Time to choose between a public or private health insurance exchange
This article is part of an eight-part series on how to cope with the implementation of Obamacare. Check back tomorrow for part five.
For small companies that want to offer insurance, one of the biggest changes in 2014 is that there are a lot more ways to shop for it. If you have 49 or fewer employees, you can use the new Small Business Health Options Program, or SHOP, exchanges run by states or the federal government. These exchanges were designed to give employees of small businesses an easy way to choose from an array of plans, from different carriers, at a given metal level (bronze, silver, gold, platinum) chosen by their employer.
Just before Thanksgiving, the Obama Administration announced that you can't get access to a SHOP exchange through Healthcare.gov website until November 2014. As the feds struggle to get the troubled Website working for individuals, upgrading the small business portion of the site has had to take a back seat, a spokesperson explained. However, you can still access SHOP plans through an insurance broker or directly through insurance providers. And in most of the 14 states that administer their own healthcare Websites, you should be able to apply for insurance online. (One exception is Maryland, which is having its own technological problems with small business access.)
But under transitional rules meant to ease administrative burdens, in 2014 the 36 exchanges administered by the federal government will ask employers to pick a single health plan to offer employees. (The multiple-choice functionality should be available in 2015.) State-run SHOPs can use either approach, but the reality is that in many states, there are just one or two providers of small-business coverage anyway. What’s more, employers and benefits experts around the country are finding that many plans offered through exchanges offer narrower networks of doctors and hospitals. Insurers say these narrower networks help them control costs and thus keep premiums down. But it can mean that employees lose access to favorite doctors and other specialists.
Private health-insurance exchanges, if they’re available in your state, are another option. In private exchanges, the employer selects a menu of plan options from one or more insurance carriers and decides on a dollar amount it will contribute toward employee health benefits. Employees then use the funds, plus any additional amount they want to contribute, to buy a plan as rich or stingy as they choose. Some private exchanges offer as many as 20 coverage options.
Private exchanges offer employees more choices than the SHOPs--not to mention being easier to use than many state exchanges--and may also offer one-stop shopping for ancillary benefits such as vision, dental, life, and disability insurance, which are not available in the public exchanges.
For large employers, human resources consultancies such as Aon Hewitt, Towers Watson, and Mercer have established private exchanges. Small businesses and sole proprietors can look to exchanges such as Minnesota-based Bloom Health (which has plans in multiple states) and HealthPass in New York State, as well as single-carrier private exchanges run by regional insurers.
This article was updated Nov. 29 to reflect the latest delays in online access to SHOP plans.