6 Things Companies Need To Know About Private Insurance Exchanges


The health insurance exchanges are one of the most misunderstood provisions. They could be really confusing. A lot of people misunderstand the provisions in the health insurance exchanges.

Health Insurance Exchange

A health insurance exchange is a marketplace. Consumers can shop for health insurance by comparing prices, benefits, and plan provisions in this marketplace.

Eligibility To Use Health Insurance Exchanges

Everyone is not eligible to use health insurance exchanges. Exchange consumers will be limited to companies with fewer than 100 employees and individuals who do not have coverage available to them through employment or otherwise under health care reform.

Public Option For Health Insurance Exchanges

The public option is not included for health insurance exchanges under health care reform. The original bill drafted by the House Of Representatives did include a public option. This was also referred to as a Federal public-benefit corporation. It was designed to compete with private companies on the exchanges. However, the version of the bill that was eventually signed into law excluded the public option. This ensured the exchange will be composed of private insurance companies.

Governing Health Insurance Exchanges

Exchanges will not be administered by the federal government. The bill was passed naming states as the responsible party. They are responsible for administering their own exchanges. It will be determined by each state how the exchange will be offered to the public. This will be done by mail, online, or telephone. Some states have already received Federal funding to develop an online system.

Advantage Of A Health Insurance Exchange (Buying Power)

The insurance carrier’s risk is spread out over a group of people under a group health plan. Carriers absorb an individual’s entire risk. This is done under an individual health plan. This causes individual premiums to remain high. Exchanges essentially become cooperatives. Small businesses and individuals with under 100 employees are allowed to form a group. This group obtains access to health plan variety and competitive pricing.

Disadvantage of A Health Insurance Exchange (Cherry Picking)

Private health insurance companies offer their group plans outside and inside the exchange. There is a risk that their carrier will seek to sign up all small businesses with healthy employees. These employees are signed up under their non-exchange platform. They offload the companies with older and sicker employees onto the exchange. The exchange experiences adverse selection or high risk participants in greater numbers. This leads to higher insurance premiums.

ObamaCare Health Plans

ObamaCare helps most small businesses. Small businesses owners have historically a much harder time supplying themselves and their employees with insurance. This is because of rising health insurance costs. The bigger businesses have remained largely unaffected because of the leverage buying large group health plans gives them. Small business owners and workers tend to benefit under the new law. Larger employers who do not supply health insurance have to figure out how to deal with new costs.

ObamaCare provides small businesses with affordable insurance options, increased buying power through SHOP exchange, and cost assistance. Small businesses will not be hurt by ObamaCare since they have under 50 full-time equivalent employees. These employees can use the SHOP to get a better deal on employee insurance for themselves. It is crucial to do outside research when choosing an insurance company to work with. Forums and reviews sites can help give small businesses and people the right tools to succeed, an example of this can be seen by examining this USHealth Group Review.

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