March 12, 2014 Presented by: Brent Wick Private Exchanges

Understanding Private Exchanges What is a private exchange The competitive landscape Carriers and exchanges Determining if this is a good solution for your company

Private Exchanges Defined Contribution model or Fixed Contribution Offer greater choice to employees  Create employee ownership of benefit choices  Remove the employer from deciding the best benefit plan Can include all benefit options Private Exchange is the distribution system…think of a grocery store for insurance products. What a Private Exchange is not….complicated! Take a Look!

It is Very Simple! Today’s ApproachPrivate Exchange Employer determines benefits to offer Employer sets employee contribution Employer sets employee contributions Benefit education meetings are held Employee makes elections based on what benefits they want Employee enrolls via paper, electronic system, etc. Employee enrolls via the Private Exchange platform

The Mechanics of a Private Exchange Employer Insurance Carrier Health Reimbursement Account Technology Solution Decision Support

Determine the products to offer Fully Insured or Self-Insured Establish contribution amount Higher an administrator of the HRA Build connectivity with employer and carriers Online benefit enrollment system Potentially call support to facilitate enrollment Determine how employees will be educated Online tools to assist in decision making Critical component to make this successful Provide the product Establish rating of each product Interface with the enrollment system Employer HRA Enrollment System Decision Support Insurance Carrier Defining the Mechanics

The Private Exchange Market 100’s of platforms to administer an exchange Nearly all consulting/brokerage firms have a solution  Including Russ Blakely & Associates These are almost all technology platforms The critical component is the Insurance Carriers

The Key to Insurance Company Participation Single Carrier Option Most all solutions Eliminates anti-selection Allows any funding Typically 4-6 options Available today for larger employers More limited in smaller markets – but developing Preferred Carrier Option Multiple Carrier Option Examples: AON, Buck, Extend Typically fully-insured Mostly in place for very large employers Value of transferring risk and defined cost

The Local Private Exchange Market Large single carrier No under 50 solution yet Some of the national solutions Single carrier only Any funding option 4-6 plans larger employers No small employer solution yet Under 50 3 packages of plans Over 50 developing Large single carrier Some of the national solutions Single carrier only 5 plans over 100 employees Insured or ASO 3 plans only under 50 employees BCBSTNUHC AetnaCigna

Critical Fact to Consider 66% buy down 11% buy up 23% stay in similar AV plans Year 1 70% stay in the same plan 30% move to a different plan Year 2 Statistics from Bloom Health

How Are You Going to Control Cost? If majority stay in the same plan  Cost increase by 10%  Employer contribution only increase 3-4%  Employee will see significant increase in cost year-over-year Cost control are even more important in Private Exchanges  Clinical programs  Wellness  Limited networks  Managed Pharmacy Private Exchanges don’t take you out of managing benefits!!

Is a Private Exchange For You? What are your long-term goals?Can employees effectively use technology? Do you need greater predictability on Company cost for benefits? Will you benefit from greater choice? Would there be a benefit of having employees take more control of their own needs? Who will help you build the total Exchange solution?

Questions?