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If Employers are Ready for Exchanges, Will Exchanges Be Ready for Employers?

By Lesa Caputo, Benefit Advisor
Beneflex Insurance Services, A UBA Member Firm

As benefit advisors, Members of United Benefit Advisors (UBA) have been preparing themselves and their clients as information has become available over the last 18 months about the role that they will play in their state exchange and to what extent their employer clients will have to become educated in the purpose and functionality of their exchange.

But now as we approach the March 2013 deadline — by which all employers are supposed to inform all employees, regardless of their benefits eligibility, enrollment or financial qualifications, about the availability of their state-of-residence exchange by way of an official HHS-approved standard template notice — we find that familiar broken record of “we’re waiting for official guidance to be released” must be played once again. Thankfully, benefit advisors that belong to UBA and their employer clients will be among the first to receive the Exchange Notice with accompanying instructions about its distribution via the PPACA Advisor health care reform resources exclusive to UBA.

However, because employees may choose to obtain coverage through an exchange even if they have access to employer-sponsored group health plan coverage (although they’ll lose their employer’s contribution toward its group health plan coverage) and because the health insurance exchanges are required to provide information to prospective enrollees about their eligibility for premium tax credits (and likely will request information from employers to determine such eligibility), employers also should have an understanding of whether the states in which they operate will have a state-run health insurance exchange.

As of the date of this article, the following 16 states have established state exchanges: California, Colorado, Connecticut, District of Columbia, Hawaii, Kentucky, Maryland, Massachusetts, Nevada, New York, Oregon, Rhode Island, Utah, Vermont, Washington and West Virginia.

Arkansas, Delaware and Illinois are planning for a partnership exchange with the federal government. And Alaska, Florida, Louisiana, Maine, New Hampshire, South Carolina and South Dakota have affirmatively decided not to create a state exchange. There is still a common misperception among some employers that if a state does not establish their own exchange (with or without partnership with the federal government) then that state will not have an exchange at all. This is absolutely not the case. For those states that have affirmatively decided not to create a state exchange, this just means the federal government will run the exchange on the state’s behalf.

All of the remaining states not aforementioned are studying their options but could end up with a federally run exchange at least for 2014 because the deadline to submit their state’s plan for implementing an exchange is mere weeks away (Dec. 14, extended from the previous deadline of Nov. 16). Of course, that leaves the biggest question of all regard exchange readiness to be answered: Will the federal government will be able to implement so many exchanges on behalf of states electing not to operate an exchange, at least in 2014? It also remains to be seen whether a change of various state public officers (such as governors or insurance commissioners) or control of a state legislature, will change a state’s position on the implementation of an exchange. Needless to say, to be continued…

So given the absence of clear information on which employers with the guidance of their benefit advisors can begin to evaluate their post-exchange era options, how is an employer to do any planning at this time? One robust tool that UBA benefit advisors may recommend to their clients will be the PPACAcalc predictive modeling software designed by health actuaries at Verisight. PPACAcalc models three scenarios and the associated cost impact: 1) if the employer makes no change to its current benefit plan design in 2014, 2) if they terminate their group medical plan in 2014 and 3) if the employer chooses to offer only a 60 percent actuarial plan in 2014. This tool also can create a plan-by-pan analysis of an employer’s exposure to excise taxes in 2018. The customized impact study that will be generated for the employer will quantify the effect of PPACA in 2014 and 2018 for either fully insured groups or self-funded employers. What makes it so effective and accurate is that it uses the actual employer premium rates, employee contributions and U.S. Census data to project the cost impact and employee migration stemming from PPACA.

Although far too many employers with fewer than 100 employees feel that they have no understanding of, or preparation for, the coming of exchanges, employer clients of UBA Member Firms have a much higher level of confidence that they will be steering their ship, or at least well-captained, in the coming uncertain waters of the PPACA exchange storm. Here’s to calm seas and full steam ahead!