Types of Exchanges

1. State Exchanges – Individual Consumer – Federal or State Run

  • Carrier participation will be voluntary
  • State determines plan designs:  Bronze (low cost), Silver, Gold, Platinum (high cost); Catastrophic Plan – young invincibles (18 -30)

2. SHOP Exchange – Small Employers

  • Open in 2015
  • Limited to 50 FTE’s
  • Employer picks plan for their EE’s

3. Private Exchanges – Wide variety available through various channels

  • Wide variety – Single or Multiple Carrier, Regional or National, Fully or Self-Insured, Defined-Benefit or Defined-Contribution
  • Available through various channels – Brokers, Technology Providers offering payroll or enrollment platforms, Insurance Companies
  • Pros and Cons – Can help control cost by setting contribution amount for each employee, offer more benefit choices and services for enrollment, claims, billing, employee support. However they charge fees and may be more expensive; carrier participation fee, company enrollment fee or both. Employee pros and cons exist as well; they may or may not like the selection of benefits, may shoulder a great portion of the costs.
  • Although they can provide a wide choice of options, employers must be concerned about ‘anti-selection’ and loss of control of the underwriting process vs. being aggregated with poor performers.

Evolving State Exchange Landscape

  • State Exchanges open in 2014 for Individuals only (SHOP plans are optional by state)
  • Federal subsidies are available in exchanges to individuals with household incomes between 138% and 400% of federal poverty level (FPL = $11,490) who do not have access to qualifying, affordable employer coverage. Employees at or below 250% of FPL will be enrolled in a silver plan with lower cost sharing
  • Federal subsidies will be based on silver plan, even if individual chooses bronze or higher metallic plan. Individuals do not get the excess subsidy if a lower cost plan is selected or a higher subsidy if a higher cost plan is selected
  • Less than half of states will have an Exchange up and running in 2014. Federal exchange will be the fallback

Potential Challenges with Exchanges

  • New enrollees must be cognizant in researching network providers and coverage
  • Additional special enrollments (i.e. change in location, employment status or income) all of which would affect eligibility for Medicaid and/or premium assistance
  • Age changes and over age dependent cancellations