by Holley Maher
There are two primary exchange platforms: public and private. A public exchange offers the potential of government subsidies or tax credits; whereas many private exchanges offer tax-favorable premium subsidies paid by the employer.
Recently, a major health insurance carrier announced concerns about participating in the public exchange in future years due to “projected losses on individual exchange-compliant products”.
When an insurance company agrees to participate in HealthCare.gov, it agrees to abide by certain rules, policies and procedures that may not necessarily exist in the private market. An insurance company’s job is to manage risk. If an insurance company doesn’t manage risk well, everyone suffers because premiums increase at a higher rate in order to make up for losses.
How does this announcement affect the millions currently enrolled in, a private exchange?” It doesn’t! That’s great news considering 40 million consumers are expected to purchase through a private exchange model in 2018.
In private exchange, employers/employees choose from a much larger array of plan designs and insurance companies. Through defined contribution technology, employers designate $X towards insurance cost (i.e. a premium subsidy) and provide employees with plan/pricing options. The best thing about private exchanges? Employers don’t need to go through the painful process of choosing a plan design for employees every year!
Regardless of your political stance, the U.S. healthcare system needed a change. This is just the beginning. Expect more changes, but don’t be worried or fearful. While change is hard, it is often necessary and good. It’s important to think ahead and develop a strategic plan so you have some control vs. letting the industry control you.
Holley Maher (hmaher@SmartBenefitsPlus.com) is a partner at Maher, Rosenheim, Comfort & Tabash LLC, specializing in group and individual insurance.
Submitted 8 years 126 days ago