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33% of firms eye private health exchanges

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in Employee Benefits Program,Human Resources

Most employers plan to continue sponsoring health benefits for their employees, but will change the way those benefits are managed and delivered in the coming years. New research finds that traditional models for providing employer-sponsored health benefits will continue, while private insurance exchanges are emerging as corporate America’s new favored way to provide coverage.

According to Aon Hewitt’s soon-to-be-released Health Care Survey of more than 1,230 employers covering more than 10 million employees, 95% of employers say they plan to continue providing health care benefits to employees in the next three-to-five years. Employers say they’re unlikely to drop benefits, pay the ACA-mandated tax penalties and let employees find coverage for themselves on the ACA’s public health insurance exchanges.

However, a growing number plan to move away from traditional employer-provided health benefits models. Only about 40% of organizations expect to keep what Aon Hewitt calls a “house money/house rules” strategy for providing health insurance benefits—employers pick a few insurance plan options, pay the lion’s share of premiums and then work feverishly to control costs.

But the survey found that in the next three to five years, 33% of employers plan to begin offering group-based health benefits to active employees through private health exchanges.  

Private exchanges are similar to the ACA’s public exchanges, but they are operated by private-sector companies or nonprofits. Employers provide a set dollar amount toward health coverage, and the employees use that money to purchase health insurance from a variety of carriers selected to provide coverage through the exchanges. Private health insurance exchanges are exempt from many of the ACA’s requirements.

Currently, only 5% of employers participate in private exchanges, many of which are run by HR consulting firms like Aon Hewitt, Mercer and Towers Watson.

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