As an employer considering health insurance for your employees, you have multiple options available to you. You can look for coverage on your own. Or, you can shop for coverage with assistance from an employee benefits broker. You may choose to go directly to an insurance company to purchase coverage. Alternatively, you can shop for health coverage via a public or private health insurance exchange.
So, you may be wondering, what’s a health insurance exchange? A health insurance exchange offers you and your employees access to multiple health insurance plans through a single program. There are both “public” health insurance exchanges and “private” health insurance exchanges. In California, the public health insurance exchange is known as Covered California, which was established as part of the Affordable Care Act (ACA) signed into law by President Barack Obama in 2010. One example of a private health insurance exchange is CaliforniaChoice, which has been serving small businesses in California since 1996.
What Are the Similarities?
Both the state exchange (Covered California) and a private exchange (like CaliforniaChoice) offer you the option to choose from multiple health insurers in a single program. Some of your employees may choose one type of coverage – like a Health Maintenance Organization (HMO) health plan – while others may want to be able to access a certain doctor, medical group, or hospital that is only available through a Preferred Provider Organization (PPO) health plan.
Other health plan options may also be available like an Exclusive Provider Organization (EPO) plan, Health Care Service Plan (HSP), and Health Savings Account (HSA) qualified plan.
Both a public exchange and a private exchange give you choices and allow you and your employees to shop and compare health plans – so you find the coverage that is right for your specific health care needs.
What Are the Differences?
As you might expect, a public health insurance exchange is one administered by the government – at either the state or national level. California was the first U.S. state to establish its own state health insurance marketplace as part of the ACA. Covered California offers medical and dental coverage to individuals and small businesses statewide.
As required by the ACA, Covered California also offers pediatric dental and vision benefits, but vision coverage for adults is not an option on the state exchange.
As of 2018, a dozen states and the District of Columbia operated their own public health insurance exchanges. All other states used the federal marketplace, HealthCare.gov, to offer ACA compliant health coverage to their residents.
A private health insurance exchange – like CaliforniaChoice – is an insurance marketplace established by a private organization such as a Third Party Administrator (TPA). CHOICE Administrators is the TPA that operates CaliforniaChoice, and all plans offered through CaliforniaChoice are ACA compliant. Through the CaliforniaChoice private exchange, small businesses in California can access dozens of health plan options from eight different health insurers that operate in the state. Businesses can also add options for employee and dependent dental and vision benefits as well as other coverage.
While a public exchange generally offers only medical and dental insurance, a private exchange may offer more. For example, CaliforniaChoice offers employers and their employees a variety of discounts (including dental, vision, and hearing services) as well as resources that could help you and your employees save time and money.
These include a free Premium Only Plan (POP), access to HRAnswerLink (human resources support), employee discounts through the Cal Perks program, a no-cost California Rx prescription-drug discount card, an online Health Savings Account (HSA) Resource Center, a free Flexible Spending Account (FSA) for groups of 15 or more employees, COBRA billing services, and other benefits.
Optional services, including payroll, 401(k) integration, and access to other types of insurance, are also often available through a private exchange.
Because Covered California was launched in connection with the ACA, it has been in operation for about 10 years. The CaliforniaChoice private exchange opened in 1996, so it has more than 22 years of experience and expertise in delivering employee choice and multi-carrier exchange services to small businesses in California.
What’s Right for You and Your Business?
If you are interested in learning more about what’s available from a public or private exchange, talk with your employee benefits broker. He or she can help you decide what might work best for your business and your employees’ individual or family health care needs. If you do not have a broker, we can help you find one who will meet with you and provide you with a custom quote for health and other coverage for your employees (and dependents, if you choose).
You might also want to read our posts on Health Insurance Can Help You Better Compete for Employees and 7 Reasons to Use a Broker and a Private Exchange for Your Small Business Employees’ Health Insurance in 2018.