Cary Grace, chief executive officer of Aon Exchange Solutions, said ADP’s new offering underscores the increasing demand for private insurance exchanges.
“ADP’s announcement validates our vision of private health exchanges as an important and growing market trend,” Grace said in an e-mailed statement. “Aon offers the broadest and deepest portfolio for companies of all sizes and industries.”
A tax on high-cost health plans that starts in 2018 is fueling employers’ search for cheaper coverage options, ADP’s Leonard said. The so-called Cadillac Tax, part of the Affordable Care Act, imposes a 40 percent levy on family plans with premiums that top $27,500 and individual plans costing more than $10,200.
“As we approach 2018, we’re going to start seeing activity really picking up more,” said Amy Gurchensky, an analyst at consulting firm NelsonHall. “It’s really not a question of if organizations are going to move to private exchanges. It’s a question of when.”
Shifting Costs
It’s not clear that having employees pick coverage options on a private exchange can keep the total cost down, Leonard said. It does let employers shift more of the expense to their workers, by providing them with a fixed sum of money.
That could be a good thing for healthier workers, who might need less care. Yet sicker employees could wind up paying more, particularly if the cost of insurance increases more quickly than the size of the employer subsidy.
A tie-up with closely held GoHealth represents a second avenue for cost savings. Through GoHealth, ADP will help employees who don’t get workplace coverage -- such as part- timers -- select health plans on public exchanges, where they might be eligible for subsidies.
The integration could let employers drop part-time workers from their health plans without making them feel abandoned, according to Ryan Smolek, vice president of operations at GoHealth.
“There is a calculation that needs to be done about whether the employee is better off under groupinsurance in the company versus on the exchange,” he said.