The Basics of Public Benefit Exchanges
Historically, many businesses have chosen to work with private benefit exchanges or broker insurance services to purchase cost effective group coverage for their employees. However, with the Affordable Care Act, some employers will have access to additional options for purchasing group coverage. From 2014, states will be required to set up public benefit exchanges which act in similar ways to private exchanges, but which are set up and managed by the state and/or federal government. For businesses who meet certain criteria, access to public exchanges may prove to be highly beneficial. They allow individuals and small businesses to access financial support to pay for the cost of health insurance, such as through tax credits which can be applied to the cost of premiums. Public exchanges will not replace private exchanges, but will offer consumers more coverage options and increase the consumer’s purchasing power.
Public benefit exchanges will also have several additional benefits. New technologies, means plans can be more easily accessed, allowing consumers to shop more efficiently online. Consumers will be able to compare plans by entering specific search criteria, and receive customer support to help make informed decisions. Public exchanges will also offer consumers recommendations of the most appropriate plans to suit their needs. In the future it is envisaged that plans will also be star rated. In addition to public exchanges, states will also be required to set up a small business health program or SHOP exchange. Initially, only those employers which employ 50 or less employees will be eligible to utilize these programs, although in some states this may be up to 100 employees. Over time, it is predicted that larger businesses will also be able to utilize SHOPs.
Exchanges may be state based benefit exchanges, federal based, or a combination of the two, and must be set up and ready for open enrolment in October 2013 to begin in January 2014. Under the public exchanges, the benefit plans offered will be approved and ready to meet the new health care reform requirements. In particular, plans must offer comprehensive coverage which includes a variety of minimum and essential health benefits. Some of these include services such as preventative and wellness services, hospitalizations, pediatric services, ambulatory patient and emergency services, maternity and newborn care. They must also cover mental health and substance abuse services, rehabilitative services including assistive devices, prescription drugs, and laboratory testing services.
Plans will also be categorized and defined by the percentage of actuarial value, or percentage of predicted health care costs that the plan will cover. These levels will be categorized as a bronze level, which will cover 60% of the actuarial cost, and the silver level which will cover 70% of the actuarial cost. The gold level will cover 80% of the actuarial cost and the platinum level will cover 90% of the actuarial value of the covered benefits. Under the health care reform, employers and individuals will have more cost effective health care options and they will be offered greater support in choosing health care coverage.