State Benefit Exchanges
By 2014, each state will be required to set up public health benefit exchanges or state exchanges, to provide a marketplace through which individuals and small businesses can shop for and purchase health insurance. These marketplaces will act as a one stop shop, providing a variety of health care plans from multiple carriers in addition to other benefit options, such as disability and life insurance. Employers who choose to offer health care coverage to their employees are typically required to make a minimum contribution towards their employee’s premiums. For this reason, less than 50% of small businesses offer health insurance due to the high costs associated with providing group coverage. Participation in group coverage also requires a minimum eligibility amount, meaning that a set percentage of an employer’s staff must participate in the plan at any one time. If this amount falls under the minimum requirements, the carrier may drop group coverage for that business. Other barriers faced by small companies include the administrative costs associated with benefit administration, which can be high. This can be particularly problematic for companies in industries which have a high staff turnover or which have office locations across many states.
From 2014, the health care reform aims to reduce the costs of health care insurance in several ways. For example, under public exchanges minimum contribution amounts will be eliminated. This will allow companies to control the amount of costs that they can afford to contribute to their employee’s premiums. There will also be no minimum eligibility, meaning no set percentage of the companies employees must participate in the plan. Public benefit exchanges will also provide administrative support such as online enrolment and customer service, reducing the employer’s administrative costs.
Currently, state exchanges can only be accessed by small businesses, individuals, employees who work for a company which does not offer health care insurance, the unemployed, self-employed, and those who are retired. It is envisaged than after 2017, medium and larger businesses will also have access to benefit exchanges. For individuals and small business who cannot afford health insurance, state exchanges will also help them to determine their eligibility for tax credits or other forms of federal assistance which can be contributed towards the cost of premiums. As plans offered after 2014 will be required to meet specific criteria as part of the health care reform, working with state exchanges which approves the plans and confirms that they meet these criteria, may help to provide businesses with piece of mind. It will also help to ensure that employers avoid any penalties associated with not providing their staff with approved plans. Carriers will still have control over the premiums they set, but consumers will be able to select from a variety of plan options, from comprehensive to minimum coverage at a variety of costs. This allows both employers and employees to find a plan which matches their budget and health care needs.