Aug 9, 2013

Is An Exchange Option Right For You?

One of the most pressing questions that individuals and small business owners have regarding the exchanges (the new online market places being set up by the state and federal governments to help consumers purchase health insurance), is whether these options will be better than their current private market options. As we approach the expected opening of the exchanges on October 1st, below are 5 points that will help you determine if the state exchanges are a better option:

Cost – If you were quoted with no medical rate up, and have seen consistent pricing, you will most likely receive a better deal in terms of coverage by staying in the private market. Unless you have been denied coverage previously and do not have any exclusion on your policy, there is a good chance that your pricing will be in line with the exchange pricing. Once we factor in community rating that will take place on 1/1/2014, you would likely see a major price increase, by going to the exchange.

Structure of Exchange Plans – The exchange plans do offer policies with varying minimum essential health benefits, but the strength of the networks are still unknown. If a plan is offered at a lower rate, and only offers local hospital network coverage, then it may not suit your needs. This is especially if you travel for work or on vacation, or live in a more rural area that already has limited health care providers.

Application – The preliminary application for the exchange enrollment is 16 pages. The exchanges will provide assistance in completing the applications however the process is looking to be more complicated than the carriers are currently offering. Most carriers have a quick 10 minute online application, where the exchange plans cross reference carrier systems, and the IRS to determine eligible subsidies.

Operations – There is still the uncertainty that the exchanges will be opening on time. We are currently about 60 days out from the exchanges opening, and many of them have not started advertising or generating awareness of their opening. Pair this with the system and servicing issues in requiring insureds to complete a 16 page application, and not having any experience in operating these programs, operationally there are many obstacles in getting these exchanges up and running successfully

Subsidies- One of the greatest issues with the subsidies through the exchanges is how the subsidies will be managed by the IRS. The government is still confirming how they are going to check the individual’s income to make sure that there is no fraud, and ensure that the appropriate credits are given to the correct people.