Private Exchanges & Defined Contribution Health Benefits to Reach Tipping Point in 2015
Corporate Wellness Magazine
A new survey reports high levels of familiarity and interest in exploring defined contribution health benefits and private healthcare exchanges, with strong evidence that 2015 will be a tipping point year for adoption.
The survey from Alegeus Technologies, a healthcare and benefit payments provider, found that as defined contribution health benefits and private health care exchanges gain traction in the market, education and support services will be needed to ease the transition for employers and consumers. Of those surveyed, 73% claimed to be familiar with defined contribution health benefit programs and 55% with private healthcare insurance exchanges. However, the research also revealed that “a significant education gap” still exists. Many of those individuals that claimed familiarity were unable to correctly answer basic questions about what they are, how they function, who they are best suited for and the benefits they offer.
Despite these misconceptions, the survey indicated that respondents still saw significant advantages in defined contribution health benefits and private exchanges. These advantages include the potential to lower their organization’s health benefit costs, offer a greater variety of benefit plan options to employees and continue to offer benefits that might otherwise have been in jeopardy.
Interest levels in adopting were found to be high, according to the survey. Of those familiar with these benefit programs, 90% expressed interest in exploring defined contribution and 85% expressed interest in exploring private exchanges for their own organization. The survey also revealed a strong correlation between consumer directed health care (CDH) adoption and defined contribution health benefits. Employers that have already adopted high deductible health plan offerings are 34% more likely to consider defined contribution programs; and those that offer CDH accounts (such as HSAs, FSAs, HRAs) are 12% more likely to express interest in these new benefit models.
Survey results also point to 2015 as being a “clear tipping point year” for the adoption of defined contribution health benefits and private exchanges. Of those that expressed interest in exploring or adopting defined contribution programs, 36% indicated they would make the switch in 2014, while 39% predicted 2015 and another 17% indicated 2016 or further out. Of those that expressed interest in exploring or adopting private insurance exchanges, 28% indicated they would make the switch in 2014, while 45% predicted 2015, and another 19% indicated 2016 or further out.
The survey was conducted in July 2013 by a third-party research firm, on behalf of Alegeus, and polled more than 500 health benefit decision makers at a cross-section of U.S. employers.
The full research report can be downloaded at www.alegeus.com/research.