Explaining the Exchanges to Employees Won’t Be Easy

As fall benefits enrollment approaches, employers will need to prepare for what one expert calls “the biggest change to occur in employee benefits since managed care”: the introduction of public and privately run health insurance exchanges.

Some 44 percent of employers believe that private exchanges, or online marketplaces, will be the preferred way to provide health care benefits in the next three to five years, according to a 2012 survey by Lincolnshire, Illinois-based consultancy Aon Hewitt.

Between the growing number of companies expected to introduce a private exchange later this year and the state-run exchanges that open for business on Jan. 1, 2014, employee communication will be critical in the coming months, benefits experts say.

Recently released federal guidelines require employers to notify their workers of eligibility requirements for their state exchange by Oct. 1, 2013. To the relief of many, the U.S. Labor Department also provided model notices that employers can give to their workers, which eliminates the need to develop their own notifications.

“It’s a huge paradigm shift,” says Alan Cohen, chief strategy officer at Liazon Corp., a private benefits exchange firm based in New York. “Five years ago people thought this idea of an insurance marketplace was outlandish, but now it’s on the tip of everyone’s tongue. On the negative side, this represents a big change, but there’s such big upside as well, and employers need to communicate that.”

He says that the first four months of 2013 have been the company’s busiest. Liazon, which was founded in 2007, caters to small and midsize employers that use the company’s Bright Choices Exchange to offer a variety of different products including health, dental, vision, life and disability products from a number of national and regional providers. The company has about 2,300 clients, Cohen says.