How will Benefit Exchanges Affect Small Businesses?
The Affordable Care Act aims to increase access to health care for all, by lowering the cost of health care coverage. It will also hold insurance companies and carriers more accountable for the types of insurance plans they offer. This is particularly important for small business and individuals, who may have previously been unable to purchase health care insurance on the private market due to the high costs or pre-existing conditions.
Public benefit exchanges are new insurance marketplaces which will allow for individuals, self-employed and smaller companies, to enjoy the same benefits and purchasing power of larger companies. For example, they will provide greater insurance options at lower costs due to the larger pool of consumers. The exchanges, which may be state led, government led or a mixture of both, will increase coverage options and enhance the quality of health care coverage. It will also make the process of choosing and purchasing coverage more efficient and accessible to all. These exchange programs will make it easier for smaller companies and individuals to choose and compare coverage options, estimate costs and determine if they may be eligible for tax credits. Enrolling within benefit plans will also be more efficient. Benefit exchanges aim to increase competition within the market and will also lead to a reduction in administrative costs. Moreover, it will increase the quality of health care coverage and protect consumer rights, avoiding discrimination, by requiring that exchanges comply with federal regulations. Similarly, benefit exchanges will provide a greater transparency of the health care coverage offered, making it easier for consumers to understand the plans and to make more informed decisions. The small business health option programs or SHOP exchanges will also help to guide small companies in choosing the best forms of coverage, including helping companies to determine if they may meet eligibility for small tax credits to help cover some of their purchasing costs.
The reduction in health care costs may provide smaller companies with the ability to offer health care coverage for the first time. In this case, companies must not only be cognizant of the new changes and options which are available in their particular state, but will also be required to consider how they will administrate their benefits and integrate these with other company processes. Companies may therefore be required to analyze their current administrative support and IT capabilities to determine if they are ready to incorporate benefit coverage into their structure.
Fortunately, there are a wide variety of software solutions which help to streamline benefit administration, including ways to incorporate other processes such as COBRA administration. They also provide employee self-service options, which is particularly important as it allows employees to engage in decision making. Employees can choose coverage which meets their individual needs whilst allowing them to update their personal information.