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What You Need To Know About Health Insurance Exchanges
Read this article in PDF form here.
By Kristie L. Arslan
Most micro-business owners know health insurance terms like copay, deductible and individual policy. But the Patient Protection and Affordable Care Act (PPACA) that passed in 2010 has thrown a new term into the health insurance market: exchange.
An exchange is a state-based marketplace where individuals and small businesses can shop for health insurance. The PPACA set out two kinds of exchanges.
The first would provide options for those who buy their own coverage in the individual market, which often includes the self-employed. A second type of exchange, which the PPACA calls the Small Business Health Options Program (SHOP), was basically created to help small employers purchase coverage for their employees in the small group market.
So what does the NASE think about these new exchanges? So far, the NASE supports the creation of new health insurance marketplaces where small-business owners can get access to more options for coverage. However, our top concerns for micro-businesses are the cost of health coverage and flexibility within the new exchanges. The design of state exchanges will have a direct impact on both those factors.
The NASE thinks that the proposed regulation is sufficiently flexible to provide states with the ability to design exchanges in a manner that works best for their population. However, as often is the case, the devil is in the details.
Affordability
The choices states make regarding their exchange systems will greatly affect the affordable health options for small-business owners.
The federal government will soon tell states which essential benefits must be included in the insurance plans they offer through the exchange. But the NASE is concerned that some states will aggressively go beyond the essentials. That action could result in higher coverage costs, which in turn could price many self-employed businesses out of the exchange.
Enrollment
The issue of when individuals or small groups can enroll in a plan is also a concern.
A highly touted feature of the PPACA is that even people with a pre-existing condition will be able to acquire health coverage. Because of that feature, there’s concern that people will wait until they’re sick to purchase insurance. If that happens, premium costs could soar because there would be fewer healthy people paying premiums and a larger number of sick people undergoing expensive treatment.
To address that concern, federal regulations allow exchanges to have open enrollment periods each year between Oct. 15 and Dec. 7. Therefore, unless you qualify for a special enrollment period (examples include birth, marriage, losing other qualified coverage, gaining citizenship), you’ll have to purchase a policy during the enrollment period rather than waiting until you need coverage because of an illness. This will help keep costs down in the exchanges.
Small Business Health Options Program
For employers, this program helps remove some of the administrative burden of managing a group health plan.
Employers can select a level of coverage they would like to offer their employees. The employees can then go to the exchange and select a plan that works best for them.
Employees may choose from a variety of plans offered by a variety of carriers. But, the employer pays the exchange the same amount regardless of the plans employees choose.
More Information
Read more about the exchanges at healthcare.gov.
Kristie L. Arslan is the President and CEO of the NASE and provides critical insight to policymakers on issues affecting our nation’s self-employed. You can contact her at advocacy@NASE.org.