Private Exchanges Likely to Thrive in Changing Health Care World
With so much being discussed and written about the potential replacement of the Affordable Care Act (ACA) since the November 2016 election, you might think the future for all of the country’s health insurance exchanges is up in the air. However, there are five reasons private exchanges will likely continue to thrive in an ACA or post-ACA world.
A major concern for employers – today and for the foreseeable future – is “how much should I be paying for my employees’ benefits?” With a private exchange, the choice is yours . . . thanks to Defined Contribution. As an employer, you decide how much you want to contribute – a Fixed Percentage or a Fixed Dollar Amount. Then each of your employees applies your contribution to the health plan he or she wants. If the cost of the plan exceeds your employer contribution, the employee simply pays the difference through convenient payroll deduction.
The old-fashioned method of offering one carrier to all of employees doesn’t give them the ability to choose the coverage that best fits their individual or family health insurance needs. Today, one size does not fit all. Employees expect more, and a private exchange lets you give it to them. Employees can choose from multiple health plans, so they can choose the option that makes the most sense for them – and their budget.
Innovative Decision-Support Tools
Private exchanges, like CaliforniaChoice, offer tools to help your employees find out which doctors, hospitals, and prescription drug benefits are available with each plan. They may also offer tools to help potential enrollees identify likely out-of-pocket health care costs – and to match the right health plan to their specific health care needs. Online enrollment, which is available through most private exchanges, streamlines enrollment and gives you the ability to track who’s already enrolled and who still needs to complete their enrollment.
A private exchanges makes it easy for you to make coverage changes (including news hires and terminations), updates to your billing, and other tasks. You’ll also appreciate the dedicated support you get from a single service team all year long – and the ability to get answers by calling just one number or visiting one website whenever you need assistance.
A private exchange makes it easy for your group to annually adjust your Defined Contribution without leaving the program. This gives you more flexibility in controlling your future health insurance costs, while still giving employees the freedom to select a plan to meet their individual health care needs. Private health insurance exchanges continue to attract greater employer interest. Accenture says private exchange enrollment was up 35 percent in 2016. The Society of Human Resources Management (SHRM) says the movement is primarily driven by costs, administration, and a positive employee/enrollee experience. Ask your broker about whether a multi-carrier private health insurance exchange might be right for your business. Offering a private exchange could help you attract and retain more employees in an increasingly competitive talent marketplace. If you don’t already have an employee benefits broker, we’ll help you find a CaliforniaChoice broker to speak with about your group health insurance needs.
What’s Ahead for Small Business Health Care
The future of the Affordable Care Act (ACA) is still up in the air at this time, and that’s prompting some employers to wonder whether they still have to comply with requirements of the health reform law. In a word, yes – at least for now. For the foreseeable future, it is important employers ensure they are aware of (and still complying with) the ACA. Until Congress and the White House work out repeal, repair, or replacement, the ACA is still the law of the land, and there are important guidelines employers must continue to follow.
A group health plan offering coverage to eligible employees may not have a waiting period that exceeds 90 days. A waiting period is the period of time that must pass before coverage for an employee or dependent who is otherwise eligible to enroll under the terms of the plan can become effective. Being eligible for coverage means having met the plan’s substantive eligibility conditions (such as being in an eligible job classification or achieving job-related licensure requirements specified in an employer’s plan terms). An employer can choose any waiting period up to, but not exceeding, 90 days. Many firms choose first of the month following 30 days of employment, while others may elect first of the month following 60 days of employment or coverage from day one.
Applicable Large Employers – those with 50 or more full-time employees, including full-time equivalents, during the prior calendar year – must report to the Internal Revenue Service (IRS) on their offer (or lack of offer) of health insurance to full-time employees and their dependents. The forms used to report employer-provided health insurance are:
- IRS Form 1094-C: The transmittal form used by ALEs to report the aggregate sum of coverage offered to employees.
- IRS Form 1094-B: The form used by non-ALE groups sponsoring self-insured coverage with the similar reporting purpose of Form 1094-C.
- IRS Form 1095-C: The reporting form for employer-offered health insurance used for each individual employee. It contains information on the coverage offered, or not offered, to any full-time employee who averaged full-time hours for at least one month of the previous calendar year.
