The Roseland, N.J., company on Thursday announced the launch of the ADP Private Exchange, a benefits administration technology platform.
“The Affordable Care Act has led employers to fundamentally reconsider every element of workforce management and shifted their focus toward, what I like to call, the three Cs of cost, compliance, and consumerism,” ADP Benefits Services president Gerry Leonard said in a press release. “Many companies today are exploring new models for administering health benefits to their employees and looking for innovative ways to reduce the cost of their health care plans in order to avoid the ‘Cadillac’ tax that will be imposed in 2018.”
The growth in the number and utilization of private exchanges for health insurance is set to explode, Benefits Pro wrote earlier this month.
From 2014 to 2015, enrollment in private exchanges doubled from 3 million to 6 million, with midsize employers contributing most to the increase, according to an Accenture report. Enrollment in private exchanges is projected to grow to 12 million in 2016, 22 million in 2017, and 40 million by 2018.
So far, the level of interest for moving to private exchanges is higher for midsize employers than for larger employers, said Paul Lambdin, director, health plan exchange practice leader at Deloitte Consulting LLP.
“In some respects, large employers have had many of the basic elements of an exchange for a long time — decision support, greater choice for employees, benefit administration, and compliance support for the employer,” Lambdin told Benefits Pro. “Larger employers need to see how exchanges would make a difference long-term to their cost structure and the affordability of health benefits, so [they] have a higher standard for taking the plunge and changing where they are today.”
On the other side of the spectrum, small employers may only have one plan choice and may “still be working out of a shoebox,” he said.
ADP’s exchange is powered by GoHealth, which will service ADP’s employer clients that have part-time, temporary, or contract workers who are typically ineligible for employer-sponsored health insurance. Through this partnership employees can apply for subsidies; compare plans and prices offered on the public exchange or other individual health options that are not offered on the public exchange; and receive expert advice from licensed advisers.
When integrated with ADP’s Health Compliance tool, the ADP Private Exchange will enable employers to identify which employees are and are not eligible for health benefits. Powered by ADP’s human resources and payroll data, employers can now direct employees working less than 30 hours per week who are not eligible for benefits to GoHealth for public exchange enrollment.
ADP says its private exchange doesn’t supplant employer relationships with brokers; in fact, ADP envisions partnerships with brokers and consultants as market acceptance for private exchange grows.