Private Exchanges - Creating New Opportunities for Consultants - Part 2 of 2

This is the second installment in a two-part series on the emergence of private exchanges in the benefits marketplace.  This section focuses on the opportunities for consultants in the private exchange era, particularly in the small and midsize employer market.

Delivering private exchange solutions to the small-midsize business market

Private exchanges are not just for large employers anymore.  There have been several accelerators that have created new opportunities for private exchanges in the small and midsize employer market space.  New entrants into the benefits and HRIS space (Zenefits, for example) have disrupted the current benefits delivery market, and forward-thinking consultants have turned to private exchanges to help build out value beyond the benefits that they have traditionally provided.  Small and midsize business owners face increased administrative burdens as a result of ACA compliance, payroll/tax reporting (Section 6055 requirements), and financial considerations.  The Cadillac Tax will impact a large number or existing plans, and a private exchange can help employees navigate choices, evaluate options, and provide decision support tools and resources to effectively right-size benefit programs and (hopefully) reduce costs for employers and employees alike.

Challenges and opportunities

There are tremendous opportunities for employers and consultants who embrace private exchanges.  What was once considered the "future" has quickly become our "now", and with growth projections estimating that the private exchange marketplace doubling each year, the tipping point for private exchanges is near (it may be happening as you read this).  Clients may be considering a private exchange for a number of reasons – market factors (regulatory, financial, or competitive) – and all will drive considerable change in the near future.  Making private exchanges part of your business strategy is critical, and a solid understanding of private exchanges and the options available to clients will help consultants stay ahead of the curve.  A forward-thinking series of strategy meetings early in the benefit year can help benefit consultants bend the trend and set the course for the future.

Is a private exchange right for everyone?

Probably not, but it would be short sighted to not make it part of a long-term benefit strategy.  Private exchanges are creating a new market space and are transforming how benefits are delivered.  Will employers look to migrate to the new space?  Of course.  If done right, they will have carefully reviewed several considerations, many of which are familiar to consultants:

·         Will a private exchange help control healthcare costs? 
·         Will it help recruit and retain talent? 

·         Will a new platform help make a business more competitive and bring value to employees and customers? 

·         Will a private exchange provide a solution for ACA compliance and reporting?

 

Chances are the average employer will have these questions at some point.  Educating customers on private exchanges may well become the new "HDHP conversation" – the inevitable talk about something that they very well may need to adopt to stay afloat and relevant in today's benefit marketplace. 

How consultants win in the private exchange era

There is an endgame for consultants in the private exchange world – and it is a winning scenario for consultants.  Private exchanges help consultants build client value, and when done right, deliver some serious return on investment.  There is, however, a paradigm shift in the perceived role of the consultant.  Instead of finding and recommending carriers and/or products, the consultant now delivers the platform that will allow employers to set financial guidelines, and for employees to choose the benefits that fit their needs.  Think in terms of retail – instead of selling the products, the consultant sells the delivery model – they are the shopping mall, or more appropriately the "Amazon" of benefits.  The role of the consultant has changed, but for the better – in alignment with the evolving needs of customers, and growing the ever-important relationships in place with clients.

What three things can consultants do now to be on the leading edge of the growth curve in the private exchange era?

• Understand the value a private exchange can deliver. Private exchanges can help facilitate defined contribution models, help recruit/retain talent, streamline administrative processes, and ensure regulatory compliance.
• Learn about the private exchange options in your market.  Third party vendors tend to specialize in market spaces.  Bloom Health, Liazon, Maxwell Health, and PlanSource are all examples of established, national private exchanges that provide solutions for groups with 25 or more employees.
• Incorporate private exchanges as part of your value proposition to clients.  Depending on client needs, an exchange solution may be worth a conversation early in your planning cycle. 

The private exchange market is expected to double every year for the next four years, and will certainly change the landscape of our business.  Best of all, it is a model that supports consultants and the work we do for our clients.  Early adopters win in the end, and now is the time to jump on board - or at least understand your options.  It can change the way you educate, sell, and grow your business in the future.



Part one of this series was published on 11/17/2015, and focused on the history, growth, and future of private exchanges.  You can find Part One at http://businessaccelerated.blogspot.com

Find more articles and updates at http://runningatthespeedofbusiness.blogspot.com/ and http://businessaccelerated.blogspot.com/