Advertisement
insurance

Getting Health Insurance on a Private Exchange

Some companies are switching from traditional group coverage to marketplaces, where employees have more choices.

My employer is no longer going to provide health insurance and is having us buy coverage through a private exchange instead. What is a private exchange, and what does this mean for our coverage?

A private exchange is a health insurance marketplace, where employees can buy coverage from one of several insurers rather than getting coverage through their employer’s group policy. Instead of giving you a few policies to choose from during open enrollment, with prices based on the employer’s size and risk, some companies are opting to give employees a fixed amount of money to use on a private exchange, where they usually have more choices. About 5% of employers currently let employees purchase benefits through a private exchange, although many more are considering the option.

Advertisement - Article continues below

Each exchange is a bit different, but usually a number of employers participate. The largest exchange is administered by benefits consulting firm Aon Hewitt. More than 600,000 employees and their dependents in 18 companies participated in the exchange in 2014, including large national employers such as Walgreen’s, Sears and Darden Restaurants. Aon’s exchange divides the country into 21 regions with different insurers and costs. Each region has three to five insurers offering coverage. The insurers include big national companies, such as United Healthcare and Aetna, and regional insurers, such as HealthNet and Kaiser Permanente.

Each insurer must offer plans for each of five levels of coverage (bronze, bronze plus, silver, gold and platinum). The requirements for the metal levels on the private exchanges are slightly different from the requirements on the public exchanges. And unlike the public exchanges, each level of Aon’s public exchange is standardized; every bronze policy must have the same co-payments and deductibles, for example, regardless of the insurer. The only differences can be the premiums and networks. “We have eliminated all that complexity and have standardized the benefits,” says Ken Sperling, national health exchange strategy leader for Aon Hewitt.

Walgreen’s was one of the largest companies to join Aon’s private exchange in 2014. Previously, the company was self-insured (paying claims from its own money, like many large companies do) and offered two coverage options. Now, Walgreen’s pays a fixed amount for employees (based on the cost of a silver policy in their region), so costs are more predictable.

Advertisement
Advertisement

Most Popular

What Trump's Payroll Tax Cut Will Mean for You
Tax Breaks

What Trump's Payroll Tax Cut Will Mean for You

President Trump issued an executive order to suspend the collection of Social Security payroll taxes. How much could it save you?
August 13, 2020
5 Tips to Minimize Your Taxes in Retirement
tax planning

5 Tips to Minimize Your Taxes in Retirement

Don’t pay more than you have to. It all starts with a thorough understanding of the basics of how retirement income is taxed.
August 2, 2020
10 Things to Know Before Going to the Hospital (from a Legal Perspective)
personal finance

10 Things to Know Before Going to the Hospital (from a Legal Perspective)

A trip to the ER can be chaotic and scary, but getting your ducks in a row now can definitely help.
August 11, 2020

Recommended

The Insurance Company Denied My Claim. What Should I Do?
insurance

The Insurance Company Denied My Claim. What Should I Do?

A lawyer specializing in insurance bad faith law explains why this happens, and outlines how to fight back.
August 6, 2020
Time for an Insurance Review
Coronavirus and Your Money

Time for an Insurance Review

You may need to update your policies in light of COVID-19.
July 30, 2020
Insurance Question: Say Rioters Destroy My Business, Am I Covered?
insurance

Insurance Question: Say Rioters Destroy My Business, Am I Covered?

If you ask your broker, the answer may be no. But don’t just accept that response. Know what your policy covers, and how to protect yourself.
July 29, 2020
HSAs Get Even Better
Financial Planning

HSAs Get Even Better

A health savings account is a powerful, tax-advantaged tool to cover out-of-pocket medical expenses and a smart way to save for medical expenses in re…
July 3, 2020