Brokers Use Zane’s Platform to Recapture and Retain Small Employer Business
Health care reform requires each state to set up a public “exchange”, or marketplace, where employees not covered through their employers can shop for health insurance at affordable rates. However, these exchanges will not be available until 2014.
Zane Benefits announced today an affordable Private Health Exchange program for small to mid-size employers that do not offer health benefits. This program will be available by the end of this month in all 50 U.S. states.
Many brokers have experienced a steady decline in small group clients over the last ten years. Instead of picking a plan to offer workers, employers can now send employees to a “private exchange” where they choose their own insurance with the help of an independent licensed health insurance broker.
With Zane Benefits’ “Private Health Exchange”:
(1) A broker or benefits consulting firm inserts its individual insurance services into Zane’s defined contribution platform. Since Zane Benefits does not sell health insurance, the broker earns and keeps 100% of the health insurance commissions.
(2) Employers offer the packaged solution to their employees. Employers may choose to make available a tax-free allowance to employees for health insurance premiums, or allow employees to use pre-tax payroll to pay for health insurance.
(3) Employees use the tax-free allowance to purchase the coverage best suited for them and their family.
For example, a restaurant might provide $125 a month to its wait staff and $300 a month to its managers, which workers then use to buy an insurance policy that fits their individual needs.
By capping health benefits costs at a fixed contribution and offering a private exchange, companies can save up to 50% compared with traditional employee benefits. Most workers also spend less.
“Once individual health insurance policies rose from 12 million in 2002 to 45 million in 2010, innovative employers figured out early that the best health insurance for every employee is the health insurance that the employee chooses for themselves,” says Paul Zane Pilzer, founder of Zane Benefits. “And now, thanks to Zane’s technology platform, employees receive the same tax advantages for individual policies that they used to only get from group coverage. “
According to a recent study by Kaiser Family Foundation, approximately 2 million U.S. small employers with less than 20 employees do not offer group health insurance due to the cost, participation requirements and administration hassles associated with traditional group health insurance. That’s because in order to offer group health insurance, small employers must meet special minimum requirements set by the insurance company that typically include:
Minimum Employer Contribution Requirements - Most insurance companies require small employers to contribute a minimum dollar amount, ranging from 50 percent to 75 percent of the premium. If an employer cannot afford the minimum contribution, the insurance company will not provide health insurance to the employer.
Minimum Participation Requirements - Health insurance companies typically require small employers to meet minimum participation requirements. If the required number of employees does not participate in the health insurance plan, the plan will be cancelled.
Administrative Time - Group health insurance plans require employers to invest time and resources into the administration and management of the health plan. If the administrative costs are restrictive, the employer may choose to not offer health benefits.
Zane’s “Private Health Exchange” directly addresses each of these issues.
With the Zane platform, there are no minimum participation requirements that a company must meet in order to offer the Private Health Exchange, and there is no minimum employer contribution required. Rather than pay the costs to provide a specific group health plan (a "defined benefit"), employers instead fix their costs by establishing a monthly tax-free dollar amount (a “defined contribution”) that employees choose how to spend. In other words, the small employer gets to name its price.
The Private Health Exchange benefits program must include all legal documentation to ensure compliance with applicable regulations. The Zane platform is an IRS, ERISA, and HIPAA-compliant platform that includes electronic plan document creation and employee election processes.
What makes the Zane program unique is that once an employer establishes the defined contribution plan, the employer has no further involvement in the employees’ health insurance decisions. The employer’s role is limited to reimbursing employees through their existing payroll, which typically takes less than 3-5 minutes per month.
One of the more exciting features of the Zane platform is its seamless integration and compliance with up-and-coming health reform ideas. There will be massive financial incentive in the upcoming years for employers to switch to defined contribution platforms, and Zane Benefits is at the forefront of providing this solution.