New data from early adopters of Mercer MarketplaceSM, Mercer’s private benefits exchange for active employees, show that employees will “right-size” their benefits to more closely match their needs when given enhanced benefits choice and decision support. By buying coverage appropriate to their needs, many employees save money for themselves and their employers.Employers of all sizes and across many industries signed up to provide benefits to active employees through Mercer Marketplace beginning in 2014.
Private benefit exchanges are intended to drive down costs by helping employees to right-size their benefits, and Mercer Marketplace offers proof of this concept. Employers that offer benefits through Mercer Marketplace have seen an average drop in annual cost of $800 per employee — with nearly a third of these savings ($250) going directly to employees and the remainder ($550) going to employers.
These cost savings are closely related to another benefit of Mercer Marketplace: greater choice for employees. Mercer research shows that US employers, overall, tend to offer just one or two medical plan options to their employees, whereas the vast majority of employers providing benefits through Mercer Marketplace offer three or more options. (See Figure 1.)
Figure 1: Number of Plan Design Options Offered
Employers providing benefits through Mercer Marketplace offer a range of deductible levels, including high-deductible options of $1,500 and $2,500 — while still being able to provide one or more lower-deductible choices for employees. The current norm, as shown by Mercer survey data, is to set a mid-range deductible. Only about a third of preferred provider organization (PPO) plan sponsors with 50 or more employees have a deductible of $1,500 or more. (See Figures 2 and 3.)
Figure 2: Deductible Levels for PPO Plans on Mercer Marketplace
Figure 3: Deductible Levels for PPO Plans* of All US Employers With 50 or More Employees
The option to buy supplemental health coverage through Mercer Marketplace is another important feature that helps employees to right-size their medical plans. It allows them to select a higher deductible plan but still have reassurance that they will be protected against medical costs due to accidents or critical illness, for instance.
For 2014, 24% of employees on Mercer Marketplace bought supplemental coverage, and 35% of employees on Mercer Marketplace with a high deductible ($1,500 or $2,500) bought supplemental coverage.
|Eric Grossman (Norwalk, CT)
Senior Partner, Active Mercer
Marketplace Business Leader
+1 203 229 6105