Your Guide: Private Health Insurance Exchanges

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Today we’re going to look at “private health insurance exchanges.” This has been one of the biggest “buzz phrases” in the health insurance industry over the past couple of years for a number of different reasons. The biggest reason though, is healthcare reform. With the implementation of new provisions required in the Affordable Care Act, the way that employers offer health insurance to their employees is changing.

We’ll take a look at the structure of private health insurance exchanges. We’ll also describe the different components that make-up a private health insurance exchange, the types of businesses that should be taking the closest look at these exchanges, how private exchanges work, and why they’re growing in importance.

Private health insurance exchanges are exactly what they say they are: they’re exchanges that are set up privately through an employer. Many private health insurance exchanges utilize two important components:

  1. Technology and software: software programs help facilitate administration of private health insurance exchanges. Technology keeps private exchange administration simple for both the employer and the employee. One example is www.liazon.com. Liazon’s platform allows an employer to define a contribution (much like an allowance), and then employees select their own health benefits. Simply, it’s an employee’s money to spend how he/she wants. The software keeps track of funds spent, shows the employee what kind of health insurance options are available in the private exchange, and allows employees to select the plans they want.
  2. Group health insurance plans: in the past, many employers only offered one group health insurance plan. Administration of multiple plans could be a challenge. So to fix that problem, software companies (like Liazon) have arrangements with insurance companies that allow the employer to more easily offer multiple group health insurance plans, from multiple carriers. The important word here is multiple. With the software and technology that’s available, it’s not nearly as difficult to offer a selection of group health insurance plans anymore. This is important because one of the biggest goals of private health insurance exchanges is to provide choice. By utilizing a private exchange, employees now have choice.

There are additional ways to set up private health insurance exchanges, but businesses with +50 full time equivalent employees will almost always be utilizing the two concepts we’ve described above. And that’s who this article is intended for: businesses that are mandated to provide coverage. However, smaller businesses can also utilize this exact same strategy. If you’re a business that is at 20 employees or above, you’ll want to understand this concept.

Question: Why are private health insurance exchanges becoming more important?

Here’s why:

  • Private health insurance exchanges give employees choices. Instead of being “stuck” in one group health insurance plan, they can more efficiently choose which plans fit them best. Having choices is now more important than ever before, because dependents (spouses and children) need to have affordable access to coverage. In the past, sometimes it was flat-out too expensive for an employee to include their dependents. The private exchange concept helps alleviate that issue.
  • Businesses with +50 full time equivalent employees are mandated to provide coverage. A private exchange is a cost-effective and budgetable way for employers in the “large group” category to provide coverage. You decide on the amount (called a “defined contribution”), and then give that amount to each employee. They pick the plan they want. Simple.
  • Efficiency. If employees are making their own decisions and picking their own plans, the whole system becomes more efficient. Instead of you telling them what they get, they instead pick what they want. When consumers are making their own decisions, they’re more conscience about where money is being spent.

That’s the basic break-down of private health insurance exchanges. Unlike public health insurance exchanges (ie: state & federal exchanges), private exchanges are completely administered within the private workplace.

As mentioned, private exchanges can be an exceptionally important concept for those businesses in the +50 employee range. They accomplish three very important things: budgetability, selection, and flexibility. Those qualities will be very significant to businesses that are mandated to provide coverage. However, this same concept can work very well for smaller businesses too (in the 2-100 employee range).

We work with private health insurance exchanges at Policy Advantage Insurance Services. If you are an employer that fits into the “group-sizes” we’ve described, contact us anytime if you have questions.

Thanks for stopping by, we hope you found our information to be valuable. Check back at our blog to get further information about funding healthcare. Also, please share with your friends, clients, colleagues, and family. Here are a few of our other information outlets:

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Business Owners: Give Your Employees More Choices

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Believe it or not, it can save you money. One of the most important concepts in the post-healthcare reform environment will be giving employees choice when it comes to their health benefits selection. This blog post will explain why this is so important. A future blog post will explain the ways this can be accomplished. Your employees have questions right now… have good answers for them.

If you’re an employer that is offering health benefits, you’ll want to understand that it’s now easier and more important than ever to give your employees a healthy selection of health plans at work. This is especially true for businesses that are in the “+50 Full-Time Equivalent Employee” category.

