Private Exchange Enrollment Continues to Grow
The American Health Care Act (AHCA) – the GOP replacement to the Affordable Care Act (ACA) – that narrowly passed the U.S. House of Representatives in early May is now being considered by the U.S. Senate. One of the provisions of the ACA repeal and replacement legislation is the elimination of the small business tax credit for employers who purchase coverage through the federal Small Business Health Options Program, otherwise known as the SHOP exchange. While the SHOP exchange may be coming to an end (it’s up in the air until the Senate acts), it may have minimal impact on businesses with fewer than 25 employees that are eligible to buy coverage through SHOP. That’s because it has never really drawn a lot of interest from employers. Employee Benefits Adviser said in an article last month that since opening in November 2014, that in its first year, SHOP drew only 10,700 small business employers and 85,000 workers nationwide.
The U.S. Department of Health & Human Services, Centers for Medicare & Medicaid Services, and Small Business Administration have declined to update SHOP participation in the past year. Nevertheless, small business enrollment in private exchanges continues to climb. In California, the small group private exchange CaliforniaChoice operated by CHOICE Administrators has seen its membership grow more than 200 percent in the past six and one-half years. It currently serves more than 18,000 groups and 326,000 members, all in California. Earlier this year, Benefits Pro, an online publication for benefits professionals, reported that more than eight million people are enrolled in private exchanges in the U.S. And it’s easy to understand why employers are attracted to a private health insurance exchange. It can help them increase their benefits options for employers, while still giving them the opportunity to control costs through Defined Contribution.
According to a 2016 study by the Private Exchange Research Council, which analyzed hundreds of thousands of benefit purchases made by workers in an employer-sponsored private exchange, the average group offers 14 different benefit options and six medical plans through a private exchange. Older workers, such as Baby Boomer and Gen Xers, are more likely to buy more coverage – over 40 percent purchased four or more products each as compared to less than one-third (30 percent) of Millennials. If you would like to learn more about private health insurance exchanges, and how you can expand the options available to your employees, while still controlling your group’s insurance and related expenses, 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 the options available to your group.