It is widely anticipated that the Supreme Court will give its opinion on the constitutionality of the individual mandate in the Patient Protection and Affordable Act on Thursday. Its decision can and will affect how health care reform moves forward. The one item that likely will continue no matter which way the Supreme Court decides is the establishment of health insurance exchanges.
Under the law, each state must establish its own exchange by 2014 or default to the federal government’s exchange. Some states have decided to use the federal government’s exchange rather than absorb the cost of developing their own.Each state must create two exchanges, one for individuals and one for small businesses. The purpose of the exchange is to introduce retail like competition to the health insurance market with the goal of lowering premiums. Each exchange must have 4 levels of coverage and cover the 10 essential benefits as required by the law including preventive, diagnostic and therapeutic services and be offered by approved health insurers. The exchanges must also be able to deliver plan information to the public and complete the enrollment process. Your current insurance broker may or may not be able to assist in the enrollment process – the language in the act refers to navigators assisting individuals and businesses but offers little direction as to who navigators are.
The plans selected for the exchange must be selected from one of four options:
They must be one of the three largest small group health plans in the state.
One of the three largest state health employee plans.
One of three largest federal employee health plans or
The largest HMO plan offered in the commercial market in that state.
Starting in 2014, small business exchanges will be available for employers with less than fifty employees. States will be able to open up the exchanges to larger employers in 2017. Employers will select plans from the exchange that their employees will be able to enroll in and will also be able to offer different plans for the employees to choose from. The employee will select their coverage online which will eliminate paperwork for the employer. In order to qualify for the tax credit in 2014 the small business must purchase their coverage through the exchange.
The individual exchanges will also have four levels of coverage and all plans in the same level will have the same coverage which will make comparing plans easier. Individuals will not be denied coverage and subsidies will be available for families with incomes up to 400% of the federal poverty level.
Time will tell how all the chips will fall with the mandate but health insurance exchanges are not a new idea, some have been up and running for many years and with much success so I do expect that they will survive the Supreme Court’s decision and, more importantly, be able to bring much needed cost savings to small businesses.
Blog Post contributed by Robert H. Burns CLU,ChFC, Yergey Insurance Agency & Contributor to Affinity HR Group