There are a number of different reasons why it’s now important to offer more selection. Here are a few of them:

  • “One size fits all” benefits plans are no-longer efficient. In the past, employers would typically offer their employees a single group health insurance plan. Imagine this… buying identical pairs of jeans for each person in the company. All the same size, all the same price. There’s going to be a good chance that pair of jeans you picked won’t fit everyone, and might be too expensive too. The same thing can happen with a health insurance plan. Which leads us into our next important reason it’s important to offer additional choices…
  • In most cases you (the employer) are the one choosing the plan for the group. So, not only are the “jeans too expensive and not fitting everyone right,” but YOU are the one who picked them out for your group. By offering a better selection of plans, people begin to make their own decisions. And when people are thinking about what they’re purchasing, they’ll become a better consumer. When people become a better consumer… it saves money all around. There’s a real concept that describes this phenomenon, and it’s called “Consumer Directed Healthcare.”
  • Dependent coverage can now be difficult to navigate. Now that everyone needs to carry health insurance, the way the dependents of your employees find their coverage is much more important. This is one of the “biggees” in the post-reform environment. For example, you may be offering the best plan to your employees, but their dependents may not be able to afford it (especially if you’re not making a contribution to health insurance for dependents, and it’s an expensive plan). You “mean well”… but this scenario can be big a problem, especially when it comes to eligibility for subsidies at the new health insurance exchanges. By having a better selection at work, dependents of employees can more easily (and affordably) navigate their options.
  • Individual health insurance plans and “defined contribution” health planning are two strategies that are growing in popularity. Why? Because they both allow employers to offer great benefits at maximum flexibility to employees and their dependents. An additional bonus: setting (or defining) a budget for health benefits has never been so easy.

Keep that last bullet-point in mind, because we’re going to get into both of those in more detail in a later blog post. That future blog post will help answer two important questions: “How can I offer more choices and flexible benefits to my employees?” and “How can it save me money?”

The good news is, it’s easier now that ever before. We can’t wait to tell you more. Continue to tune-in to our blog, and we’ll continue to share great information.

Thanks for stopping by, we hope our information was valuable to you. Check back at our blog to get further information about funding healthcare. Also, please share with your friends, clients, colleagues, and family. Here are a few of our other information outlets:

Home Page: https://policyadvantage.com

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Insurance Alphabet: Letter E

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E is for:

“Exchange”

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Exchange: When used as a noun, an exchange is a place where goods or services are bought or sold. In this blog post, we’re specifically referring to exchanges that sell major-medical health insurance policies. These are otherwise known as health insurance exchanges.

The reason that we’ve selected this topic is because you’re going to hear a lot about “exchanges” over the next few years (and into the future in general), when it comes to health insurance. There are two types of health insurance exchanges:

  1. Public Health Insurance Exchanges
  2. Private Health Insurance Exchanges

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A Public Health Insurance Exchange is an exchange that is set up, funded, and administered by the government. There are a combination of ways that this takes place:

  • A) State-only administered exchanges.
  • B) Joint state/federally administered exchanges.
  • and C) Exchanges administered by the federal government only.

Public Health Insurance Exchanges were a large part of healthcare reform (ACA/Obamacare). These are the new exchanges that are mandated by the law. The purpose of these exchanges is to help expand affordable coverage to the uninsured. The state exchange in California is called “Covered California.”

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A Private Health Insurance Exchange is an exchange that is set up, funded, and administered by private parties. In other words, the government is not involved (examples of private parties: employers and their employees).

There are a number of different strategies when setting up a Private Health Insurance Exchange. Most of these strategies revolve around the “defined contribution” health planning concept that we’ve discussed in past blog posts. This concept (defined contribution) is gaining importance as we move forward in health benefits planning. Third party administrators (or TPAs) facilitate the administration of Private Health Insurance Exchanges.

Thanks for stopping by, we hope you found our information to be valuable. Check back at our blog to get further information about funding healthcare. Also, please share with your friends, clients, colleagues, and family. Here are a few of our other information outlets:

Home Page: https://policyadvantage.com

Twitter: http://www.twitter.com/policyadvantage

Facebook: http://www.facebook.com/policyadvantage

YouTube: http://www.youtube.com/policyadvantage

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Benefits Chalk Talk: Integrated HRAs

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Welcome back to another edition of “Benefits Chalk Talk.” In this series at our blog, we provide you with valuable, up-to-date, relevant information about health benefits planning so that you can put the things in place that make the most sense for yourself or your company. At Policy Advantage Insurance Services, we feel that informed consumers can make a really big difference in our industry.

