In 2014, new entities will be part of the health insurance world — health insurance marketplaces.
Health insurance marketplaces are key components of the Patient Protection and Affordable Care Act (PPACA). They are designed to make buying health coverage simpler by providing easy-to-understand information that allows consumers to make apples-to-apples comparisons of a wide variety of products. Marketplaces are intended to make health coverage more affordable by promoting increased competition among health insurers under new market and product standards. In addition, certain consumers may be eligible for premium tax credits and cost-sharing reductions that will further reduce health insurance costs. Qualifying small employers also may be eligible for a tax credit.
“Health insurance marketplaces have the potential to increase consumerism in health insurance,” says Sheryl Kashuba, vice president, Health Policy and Government Relations, and chief legal officer for UPMC Health Plan. “However, employers need to understand how they will operate and who they will serve.”
Smart Business spoke with Kashuba about what employers need to know about health insurance marketplaces.
What is a public health insurance marketplace?
The public health insurance marketplace, sometimes referred to as an exchange, will comprise two new marketplaces where consumers and employers will be able to purchase health insurance. Coverage will be available to individuals via the Health Benefit Marketplace and to small businesses via the Small Business Health Options Program (SHOP) Marketplace.
In Pennsylvania, companies with 50 or fewer employees will be eligible to purchase on the SHOP in 2014 and 2015; in 2016 and beyond, employers with 100 or fewer employees may purchase on the SHOP.
In some states, the state itself will operate these public exchanges. In other states, including Pennsylvania, the federal government will operate federally facilitated marketplaces. In order to sell coverage on public exchanges, including on the federally facilitated marketplace, insurers must receive certification that their plans meet the requirements established by the PPACA for qualified health plans (QHP).
How does an insurer earn qualified health plan status?
A qualified health plan is a health insurance plan that has been certified by a marketplace as meeting certain standards; plans must receive QHP certification in order to be sold through a public marketplace. The certification standards include coverage of all essential health benefits, adherence to established limits on cost sharing such as deductibles, copayments and out-of-pocket maximum amounts, establishment of quality standards and a host of other requirements.
Who can purchase coverage through a public marketplace?
Most U.S. citizens and lawful residents will be eligible to purchase coverage on the health insurance marketplace. Any small employer meeting the employee limits established in its state may purchase coverage via the SHOP.
What is a private health insurance marketplace?
A private health insurance marketplace is run by a private sector entity, such as an insurer or broker. Private marketplaces may be designed to allow employers to control costs through defined contribution models and to allow employees expanded coverage options. These marketplaces also may offer a broad range of retail products, such as life insurance and even non-insurance products.
Must every employer purchase insurance from a marketplace?
No. While both the SHOP and private marketplaces will be designed to offer a variety of coverage options, some individuals and employers may prefer to continue to purchase coverage outside these new distribution channels. Employers will continue to have the option to do so. However, premium tax credits and cost-sharing reductions for individual market coverage and tax credits for qualifying small group plans will only be available through the public Health Benefit and SHOP marketplaces, respectively.
Sheryl Kashuba is vice president of Health Policy and Government Relations and chief legal officer at UPMC Health Plan. Reach her (412) 454-7706 or [email protected]
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