Public vs Private health Exchanges
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Public vs Private health Exchanges

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http://offers.zanebenefits.com/public-vs-private-health-exchanges-webinar ...

http://offers.zanebenefits.com/public-vs-private-health-exchanges-webinar

Public and private exchanges have the same core components, but public health insurance exchanges enjoy several key advantages.

For example, individuals can only access premium tax subsidies through the public exchanges.

So, how do you determine if a public or private health insurance exchange is the right solution for you or your business?

Anyone interested in understanding how to compare public and private health insurance exchanges should attend this webinar.

During this 45 minute webinar, you will learn:

The difference between a public and private health exchange

What insurance options are available in public and private health exchanges

What tax credits are available in the public exchanges

How coordination rules affect integration of public and private health exchanges

Watch recorded webinar here: http://offers.zanebenefits.com/public-vs-private-health-exchanges-webinar

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Public vs Private health Exchanges Public vs Private health Exchanges Presentation Transcript

  • Public vs Private Health Exchanges"A health exchange is a concept.... not a product"
  • The ZaneHRA Software provides a 100% paperless administration experience to employers and insuranceprofessionals that want to offer better health benefits without a traditional group health insurance plan at lower costs.For more information about ZaneHRA, check out our Software.Employers use ZaneHRA to open and manage their own stand-alone HRA or defined contribution health plancompletely online, electronically enroll participants and print welcome kits, and monitor expenses andreimbursements in real-time.Employees obtain their own individual health policies from a designated health insurance broker (see below),submit premium and medical expenses online, via fax, or mail, and receive same-day reimbursement via check,payroll addition, or direct deposit. Zane Benefits does not sell health insurance.Insurance Professionals partner with Zane Benefits and use ZaneHRA to provide clients with a cost-savinghealth benefits option. Insurance brokers earn compensation on ZaneHRA referrals and retain 100% of the healthinsurance compensation from carriers. ZaneHRA is distributed by leading health insurance carriers, agencies,brokers, and accountants. DISCLAIMER The information provided herein by Zane Benefits is general in nature and For additional resources on should not be relied on for commercial decisions without conducting Health Care Reform, visit independent review and analysis and discussing alternatives with legal, accounting, and insurance advisors. Furthermore, health insurance www.zanebenefits.com/blog regulations differ in each state; information provided does not apply to any specific U.S. state except where noted. See a licensed agent for detailed information on your state. www.ZaneBenefits.com
  • Agenda 1. What is a Health Insurance Exchange? 2. Private vs Public 3. Individual vs Group 4. Overview of Private Health Exchanges 5. Overview of Public Health Insurance Exchanges
  • What is a Health Insurance Exchange?
  • What is a Health Insurance Exchange?The biggest buzzword of this decadeWebster defines an Exchange as: "A place where things or services are exchanged, such as a store or shop specializing in merchandise usually of a particular type."So, a health insurance exchange is: a store or shop specializing in healthinsurance merchandiseA "private" exchange is simply a health insurance exchange managed by a private company....A "public" exchange is simply a health insurance exchange managed by a public entityIn its simplest terms, a health exchange is a insurers, brokers or governmentsinsurance offering to individuals and/or employers/employees "A health exchange is a concept.... not a product"
  • 4 Components of a Health Insurance ExchangeTodays health insurance exchanges typically include thefollowing components: 1. CHOICE. A choice of two or more health insurance options 2. ADVICE. Advice and recommendation on what health insurance options best fit your needs 3. BILLING. Automated billing for the chosen health insurance plan premium(s) 4. SUPPORT. On-going support for the chosen health insurance plan(s)
