Posted on July 17, 2014

Health Care Exchanges: Just the Facts

_From the health care reform experts at Accelerated Benefits

If there is one new phrase that has been created from the Health Care Reform Act, it is "Health Care Exchange." This article will clarify the differences between the following: ACA Created Health Care Exchange, Individual Private Exchanges and Group Private Exchanges.

Government-run Healthcare Exchanges

Starting with the ACA created Federal/State Exchanges, now called Marketplaces, the trials and tribulations are well documented. This exchange can be summarized as follows:

* As a result of ACA, every state must have a Healthcare Exchange (run by state or federal government).
* First open enrollment date was 10/1/13 which ceased on 3/31/14.
* There are unisex rates, guaranteed issue, no medical questions, and no pre-existing condition limitations for all who apply.
* Many insurance companies do not participate in the federal exchanges.
* Most public exchange plans have limited provider networks as compared to non- public exchange products.
* Approximately 8 million individuals have enrolled in coverage through the federal exchange.
* To help with affordability, there are subsidies and tax credits available to individuals who have incomes below 400% of the poverty level.
* Open enrollment is closed until 11/15/14 for 1/1/15 coverage.
* Special enrollment options exist if an individual has a qualifying event.
* Rate increases to be approved by the government consistent with current and expected claims of each insurance company in the state pool.
* Individuals cannot purchase coverage with pre-tax premiums through payroll deduction or HRA plans.

Individual Insurance Private Exchanges

Not to be outdone, the private sector was quick to develop Individual Insurance Private Exchanges. The opportunity to purchase individual medical insurance online is not new, however it has become much more prevalent as new rules on these products make them much more attractive. Private exchanges on the individual market have the following attributes:

* Open enrollment for newly developed products as a result of ACA began 10/1/13 and ceased 3/31/14.
* Special enrollment options exist if an individual has a qualifying event.
* There are unisex rates, guaranteed issue, no medical questions, and no pre-existing condition limitations for all who apply.
* There are more plan options, more insurance providers but programs are similar in price to the public exchanges.
* Most of them offer enhanced websites that also provide individuals a pathway to enroll in the federal exchanges.
* Most of these websites also offer dental, vision, disability and other types of insurance products.
* This option is best suited for individuals who do not qualify for subsidies and credits through the federal exchanges or want larger provider networks and plan options.
* This can be a great option for smaller employers who wish to terminate their group coverage but still want to assist employees with securing insurance coverage.
* A majority of ERISA professionals take the position that you cannot purchase coverage with pre-tax premiums through payroll deduction or HRA plans.

Group Private Exchanges

Finally, many employers are being solicited to participate in Group Private Exchanges.

* These plans typically offer one insurance company’s product line but 4 to 10 medical plan options. Some larger employers may be eligible to offer multiple health carrier options.
* Most employers adopt a defined contribution medical plan concept. The employer pays a fixed dollar amount for single and family coverage and the employee makes up the difference with payroll deduction premiums. Conceptually this leads to more consumerism in plan selection and utilization.
* This option can be offered on fully insured and partially self-funded plans. ACA has created a trend towards self-funded medical plans due to taxes and restrictions embedded in fully insured plans.
* Private Exchanges have advanced benefit administration systems to ease the administration of enrolling multiple insurance options.
* Medical, dental, vision, disability and life are all offered through one enrollment platform.
* Expect significant setup and installation commitment by the employer in exchange for a potential long term solution.
* Usually there are additional fees for employers who adopt these plans charged by the broker, insurance company or TPA.

This move toward exchange options is more than just a trend. It will quite possibly will be the way the majority of employers will offer coverage for employees, or the way individuals will purchase coverage in the future. Be sure to get the advice of legal and insurance experts when evaluating these programs as there are many compliance and HIPAA regulations to consider.


Hear more from Accelerated Benefits at a health care reform webinar, or get in touch to learn more today.


Accelerated Benefits is a benefits brokerage firm headquartered in Columbus, Ohio, that specializes in the “5 C’s” of employee benefit programs: cost, compliance, communication, coordination and consultation. Accelerated Benefits offers benefit solutions to fit the unique needs of any size company. When your goal is to integrate, communicate, and simplify your employee benefit program, AccBen can lead the way.


This content is intended for educational purposes only and should not be considered legal advice.