The Health Care Exchanges: Employer action required
by David Bottoms
September 09, 2013 12:00 AM | 992 views | 0 0 comments | 5 5 recommendations | email to a friend | print
As full implementation of the Affordable Care Act is set to occur in 2014, many employers, and certainly most employees, have questions regarding how the Exchange in Georgia will function. While many questions still remain, and as things stand currently, on Oct. 1, 2013, citizens will be able to view options and enroll in health coverage, to be effective Jan. 1, 2014, through an online health insurance portal commonly referred to as an Exchange, or as the federal government is now calling it, a "Marketplace."

For the first time in the state of Georgia, individual medical coverage will be offered regardless of an applicant's health status, and insurance carriers will be prohibited from imposing pre-existing condition limitations. While this will certainly come as wonderful news to those who have struggled to find health coverage in the past due strict underwriting requirements traditionally imposed by the insurance market, the mandate that underwriting standards be relaxed has many health insurers concerned about a tsunami of "bad risk" entering the insurance pools in 2014.

Accordingly, many carriers are publically stating their expectation that rates for health coverage in the individual market will increase beginning January 1, 2014 and a few major carriers, such as UnitedHealthcare, Cigna, Aetna and Coventry have announced that they will not participate on the Georgia Exchange. Of the remaining carriers, Blue Cross Blue Shield of Georgia, Humana and KaiserPermanente are shaping up to be the predominant initial participants.

Per guidance released by the Department of Labor, virtually all employers must provide all employees specific notice of the Exchange no later than Oct. 1, 2013. Importantly, notice must be provided regardless of whether the employer offers health coverage and it must be provided to all employees, regardless of their specific employment status (full-time, part-time, seasonal, etc.). The notice must be delivered via first-class mail, or electronically under the DOL's electronic disclosure safe harbor rules which, for the most part, permit email and electronic communication to employees who have computer access as a regular function of their job. Additionally, all new hires after Oct. 1, 2013 must be provided notice within 14 days of hire.

Model notices and specific details of the employee notification requirements are available at the following address (http://www.dol.gov/ebsa/healthreform/).

That said, for employees who are offered "minimum essential"and "affordable" coverage by their employers, the Exchange options will be of little benefit. Specifically, no government premium subsidies will be available and coverage purchased through the Exchange must be purchased with after-tax dollars. Conversely, the employee's premium for coverage through their employer's plan can be funded with pre-tax dollars via the employer's Section 125 cafeteria plan.

In short, the provision of the notices to employees is sure to arouse questions related to the Exchange, how it will work, and whether it will be of benefit to employees. While in many cases, the Exchange options will be of little value to those with access to employer provided coverage, employers would be wise to familiarize themselves with the general structure of the Exchange and the required notices so that they are prepared to address the employee questions that are sure to come.

David Bottoms is senior vice president of The Bottoms Group and a principal of TBX Benefit Partners. ]]>
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