The Patient Protection and Affordable Care Act (PPACA), also known as Healthcare Reform, mandates that all resident citizens and legal immigrants of the United States procure and maintain health insurance. For many people, especially those working for corporations or other large businesses, nothing much will change — they are still covered by their employer. Self-employed individuals and those working for businesses with fewer than 50 eligible employees will also need to obtain coverage, but must do so without a large company to help them. Where will they turn for their healthcare plan?
People without access to a corporate plan may turn to newly created state healthcare insurance exchanges. The passage of PPACA called for the creation of these entities, organized to create a competitive market for health insurance. These exchanges are being set up to ensure that there will be common rules regarding the offering and pricing of insurance, there will be several choices of health plans, and there will be information available for consumers to compare plans and purchase plans.
What are the functions of the Exchange?
- Certify health plans to be offered in the exchange
- Operate a toll-free telephone assistance line
- Operate a website for individuals to get uniform information about exchange health plans
- Assign a rating for each plan based on the benefits and price
- Provide a uniform enrollment form in a standardized format
- Inform individuals regarding their eligibility for programs such as Medicaid, CHIP or, any other,
- State or local programs they may be eligible for
- Establish a navigator program to reach underserved populations about the exchange
- Make subsidies available for qualified Exchange participants
The plans available through the exchanges provide for four levels of coverage, based on “Actuarial Value” or the percentage of costs the plan is expected to cover for an average population. These levels are:
- Bronze — 60%
- Silver — 70%
- Gold — 80%
- Platinum — 90%
For instance, a plan at the Bronze level of coverage would pay 60% of out-of-pocket expenses, with the individual being responsible for the remaining 40%, while the Platinum plan would pay 90% of out-of-pocket expenses, leaving 10% for the individual. It is expected that healthier people will select the Bronze or Silver plans to minimize their cost for coverage, while older people and those with on-going health issues will select Gold or Platinum to minimize their out-of-pocket expenses. The different tiers refer only to the amount of monetary coverage of the plan, and it is important to understand that all of the plans offer the same essential health benefits and level of care.
The new State Health Insurance Exchanges will initially be available to individuals purchasing insurance as well as small employers — that is, those employers with fewer than 50 eligible employees, but after 2016 States will be given the option to expand access to larger employers. To date, only seventeen states have created independent exchanges:
- District of Columbia
- New Mexico
- New York
- Rhode Island
While seven states have created a State-Federal Partnership Exchange:
- New Hampshire
- West Virginia
The remaining States have chosen to default to a Federal Exchange.
All of these changes are going to be confusing, both for employees and even healthcare providers. Fortunately, there are resources out there to help your employees (and you) make sense of all the changes. The Federal government has set up a site that provides information on the various exchanges, how much coverage is likely to cost and much more. There is also the Kaiser Family Foundation website, which offers great information and includes a calculator to help determine if an individual is eligible for a subsidy, and if so, how much.
Bottom line is that employees will turn to their HR administrators and company executives for answers. It’s prudent to consider communicating often about your own benefit plans and how you intend to accommodate employees in the future. The more informed you are about all aspects of PPACA, the better you can communicate and ensure employees are well-informed.