  • Understanding How a Specific Health Exchange WorksHealth insurance exchanges come in many different shapes and sizes.To understand how a particular health insurance exchange (e.g. 2014 stateexchanges) works, you must answer the following questions about the particularexchange: 1. Public vs Private. Is the health insurance exchange Public or Private? 2. Individual vs Group. Is the health insurance exchange Individual Market Based or Group Market Based? 3. Eligibility. Who is eligible to participate in the health insurance exchange? 4. Product. What products are available in the health insurance exchange? 5. Special Incentives. What is unique or special about the health insurance exchange? (e.g. subsidies)
  • Private vs Public Health Insurance Exchanges
  • Public vs Private Health Insurance Exchanges Public and Private Exchanges Have the Same Core Components A "private" exchange is managed by a private entity (e.g. a broker or insurer). A "public" exchange is managed by a government entity (e.g. a state). Special incentives for Public Exchanges include: ● Premium Tax Credits ● Cost-sharing Tax Credits Individuals/Employees can only access the tax credits through the public AHBE exchange. Employers can only access the tax credits through the public SHOP exchange.
  • Individual vs Group-based Insurance Exchanges
  • 2 Types of Health Insurance ExchangesIn general, there are two exchange models in the currentmarketplace: 1. Group Market Health Insurance Exchange – An exchange that sells “group” health insurance to employees of employers. 2. Individual Market Health Insurance Exchange – An exchange that sells “individual” health insurance to individuals and families (that may be employees).
  • Individual vs Group-based Health Insurance Exchanges Unique pieces of Group-based Exchanges include: ● No medical underwriting today (this is no longer unique in 2014) ● Typically limited to single insurer (due to adverse selection) ● Minimum Contribution and/or Participation Reqs for Employers (core problem) Unique pieces of Individual-based Exchanges include: ● Portability ● Typically multiple insurers ● No employer involvement in "sponsorship" of plans Both can typically be pre-taxed through tax-advantaged "arrangements"
  • #1 Group Market Health Insurance ExchangeThis is traditionally referred to as a "Cafeteria Plan".How it works: 1. The carrier/broker sells a group health plan to an employer.* 2. Employers decide how much money they want to spend on their employees’ health care coverage via defined amount or percentage of premium. 3. Employees select from multiple plan designs ranging from low to high deductibles, typically from a single carrier. 4. The employer pays the premiums directly to the carrier on behalf of the employees.Example: www.bluekcexchange.com*Requires employer to meet minimum contribution and/orparticipation requirements
  • #2 Individual Market Health Insurance ExchangeThis is traditionally referred to as "Individual Health Insurance Quoting".How it works: 1. The carrier/broker offers a variety of individual health plans to an Individual. 2. Individuals select from multiple plan designs ranging from low to high deductibles, typically from multiple carriers. 3. The Individual pays the premiums directly to the carrier out-of-pocket.*Multi Carrier Example: www.ehealthinsurance.comSingle Carrier Example: www.uhone.com/Quote/QuotePerson.aspx*If individuals employer offers Health Reimbursement Arrangement (HRA),individual can get reimbursed tax-free for individual premiums (i.e. definedcontribution).
  • Overview of Private Health Exchanges
  • Review - A Private Health Exchange is Nothing NewA private health exchange is a brokers (or insurers) insurance offering...Some firms have created new web-based technology to automate the four keycomponents, but online automation is not required.E.g. A 1-man-shop could run a private health exchange via phone and emailIf you want to automate the process, you can license new web-based technology.
  • 4 Key Components of a Health Insurance ExchangeA Private Health Exchange typically includes: 1. Choice of Two or More Major Medical Health Plans 2. Health Insurance Advice and Recommendation Support 3. Automatic Billing 4. On-going Support
