Private or Public? Know your options for health insurance exchanges

State-based health plan exchanges, which are mandated by the Affordable Care Act (ACA), are about to become a reality.

As we covered in an earlier blog, the purpose of these exchanges is to help individuals and small businesses compare and enroll in qualified, affordable health plans. Regulators will decide which health plans are allowed to sell in the new marketplaces, and exchanges must open for business by October 1, 2013. The law also requires most employers to notify employees of exchanges –and their potential eligibility for premium credits — by March 1, 2013.

Employers are not required to participate in state-based health insurance exchanges and are allowed to keep their group plans. But employers also have a third option – private exchanges.

So what’s unique about a private health insurance exchange?

Unlike public exchanges, which are run by the government, private exchanges have varying business models. Some service individuals purchasing insurance in the individual health insurance market. Others service the group health insurance market – both the fully-insured and the self-insured markets.  For many employers, an increasingly popular private exchange model helps their employees purchase plans that are sponsored by the employer.

As you consider your choices, here are some key differences between public and private exchanges to keep in mind.

 

Public exchange Private exchange
Governance State and/or the federal government Employer/insurer
Eligible participants Individuals and small businesses with fewer than 50 employees in Michigan All group sizes (generally at least 25 employees)
Product offerings
  • Health
  • Dental
  • Health
  • Dental
  • Life
  • Wellness
  • All ancillary
Carrier choice Determined by state Determined and controlled by employer
Billing Traditional billing methods
  • Integrated account management
  • Flexible options for retirees
Funding
  • Paid by employee, with government subsidies paid to individuals to purchase coverage
  • Traditional employer contribution
  • Defined contribution from employer
  • Employee and retiree costs are based on benefit choices

 

A growing number of companies are considering private exchanges in combination with a defined contribution health plan. The primary advantages of this model are its predictable costs and more health insurance plan choices for employees. Some of these plans also provide employees with enhanced decision-support tools to help them make their decisions.

GlidePath

Rising benefit costs is a challenge for all companies. GlidePath, a new solution from Blue Cross Blue Shield of Michigan and Blue Care Network, offers your mid-size company an innovative way to manage spending and risk. It can transform the way you finance your company’s health insurance coverage. With GlidePath’s defined-contribution solution, you can determine your company’s health benefit budget and simplify the administrative work that goes along with offering health benefits.

 

 

About Jeff Rubleski

Jeff Rubleski serves as Director of Sales Strategy for Blue Cross Blue Shield of Michigan and is a certified Healthcare Reform Specialist. Jeff serves as the GlidePath go-to-market lead in implementing this defined contribution solution for active and retired members. Prior to joining Blue Cross Blue Shield of Michigan, Jeff served as the Marketing Strategist and Chief Operating Officer for the Wellness Council of America, where he led the development of a complete line of wellness publications that are distributed to employees in organizations throughout the United States and Canada.
 
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