A private exchange in its core function is a private business, operated by insurance agencies and brokers, towards selling health care products to its customers in the digital or online platform. Private exchanges are one of their kinds when providing their consumers to buy from an array of health insurance policies and allied health facilities. These exchanges offer you the best plan choices as per your needs and budget using their technology platform. Here they include the plans available for you with subsidies, something you may not receive in the traditional model.
The end-to-end model of a transaction in private exchanges is online. Your enrollment form will be collected using electronic medium and the information you provide will be transmitted to an insurance agent digitally. Moreover, you as an individual health insurance customer or employer will be offered benefits administration services in case you want to know about your coverage in-depth. Hence a private health insurance exchange is an attractive option for all types of businesses and individuals.
Any private exchange with the following 2 features will automatically win the hearts of its consumers:
Your coverage will have funding
The current state of private exchange has two ways to fund any insurance policy.
After-tax based fund covering- here individual buyer pays for the coverage from out-of-pocket, mostly without having any preferences for the tax in the coverage. Individual health care marketplace finds this method the most common. Here the Federal government or employer does not generally subsidize the purchase of this private health plan.
Employer-based plan- Here the employer typically pays either the entire or a part of the total health insurance plan for his employee. This effectively helps the employee pay a lesser contribution towards his health coverage costs. Although the subsidy employer receives is a portion of the compensation for the employee, amounts the employer pays towards his employee’s health coverage are tax exempted for the employee (in case of FICA tax issue and his income).
Any successful private health insurance exchange provides a very smooth way to afford health care coverage, irrespective of whether the plan is purchased by an individual in an individual marketplace or subsidized by the employer. Whatever the format of health insurance plan is, a private exchange helps in defined contribution payment process where the role of the employer is only to contribute funds in purchasing that health insurance policy. Exchanges may prefer providing these facilities in-house. In both situations mentioned above, the private exchange provides a system for seamless transfer of healthcare funds from the employer or employee to the particular carrier that’s providing the health insurance coverage.
Inventory having major health plans
Yet another feature contributing towards the success of private exchange is helping the customer shop from different medical health plan products, having various kinds of designs in plans. There can be even 20-30 different types of medical health care products having a range of price from high-cost insurance coverage to the low cost or no-cost shared plans as well. Here, there can be as high as 60% difference in cost between the plans. The inventory promotes consumerism and has reduced expenses on health care, and thereby, can save more for individual health care customer (for individual market coverage) and employee with the employer (for employer-based coverage).
The most vital thing here is to point out that private health insurance exchanges in the individual marketplace needs to typically allow multiple carriers. The more the number of carriers, wider will be the variety of health insurance plans.
Though there are a few more features that can help bring success to the private health insurance exchanges, the two mentioned here are considered the primary factors that contribute towards its growth.