  • 1. Choice of Two or More Major Medical Health PlansIndividual health insurance market private exchanges typically offer multiple carriersGroup health insurance market private exchanges typically only offer one carrier dueto adverse selection (i.e. one carrier may get the “good” health, while the othercarrier attracts the “bad” health).The exchange may also include supplemental plans.The plan comparisons can be provided via any of the following mediums: ● In-person via paper/voice ● Online website / Quote engine tool ● Email/chat ● Telephone
  • 2. Health Insurance Advice and Recommendation SupportPrivate health exchanges give advice to the consumer regarding what major medicalhealth plan(s) and/or supplemental plan(s) best fits their needs. The followingmethods are often used to gather information: ● Forms to collect personal data (e.g. gender, family size, age, etc.) ● Survey to collect risk tolerance ● Review of previous claims history and pre-existing medical conditionsThe advice and recommendation support can be provided via any of the followingmediums: ● In-person via paper/voice ● Online website / Quote engine tool ● Email/chat ● Telephone
  • 3. Automatic BillingPrivate health exchanges provide a way for theconsumer to purchase health insurancecoverage, regardless of whether the coverage ispaid for by an employer or paid for by anindividual.Two ways to bill coverage: ● Individual basis. Consumers pay for coverage out-of-pocket via an online payment system allowing credit/debit cards or auto-payment from a bank account. ● Employer basis. Employer pays for all employees coverage via check or an online payment system.
  • 4. On-going SupportPrivate health exchanges provide ongoing support forconsumers with questions about the health coveragethey have purchased through the private exchange.These services may include: ● Phone Support ● Email/Chat Support ● Web Support ● In-person Support
  • How to Offer an Individual Private Health ExchangeTo offer an Individual Market Private Health Exchange, sell individual healthinsurance.Call your individual services a "private health exchange".For single carrier quoting, using a single carrier broker link.For multiple carrier quoting, use multiple carrier broker links or quote engine (e.g.norvax.com).
  • Sample Private Individual Health Exchange w/ Defined Contribution
  • How to Offer a Group Market Private Health ExchangeTo offer a Group Market Private Health Exchange, contact your group carriers andask if they have a private health exchange product available.If so, start selling it.If not, work with the carrier to re-brand an existing multi-plan "cafeteria" offering as agroup private health exchange.
  • The Future of Private Health Exchanges post-2014As long as health insurance can be sold outside of public exchanges, private healthinsurance exchanges will exist....
  • Overview of Public Health Insurance Exchanges
  • Public Health Insurance Exchanges In 2014, PPACA requires all U.S. states to create two types of exchanges: 1. American Health Benefit Exchange ("AHBE") - An Individual Exchange 2. Small Business Health Options Program ("SHOP") - A Group Exchange for Employers with < 101 EEs with multi-carrier option (Same Core Components as Private Exchanges) SPECIAL INCENTIVE: Massive tax credits* will be available for people earning up to 400% of the FPL (majority of Americans). Individuals can only access the premium tax credits through the public AHBE exchange. (Requires Business to Drop Coverage) *There is also a Small Business Tax Credit available in SHOP
  • Household Income & Size are Key Variables for Individuals 2013 FPL Guidelines Household Size 100% of FPL 400% of FPL Premium Cap Range Average Group Single 1 $11,490 $45,960 $0 - $363.85 / mo Premium in 2011 was: 2 $15,510 $62,040 $0 - $491.15 / mo $435.17 3 $19,530 $78,120 $0 - $618.45 / mo Average Employee +1 Premium in 2011 was: 4 $23,550 $94,200 $0 - $745.75 / mo $860.75 5 $27,570 $110,280 $0 - $873.05 / mo Average Group Family of 4 Premium in 2011 6 $31,590 $126,360 $0 - $1,000.35 / mo was: 7 $35,610 $142,440 $0 - $1,127.65 / mo $1251.83 8 $39,630 $158,520 $0 - $1,254.95 / mo Tax credit calculator coming soon at http://navigator.zanebenefits.com
