4 Reasons Why Small Businesses Are Flocking to Private Exchanges

If you’re a small-business owner who is looking for a cost-effective alternative to group health insurance plans, you may be interested in private exchanges. Similar to the public health insurance Marketplace, private exchanges allow your employees to choose a plan that best fits their specific needs and budget, while you provide them with a contribution toward their insurance coverage. Many in the industry predict that private health exchanges are the next big thing for small businesses. Let’s take a closer look at why they’re growing in popularity.

1. They can help small businesses get out of the insurance business

Managing the health benefits for a small business is a headache that many business owners would prefer avoiding altogether — and private exchanges allow you to avoid many of the costs and hassles that come along with administering group health insurance policies. Not only do private exchanges allow employees to directly research and choose the specific policy that best meets their needs, but they also take on most of the paperwork associated with plan enrollment and ongoing maintenance. This change allows small-business owners to focus on core business functions, rather than having to become insurance experts.

2. They can give employees more flexibility and autonomy

When offering group health insurance, most small businesses are only able to offer their employees one or two plans from which to choose. With a private exchange, however, employees are typically able to select their plan from a much wider variety of options. This means your 22-year-old receptionist who teaches yoga on Saturdays can opt for a higher deductible plan that keeps her monthly premiums low, while your 53-year-old VP can choose a more comprehensive plan that allows him to take his children to their preferred pediatrician without incurring out-of-network charges.

3. They can save everyone money

When employers pay for one-size-fits-all group health insurance plans, they’re paying for a set of benefits and services regardless of if anyone will use them. But when small businesses move to a private exchange model, both employers and employees save money because you only pay for the benefits your employees feel are necessary. Because employees can pick and choose what works for them, they are able to save money. Plus, employers get the added bonus of saving time because you no longer have to spend days or weeks trudging through the process of negotiating group health insurance policies.

4. The range of options is much more comprehensive

Many small businesses offering group health insurance have shied away from add-on services like life, accident, or disability insurance, simply because they didn’t want to encounter the administrative headaches. However, private exchanges allow small businesses to offer a much wider variety of insurance plans with little-to-no additional hassle for the employer. In addition to typical insurance add-ons, like dental and vision coverage, things like legal insurance and even pet insurance can be easily added to a company’s private health exchange offerings, increasing the overall value of the insurance to the employee.

Clearly, private exchanges offer small businesses and their employees a wide range of benefits. Private exchanges remove many of the administrative headaches that business owners encounter when managing a group plan, while giving employees greater control over their health care preferences and budget. Private exchanges do all of this while also providing a more comprehensive set of offerings at a price that tends to save everyone money. With advantages like these, it’s easy to see why many small businesses are enthusiastically jumping on the private exchange bandwagon.

About the author

Lauren Mandel is the Content Marketing Manager for GoHealth Insurance.  GoHealth powers one of the nation’s leading private health insurance exchanges for individuals and families.

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