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Looking Ahead: Private Exchanges in a Changing Health Care World

With the proposed GOP replacement plan for the Affordable Care Act (ACA) on hold – after Speaker Paul Ryan pulled the bill from consideration on March 24 – health reform’s future remains a question. In the weeks (or, perhaps, months) ahead, the GOP and White House will have to work out a new strategy for ACA repeal. But while the ACA’s future is uncertain, private health insurance exchanges continue to thrive. And there are several reasons why private exchanges will continue to attract employer interest.

Cost Control

An obvious concern for employers is cost. Many may be asking “how much should I be paying for my employees’ benefits?” A private health insurance exchange puts employers in charge, thanks to Defined Contribution. You choose the amount you want to contribute toward your employees’ health insurance – a Fixed Percentage or a Fixed Dollar Amount – and each employee then applies your contribution to the plan he or she prefers. If the preferred plan costs more than your employer contribution, the employee simply pays the difference through the convenience of payroll deduction.

Greater Choices

No longer does a single carrier solution work for most businesses. One size does not fit all. Every employee is unique and offering just one carrier to all employees doesn’t give them the ability to choose the coverage that best fits their individual or family health care needs. With a multi-carrier private exchange, employees have access to multiple health plans, so they can select the coverage that makes the most sense for them.

Online Technology and Decision Support Tools

Many private exchanges offer online enrollment to streamline sign-ups and decision support tools to help employees determine which health care providers and prescription drug benefits are available with each health plan. They often also offer tools to help employees and dependents identify potential out-of-pocket health care costs – and the ability to match the right health plan to their specific health care needs. Online enrollment helps employees enroll more quickly and gives employers the ability to track who’s enrolled and who still needs to submit enrollment information.

Streamlined Administration, Easy Renewal

Private exchanges offer the added advantage of more-efficient administration, including processing of new hires’ applications, terminations, and other coverage changes as well as billing and other account updates. Groups also appreciate the dedicated support they get from a single customer service team plus the ability to get answers by calling just one number – or visiting one website – when a need for assistance arises. Renewals are easy because businesses can adjust their Defined Contribution each year without leaving the program. That means increased flexibility to manage health care costs, while still giving each employee the ability to find a plan that fits his or her individual needs and budget. Private health insurance exchange enrollment is on the rise. In fact, California’s oldest, continuously operating multi-carrier private exchange, CaliforniaChoice, has seen its membership grow by more than 300 percent since 2010. Consulting group Accenture reports private exchange enrollment was up 35 percent nationwide in 2016, as compared to 2015.   If you want to find out if a private exchange might be the right move for your business, your employee benefits broker can help. If you don’t already have a broker, we’ll help you find a CaliforniaChoice broker to speak with about your group’s health insurance needs.

Multiple Group Dental Options Available through CHOICE Administrators

Employers looking to offer Dental coverage to employees have a variety of options available through CHOICE Administrators. Through the CaliforniaChoice private exchange, businesses can choose from three Dental plans. The Dentegra® Smile Club, available at no additional cost as part of the CaliforniaChoice Business Solutions Suite, offers reduced fees for dental care services. SmileSaverSM Dental 3000 and 1000 HMO plans are available for a low monthly payment and offer free office visits, oral exams, X-rays, and two cleanings per year. The Dental 3000 HMO can be added as a voluntary plan with no minimum employee participation. The third plan is an Ameritas Dental PPO, which offers a low deductible and the option to visit any dental provider, in- or out-of-network.

Dental Coverage For Larger Groups

Employers with two to 199 employees looking for more robust Dental Insurance may be interested in the ChoiceBuilder ancillary benefits exchange, which includes options from Ameritas, Anthem Blue Cross, Delta Dental, and MetLife. Anthem Blue Cross has both voluntary and employer-sponsored options with three new PPO plans added to ChoiceBuilder in 2016. The employer-sponsored plans offer a choice of annual maximums. The voluntary Anthem Silver PPO has a $1,500 maximum benefit. Orthodontic care is optional and includes a $2,500 lifetime maximum and 50 percent coinsurance. Delta Dental offers two DeltaCare USA HMO plans and two PPO plans through ChoiceBuilder. The HMO plans include 100 percent coverage for exams and diagnostics and no waiting period.

The PPO plans waive the annual deductible for diagnostic and preventive care and offer an option for orthodontic care, with 50 percent coinsurance. There is no waiting period on either PPO plan. MetLife Dental offers four Dental PPO plans – three employer-sponsored choices and one voluntary PPO plan. The MetLife Dental PPO program includes added savings at a PPO provider, the freedom to visit any dentist in or out of network, and no paperwork for patients (if the dentist files claims on their behalf). The PPO plans include in-network benefits of up to $2,500 annually and out-of-network benefits of up to $2,000 per year. For all four PPO plans, the deductible is waived for in-network diagnostic or preventive care. Orthodontic care is available. To learn more about the CaliforniaChoice multi-carrier private health exchange or the ChoiceBuilder ancillary benefits exchange, contact your employee benefits broker. If you don’t have one, we’ll help you find a broker.

Maximizing Your 2016 Tax Return: Health Insurance Deductions

Want to make the most of your business tax return for 2016? Of course you do. Don’t overlook the tax deductions available to you for providing health insurance and other benefits to your employees. Under current law, employer-paid premiums for health insurance are exempt from federal income and payroll taxes.  The employer-sponsored health insurance exclusion is the nation’s largest annual tax expenditure, costing the federal government an estimated $260 billion in income and payroll taxes this year.  (Last year, it costs the feds $216 billion in lost revenue – nearly three times the mortgage interest deduction, according to the New York Times.) Critics say the tax subsidy for employer-supported health insurance has likely contributed to the increasing cost of health care. That’s because it encourages employers (and employees) to purchase more comprehensive health insurance – often with reduced cost-sharing and/or less-stringently managed care.

Tax Break Qualification For Small Businesses 

Leading up to the early March 2017 release of the Republican-sponsored American Health Care Act (AHCA), also known as Trumpcare, some were expecting the Affordable Care Act replacement proposal would call for elimination of the tax break for employer-sponsored health insurance. However, the draft bill includes neither an elimination nor a cap on the employer tax break. (Currently, more than 175 million Americans get their health coverage through their employers.) Every dollar you spend on employee wages is subject to income and payroll taxes; however, each dollar you spent on employee health insurance is tax deductible. You can also deduct contributions/reimbursements made through a Health Reimbursement Arrangement (HRA) as well as contributions to employees’ Health Savings Accounts (HSAs). Over and above standard tax deductions, small businesses may qualify for a health insurance tax credit as part of the ACA. Qualification depends on your group size, contribution toward employee premiums, and how and where you purchase your coverage. Ask your accountant if your business qualifies. When you’re comparing health plans for your employees, a benefits broker can be of tremendous assistance. If you don’t already have a broker, we’ll help you find a local CaliforniaChoice broker to speak with about your group’s health insurance needs.