U.S. businesses have traditionally paid premiums to insurance companies to cover workers with a single "defined benefit" group health insurance plan. However, due to changes in the individual market, most of these businesses will consider switching to a "defined contribution" health benefits program, where employers give workers a monthly allowance to purchase their own "individualized" coverage through a private or public health insurance exchange.
Health Reform Provides Massive Federal Subsidies for Individual Policies
Under the health law, individuals or families making as much as four times the U.S. poverty level -- that's approximately $90,000 for a family of four -- are eligible for health insurance premium subsidies. In states that don’t set up exchanges, a federally run national site will take over.
Public Health Insurance Exchanges are Being Developed Now for 2014
The development of the public health insurance exchanges for 2014 is under way. These public exchanges will provide new opportunities for health insurance companies and brokers to provide new, value-added services. Similarly, private health exchanges, which have been around for years, are adapting their services for employers and defined contribution.
Below are 5 key questions brokers, health plans and businesses should be prepared to discuss during the upcoming renewal periods.
1. Broker Role: How can insurers and brokers integrate and/or coordinate with federally run health insurance exchanges?
2. Public exchanges: What insurance options will be available in public health exchanges?
3. Defined contribution: How can employers, insurers and broker adopt defined-contribution platforms?
4. Employer Penalty: First, Does it apply? Then, based on the comparitive costs of "paying or playing", should the employer provide qualified, affordable coverage or provide a defined contribution plan and pay the penalty?
5. Private exchanges: What role will private health exchanges play in 2013, 2014 and beyond?