insurance regulation are simply unmatched," says Jim Donelon, NAIC president and Louisiana insurance commissioner.
Nelson worked at the NAIC as an executive vice president and chief of staff prior to entering public service more than 20 years ago.
"After years in government, this is a homecoming for me," says Nelson, adding that he looks forward to his new regulatory role.
His responsibilities include reaching out to federal and international government agencies and maintaining relationships with state government associations and other industry employees.
"I am honored to serve as CEO during such an important and exciting time in the regulatory community," Nelson notes.
According to the NAIC, Nelson's background in the executive, legislative and regulatory fields makes him qualified for the role.
Nelson, who served in the Senate as a member of the Democratic Party, voted for the passage of the Patient Protection and Affordable Care Act in December 2009.
The NAIC did not respond to a request for further comment. - Gillian Roberts
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