Supplemental and Ancillary Products on Private ExchangesBuilding an Attractive, Well-Rounded Benefits Package

Tracie Foster: AnthemCarol Harnett: Council for Disability Awareness

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What Do Working Americans Value Most vs. What Do They Insure?

Will a Private Exchange Help Employees Insure What They Value?

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Anthem’s Private Exchange Experience

We participate in the 4 national consultant exchanges, Anthem

Health Marketplace, local broker exchanges, Medicare and

individual exchanges

Adoption has been slower than

industry projections (about 1% of

employer group market

We added a166K members in 2014 bringing

total private exchange membership to approx. 389K members

As of 1/1/2015, Anthem’s Specialty products are on 27 group exchanges and

we have 35 groups totaling 41,100 members

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All Private Exchanges Are Not Created Equal

Overall vision, goals & objectives vary• What benefits do you want to place in the exchange?– Health,– Health, dental and vision, or– Health, dental, vision, disability, life, critical illness, accident, etc.?

• Knowledge & experience with ancillary benefits – especially Life & Disability – becomes critical

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All Private Exchanges Are Not Created Equal

Other considerations:• Enrollment/Benefit Administration platform & capabilities

• Markets, plan designs, subsidies and funding arrangements

• Decision Support ToolsAon Hewitt Mercer

MarketplaceTowers Watson Buck

ConsultantsFunding Fully Insured Fully Insured &

ASOASO ASO

Medical Selection Model

Multi-carrier FI is single-carrierASO is single-

carrier or multi-carrier

Multi-carrier Single carrier by financial

advantage determined within

in each MSA

Market National: 3000+ National & local: 100+

National & local: 1000+

National & local: 3000+

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How employers are using private exchanges varies

Mix of products on and off exchange

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How employers are using private exchanges varies

Mix of funding: defined contribution, voluntary, employer-paid• What type of account structure has to be used:– Health Reimbursement Account, or– Section 125 (cafeteria plan)

• In a defined contribution model:– HRA: medical, dental and vision– Cafeteria plan: medical, dental, vision, plus other benefits such as disability and

life

• No defined contribution model:• No true account structure• Dollar amount is displayed and not used for anything other than securing coverage

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How employers are using private exchanges varies

How does the employer want to subsidize the exchange?• Single subsidy, or

• Split subsidy (health subsidy plus other benefits)

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Advantages of Offering Ancillary Products on Private Exchange

• Offers employees more variety, transparency & choice

• Convenient – all-in-one enrollment system

• Companies may optimize their benefits communications into one package

• Takes burden off employer – benefits facilitator vs benefits manager

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Words of Caution

• Plan designs, funding and administration capabilities may be more limited

• Ancillary and voluntary benefits not offered in same manner as medical benefits so experience can feel clunky

• Communication materials large, complicated and overwhelming

• Understand the pricing

• Voluntary benefits present some additional risks

• Integrated health & productivity management initiatives harder to implement/maintain

• Customer Reporting/Renewal processes are still somewhat works in progress

• Mergers and acquisitions among growing number of private exchanges

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Takeaways

• Be clear with what plan designs, funding, administration capabilities you need as well as those you’d like to have

• Understand what the private exchange you choose can and can’t support

• If you’re determined to have all your benefits on a private exchange, be flexible and willing to weather some bumps in the road