- IRS Form 1095-B: This is used by non-ALE groups sponsoring self-insured coverage with the similar reporting purpose of Form 1095-C.
The ACA and IRS also require employers to report the cost of employer-sponsored group health coverage on employee W-2 forms annually if the employer files 250+ W-2 statements. Reporting on the W-2 does not mean the coverage is taxable. The value of the employer’s contribution to health coverage, generally, continues to be excludable from an employee’s income and is not taxable. Link here to read the IRS guidelines on reporting employer-sponsored coverage.
Employers offering health insurance, regardless of market segment or employer size, must provide employees with a Summary of Benefits and Coverage (SBC) that explains available health plan coverage. (The SBC and related required Uniform Glossary must be distributed to employees as soon as they are eligible, and, again at annual Open Enrollment. The SBC and Uniform Glossary are intended to provide enrollees (or prospective enrollees) with simple means to comprehend benefits, understand co-pays/coinsurance, and to enable purchasers to compare differences between multiple plans in order to make more-informed health insurance decisions. The format and language used in the SBCs are the same for all carriers and all health plans, across the board, including the Exchange/marketplace. For a plan effective or renewing 4/1/2017 or later, a new SBC format is required. The improvements to the documents include an additional coverage example and language and terms to improve consumers’ understanding of their health coverage. While responsibility to deliver SBCs to eligible employees is the employer’s, the burden of creating SBCs for all plans is the responsibility of carriers. The exception to this, however, is for self-insured plans, where a carrier does not exist to create the SBC documents. Employers sponsoring self-insured plans are required to create SBCs and supplemental Uniform Glossaries using the same format; many self-insured employers use TPAs for this service. If you want to stay up to date on changes to the ACA or replacement legislation – and the impact on small business – talk with your employee benefits broker. If you don’t already have a broker, we’ll help you find a CaliforniaChoice broker to speak with about your group health insurance needs.
An Update on the Proposed ACA Repeal
While the country waits to see what, if anything, members of Congress can agree upon as it relates to a new approach for the repair or repeal of the Affordable Care Act (ACA), the Kaiser Family Foundation’s latest poll shows three quarters of the public – including a majority of President Donald Trump’s supporters – want legislators to try to make the ACA work. In the latest Kaiser Health Tracking Poll survey, fielded after the March 24 cancellation of a vote on the American Health Care Act of 2017 (AHCA), 75 percent of participants said President Trump, his administration, and Congress should do what they can to make the original health care law – the ACA – work. Just one in five (19 percent), including 38 percent of Republicans, believe the Administration should allow the ACA to fail so Congress can replace it later. Making the current law work is favored by a majority of all parties – 89 percent of Democrats, 78 percent of Independents, and 51 percent of Republicans – including 54 percent of Trump supporters. The poll also found 64 percent of the public believes it’s a good thing the replacement bill, the AHCA, failed to reach the floor for a full vote by the House of Representatives. Fifty-two percent said they were “relieved” Republicans were unable to pass the AHCA, while 44 percent were “happy” the bill didn’t get a vote. That compares to 40 percent who said they were “disappointed” and 20 percent who were “angry” about the failed effort. So, what does all of this mean about the ACA’s future? The House adjourned in April for an Easter break, but there were reports across multiple media that Freedom Caucus chair, Rep. Mark Meadows (R-N.C.) was discussing two options with House Speaker Paul Ryan (R-Wisc.) during the congressional recess. “We’re very close,” Meadows told the Washington, D.C., newspaper, The Hill, which reports on Capitol Hill news. “The biggest thing for all of us is we want to make sure we don’t just have repeal, but we have a replacement that drives down insurance premiums.” The Los Angeles Times reported on April 11th that health insurers are looking for more certainty about ACA subsidies, and whether the government plans to maintain them, before deciding whether to participate in individual market exchanges for 2018. While the Department of Health & Human Services has said it is not changing the formula that would maintain cost-sharing payments to reduce participants’ premiums, there is still pending litigation about the subsidies. Insurers need to file their rate requests for 2018 by June 21, 2017. Government funding for the ACA is set to expire on April 28. That will be followed on May 22 by a status update from the House of Representatives and the White House on the lawsuit in the U.S. Court of Appeals about premium subsidy payments. To stay up to date on possible ACA changes – or further action on the AHCA – talk with your employee benefits broker. 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.