Private exchanges offer businesses a one-stop-shopping solution for providing employees with a variety of benefits options.

Key considerations

Products and services will vary based on specific details provided by the exchange.

Private exchanges may offer two different models for employers: the choice of “defined benefits” or “defined contribution.”

  • Defined benefits: Employers can choose a plan that fits their business goals and workforce needs.
  • Defined contribution: Employers choose a dollar amount to contribute toward their employees’ benefits, and the employees choose among multiple plans. This option can help to keep costs predictable, while also offering employees the option to “buy up” to more robust insurance coverage.

Since these programs require employees to make more informed decisions about health care, it is increasingly important they understand how an employer contribution works and how to choose supplemental options to augment out-of-pocket costs.

Tax credit availability

  • The employer will not be eligible to receive small-business tax credits.
  • Employees may be eligible to receive health insurance marketplace subsidies if their employer’s coverage does not provide minimum value coverage and/or the employee contribution is more than 9.5 percent of the employee’s household income.

Administration and reporting

Private exchanges may help simplify administration of multiple benefits options by issuing a single invoice and collecting payments. For more information about reporting requirements:

Penalties

Employers with 50 or more full-time equivalent employees may be subject to shared-responsibility penalties if coverage either does not meet affordability or minimum value requirements. Employers must offer coverage to 95 percent of full-time employees and their dependents.

Voluntary insurance

Private exchanges may offer a variety of benefits, including voluntary insurance options. These policies provide peace of mind to employees by helping with out-of-pocket costs associated with illness or injury. Learn more at Aflac.com.

For more information

A comprehensive summary is available in The Benefits Decision Guide.

Learn more at aflac.com/health-care-reform.

To learn more about coverage available in your state, visit: healthcare.gov, cciio.cms.gov and irs.gov.