Employers have tough decisions with health care reform. What they decide to do will impact their employees in a negative or positive way. Some employers are seeing high double-digit increases with traditional group sponsored coverage. The key for them is to find a way to stop some of the bleeding.
Buzz words keep going around about these health insurance exchanges. This has made it confusing for some employers.
“What will these exchanges do for me?”
If you choose the wrong one, it could cause you some frustration and cost you money. If an employer chooses the right one for their situation, it will save them thousands. Some employers want to explore this these ‘exchanges’ as a way to cut some of their costs.
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What is an Exchange?
An exchange is nothing more than an online shopping portal, similar to Amazon.com®. Once you put in your data and what you are searching for, you can view what health plans are available to the individual or family applying for coverage. Once you select a plan, you can complete some basic details, like your address and payment info and then you are done. The insurance company will take care of the rest.
The public exchange takes you through a series of additional questions to determine if you qualify for a tax credit. Some people call this “Obamacare” or “Obamacare Plan”. After the questions, they will make an immediate determination of your official tax credit, if you qualify.
Once the tax credit has been determined, you can select a plan available to you. The premium is reduced by the exact amount of the tax credit you qualify for (or amount of the credit selected during enrollment). There is no ‘discount’ on the public exchange. The public exchange is the only place where you can receive a government subsidy for health care.
A private exchange allows the employer to have some more control, especially if they are contributing dollars towards health insurance premiums. This could be insurance company selections, voluntary benefit offerings, contribution amount, employer reports, etc.
Each private exchange will vary with their offerings. It could be limited to health insurance only, and only one insurance company. Some may include voluntary benefits, like dental and vision.
Many will charge some type of nominal fee to the employer. However, it gives a lot more flexibility to the employer and their employees.
Both types of exchanges have their advantages. The employer needs to evaluate both options before proceeding. There can be tax consequences if you do not pay close attention. An experience insurance advisor will be able to handle the details of each exchange and assist with the enrollment on the exchanges.
Butch Zemar
EliteBenefits.net