1. Individual Policy-Type Health Insurance Exchange that on Average is 33% Less Expensive and that Outsources the Employer’s Medical Benefits Program
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Thomas A Ference
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Human Resources Mining & Distribution Co
Locating, Validating and Accelerating HR  Innovation
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2. Individual Policy-Type Health Insurance Exchange ( HIX ) Rationale
Group-type medical benefit plans have not been able to exclude employees with pre-existing conditions since HIPAA was passed in 1996.
These provisions have caused the accumulation of excessively adverse risk pools for group plans / group insurers / group-style exchanges versus the individual policy insurers that have been subject to such provisions only as of
This timing differential has presented a reverse arbitrage and risk transfer opportunity for the employer between the two markets.
An individual insurance policy Health Insurance Exchange (HIX) was thusly developed to allow the employer to shift risk from the employer’s own group plan over to the HIX.

3. HIX Savings Calculation Process
Proprietary analytics allow the employer to measure the gross savings arising from the cost difference between the group plan and the HIX “plan” on an employee-by-employee basis.
The gross savings amount is further adjusted by the:
-Tax impact of employee’s going from pre-tax to post-tax premium contributions (incurred only if employer desires to gross up employee contributions for the income tax effect),
-Employer’s ACA penalty (cost optimized by this system) for dropping group-style coverage
-Employees’ ACA premium subsidy which the employer can use to offset its own premium contribution,
so as to produce a net employer savings.
This net savings has ranged between 20% and 60% (with a 33% average).

4. Win-Win Employee Advantages Employer Advantages
More plan design and insurance company choices
Multiple networks and PBMs from which to chose
Can personalize desired fixed premium contribution level vis-a-vis desired out-of-pocket exposure
Improved customer service
Transfer group risk to HIX
Reduce program cost
Switch employer from defined benefit to defined contribution style employee premium subsidy method
Removes employer from participant enrollment process
Eliminates need for COBA

5. Cost Savings Estimation Analytic
200 Employee, Self-Funded Group - Example
Current Group
HIX
Annual Premium
$1,336,500
$800,659
Tax Impact on Employees from Now Having After-Tax Employee Contributions
+65,696
Optimized Employer ACA Penalty
+61,560 *
ACA Employee Premium Subsidy
-116,322
Plan Administration Fee
Included above
+48,000
-Annual Cost
-Annual Savings
-% Savings
1,336,500
811,594
524,906
39%
* The non-optimized employer ACA penalty would be $360,720

6. Demographics-Driven Personalized Choices
Demographic Inputs
Top Matching Plans
“Similar to current”, “system recommended” or “on my own” shopping options
Location
Monthly payment vs. out-of-pocket
HSA preferences
Prescriptions
Frequency of physician visits
Physician, clinic , hospital used
Federal premium subsidy

7. Next Steps
This product/service is contained in the HR Specialty Products & Services Catalogue™
Operational level details about this particular service provider can be obtained in conference with the vendor
The HR Mining &Distribution Co. is an independent and contracted representative of the vendor
Upon your request, we will arrange for an introduction that can range from a simple, quick conference call to a services overview / system demo
Tom Ference (Chicagoland area) or
Thank you for your potential interest in this fresh thinking