Private Exchanges May Be a Tool for VEBAs to Save Money

The Affordable Care Act was passed with an expectation of increasing access to health care. Employees or retirees obtaining health care benefits through a VEBA may not necessarily need additional access to health care but do have an interest in getting less expensive health insurance options.  VEBAs are typically fixed dollar arrangements, so less expensive coverage should extend the life of VEBAs.  Private exchanges may be a favorable option for a VEBA to consider.   

At a simple level, a private exchange as an online marketplace, much like internet shopping sites.  Private exchanges are created by private commercial parties such as insurance companies or third party administrators.  With a private exchange, a sponsor gives their employees or retirees a fixed amount of money allowing the participants to use the exchange to find tailored healthcare coverage that is best for them.

The jury may still be out on the long-term savings that may be achieved through private exchanges, but VEBA plans should be examining this relatively new option.