The Individual Health Insurance Marketplace (a.k.a. Georgia's Federally-Facilitated Exchange) will be of most benefit for individuals and families without current health insurance coverage or those with incomes below 400% of the Federal Poverty Line (FPL) who currently purchase health insurance coverage on their own, outside the context of an employer-based plan.
Individuals and families with income below 400% of FPL will qualify for government subsidies to lower the cost of their premiums if they do not have access to "minimum essential" and "affordable" health insurance coverage through an employer. Those searching for coverage on the government exchange will be able to select from a menu of health coverage options from insurance carriers including Blue Cross Blue Shield, Kaiser Permanente, and Humana. Notably absent from the Georgia Marketplace will be United Healthcare, Cigna, Coventry, and Aetna although those providers will be available in the private market.
Private Individual Insurance Exchanges will, by law, offer the same coverage and unsubsidized pricing available through the government exchange; however, there will be a wider array of carrier and coverage options available through the private exchange environment. The primary downside to the private exchange is that government subsidies will be not available, so those with incomes in excess of 400% of FPL will be most likely to select coverage through the private exchanges as more options will be available and the cost of coverage will be the same in the private market as that which they would find through the government exchange.
As is currently the case, the insurance brokerage community will be able to assist enrollees in their coverage selection through both the private and public individual exchanges and the cost of this professional assistance will be funded by the selected insurance carrier as an embedded commission within the selected insurance product and without any increased cost to the enrollee.
Employer exchanges, also available through the brokerage community, will be electronic environments which will allow employers to offer their employees an array of coverage options for their personal selection. Most notably, the private exchanges will offer employers the ability to easily administer their benefits offering using a defined contribution approach wherein a defined dollar amount is provided to each employee for their use to purchase health, dental, vision, life insurance, etc. that most fits their needs. With the defined contribution approach, the employer retains the ability to design the plan offering while the employee will control the specifics of the plans purchased.
While the employer exchanges will have similar public/private components, much remains unknown regarding the relevance of the government small-business exchange, referred to as the SHOP Exchange. Much of the functionality initially mandated to be provided by the SHOP Exchange has been deferred to 2015. That said, there is widespread expectation from policy experts that the private group exchange environment will be a far more attractive option for employers than the public offering.
While much remains to be seen as Health Care Reform continues to be implemented, the advent of these new exchanges will significantly change how individuals research and enroll in both individual and group health coverage. Even for employers who do not expect to make any significant changes to their coverage or enrollment offering in 2014, having an understanding of exchanges and how they function will enable employers to more effectively and directly address questions from employees as they arise.
David Bottoms is senior vice president of The Bottoms Group and a principal of TBX Benefit Partners.