Issue link: https://www.e-digitaleditions.com/i/330423
[ 53 ] JUNE 2014 | www.hrotoday.com 1. Cost. The average annual cost of providing health coverage to employees has continued to rise, and the traditional structure is not sustainable in the long-term for many organizations. 2. Compliance. Regulatory changes make compliance more complex and create additional administrative burdens for many companies, e.g., PPACA's 30-hour rule. 3. Customization. Private exchanges afford employees the opportunity to customize benefits based on their individual needs with the assistance of decision-support tools. Although early in the game, there are definite patterns of behavior from those organizations that have already made the transition toward a private exchange for active employees. Buyers come from a variety of industries with restaurants and retail accounting for nearly 45 percent of the activity. An estimated distribution across all industries is as follows: • Restaurants: 25 percent • Retail: 20 percent • Business services: 16 percent • Manufacturing: 12 percent • High-tech and electronics: 12 percent • Other including financial services, hospitality, health care, construction, etc.: 15 percent Nearly 85 percent are fully-insured plans; the remaining 15 percent are self-insured plans. Employees are spending much more time in the enrollment process than in the past. For traditional enrollment, the average time an employee spent was between two and five minutes; enrollment through the exchange yields an average of 20 minutes per employee. While there are still lessons to be learned and case studies to be written, organizations will continue to transition toward private exchange models, which will facilitate growth for ancillary services, mainly FSAs, HSAs, and HRAs. Ultimately, benefits administration will be a trending topic for the next several years as hesitant organizations look for proof of overall stability in the new model and stability in the vendors supplying the private exchange offerings. Amy L. Gurchensky is an HRO analyst for NelsonHall. In 2012, WageWorks, a provider of consumer-directed savings accounts, reported a 24 percent increase in revenues for such accounts, and in 2013, WageWorks reported a 20 percent increase in revenues year-over-year. This growth is expected to continue as private exchange activity increases.