  • Premium Tax Issues in the Public AHBE Exchange(1) Government-subsidized portion of medical premiums (if applicable) is not taxdeductible ● See PPACA Section 1401 adding Section 36(B)(g) to Subpart C of part IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986 "(g) Credit for Health Insurance Premiums- No deduction shall be allowed for the portion of the premiums paid by the taxpayer for coverage of 1 or more individuals under a qualified health plan which is equal to the amount of the credit determined for the taxable year under section 36B(a) with respect to such premiums")(2) Unsubsidized portion of medical premiums are tax deductible. However, plansin AHBE exchanges are not qualified benefit under Section 125 ● See PPACA Section 1515 "OFFERING OF EXCHANGE-PARTICIPATING QUALIFIED HEALTH PLANS THROUGH CAFETERIA PLANS."The Section 125 exclusion does not apply to:1. HRA premium reimbursements for unsubsidized portion2. HSA (e.g. when unemployed) premium reimbursements for unsubsidized portion3. 1040 Schedule A deduction for premium expenses over 10% of income
  • Public Administrative IssuesTax Credit Administration ● Eligibility ● Amount ● Advanced PaymentEnrollment Periods ● Initial Enrollment Period, October 1st, 2013 - March 31st, 2014 ● Annual Enrollment Periods, October 15th - December 7th ● Special Enrollment Periods, similar to cafeteria plan rulesNavigators...
  • What is a Navigator?The Affordable Care Act requires public exchanges to establish a “navigator” program to helpindividuals purchase coverage in the exchange.To be eligible to receive navigator grants, an entity must: 1. Already have relationships with employers, individuals 2. Be capable of performing the duties of a navigator 3. Meet standards established by the Secretary of HHS 4. Deliver fair and impartial informationHealth insurance agents or brokers can be a navigators, however there are restrictions oncompensation directly from insurers.
  • Coordination between Private and Public ExchangesFinal exchange regulations enable States to allow agents and brokers that operate a “web-basedentity” to sell individuals health plans offered on the “public” exchange...qualifying individualsmay use subsidies for this purchase.However, integration will be complex.If a State chooses to work with a web-based entity, the entity must: ● Make sure that the individual completes a single, streamlined eligibility verification and enrollment application through the “public” Exchange ● Provide consumers the ability to view all plans offered through the “public” Exchange ● Provide standardized comparative information on each available QHP ● Allow consumers to go directly to the “public” Exchange’s web site if they chooseState exchanges will determine how brokers can be compensated for bringing business to exchanges.
  • Summary/Next Steps
  • Summary/Next StepsSummary ● A Health Insurance Exchange is a concept (not a product) ● The real "product" is health insurance ● There are two core types of health insurance exchanges (individual- market and group-market) ● Public Exchanges have major advantage over Private Exchanges due to tax creditsNext Steps:1. Watch for new webinars on AHBE and SHOP exchanges
  • The ZaneHRA Software provides a 100% paperless administration experience to employers and insuranceprofessionals that want to offer better health benefits without a traditional group health insurance plan at lower costs.For more information about ZaneHRA, check out our Software.Employers use ZaneHRA to open and manage their own stand-alone HRA or defined contribution health plancompletely online, electronically enroll participants and print welcome kits, and monitor expenses andreimbursements in real-time.Employees obtain their own individual health policies from a designated health insurance broker (see below),submit premium and medical expenses online, via fax, or mail, and receive same-day reimbursement via check,payroll addition, or direct deposit. Zane Benefits does not sell health insurance.Insurance Professionals partner with Zane Benefits and use ZaneHRA to provide clients with a cost-savinghealth benefits option. Insurance brokers earn compensation on ZaneHRA referrals and retain 100% of the healthinsurance compensation from carriers. ZaneHRA is distributed by leading health insurance carriers, agencies,brokers, and accountants. DISCLAIMER The information provided herein by Zane Benefits is general in nature and For additional resources on should not be relied on for commercial decisions without conducting Health Care Reform, visit independent review and analysis and discussing alternatives with legal, accounting, and insurance advisors. Furthermore, health insurance www.zanebenefits.com/blog regulations differ in each state; information provided does not apply to any specific U.S. state except where noted. See a licensed agent for detailed information on your state. www.ZaneBenefits.com