Today we’re talking about “Integrated HRAs.” If you’ve been reading our blog, you’ve heard about HRAs (or Health Reimbursement Arrangements) before. We’re a big proponent of them (HRAs in general) for a number of different reasons. They’re a very “money smart” concept when it comes to health benefits planning. If you want to understand more about the general nature of HRAs before moving on, you can read about them here.

As we’ve mentioned, HRAs are a great way to help employers retain funds that would normally go to insurance companies. There are many different ways to utilize HRAs. There are various strategies and ways to set up an HRA. This blog post is specifically geared towards explaining “Integrated HRAs.”

Question: What is an Integrated HRA? 

Answer: Integrate means to combine parts with another so that they become a whole. In the case of an Integrated HRA, there are two parts that are being combined:

  1. A group health insurance plan.
  2. A health reimbursement arrangement (HRA).

Question: What kind of group health insurance plan works with an HRA?

Answer: Any kind of group health insurance plan works with an HRA, as long it (the group health plan) conforms with PHS 2711 (no lifetime or annual limits, etc). Without getting into details that will confuse you, PHS 2711 is one of the big reasons that HRAs integrate so well with a group health insurance plan.

Question: Why would I want to “integrate” an HRA with a group health insurance plan?

Answer: The integration of an HRA with a group health insurance plan can allow an employer to retain funds that would normally go to insurance companies as premiums. In essence, it is a way for an employer to “partially self-fund” their group health plan. Example:

  • An employer puts in a higher deductible PPO (with the higher deductible, premium dollars are saved). The employer then “integrates” an HRA with the higher deductible group health plan to help cover the raised deductibles, co-payments, and other out of pocket expenses. In this example, premiums are lowered, and the additional out-of-pocket risk (higher deductibles and co-pays) are picked up by the employer, tax-free.

Question: How much money can I give to each of my employees in their HRA?

Answer: There is no limit on this amount, because it is integrated with the group health insurance plan (which cannot have annual or lifetime limits). You can decide the amount that you would like to give to each employee. It’s very budgetable. You can also tier your contributions (ie: managers get $200/month, and drivers get $150/month). There are many different ways that this can be set up. It’s very manageable; you can customize your contributions how you like. Contributions are also distributed tax-free by employees into “qualified medical expenses” through Section 105.

As you can see, when properly designed, an “Integrated HRA” can be a valuable and important employee health benefit. They are a very “money smart” concept to help employers save money, and provide quality health coverage. The Integrated HRA can be also considered another form of defined contribution health planning (because an employer is defining a contribution to an HRA).

If you have further questions about setting up an Integrated HRA, please contact us at any time. They’re very simple to administer. We work with a couple of different HRA third party administrators.

Thanks for stopping by, we hope you found our information to be valuable. Check back at our blog to get further information about funding healthcare. Also, please share with your friends, clients, colleagues, and family. Here are a few of our other information outlets:

Home Page: https://policyadvantage.com

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Facebook: http://www.facebook.com/policyadvantage

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Benefits Chalk Talk: Defined Contribution Health Plan Strategies

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Welcome back to another edition of “Benefits Chalk Talk.” Our biggest goal in this blog series is to help you understand all of the different tools (and planning strategies) that fund healthcare. By providing you with valuable, up-to-date, and relevant information… we’ll give you the power to put things in place that make the most sense for yourself or your business. Knowledge is power; you’ll be able to put a comprehensive program in place for yourself or your company, while saving money.

Today we’re going to be talking about “defined contribution” health plans again. In case you’ve missed past blog posts, we’ve talked about these concepts a little bit already. If you’d like to read up about the concept a little bit more before moving on with this post, you can find further information about it here.

One of the biggest buzz phrases in health benefits planning today is “defined contribution.” It’s a red hot concept. There are a number of different reasons as to why it’s becoming so popular. Here are a few of them:

  1. Smart Benefits: In most situations, it is a “smarter” way for businesses and individuals to fund healthcare (especially financially). It just makes better sense.
  2. Healthcare Reform: Depending on your defined contribution planning strategy, healthcare reform (ACA/Obamacare) has made current conditions more favorable towards defined contribution benefits planning. 
  3. Technology: New computer programs and software are allowing businesses and companies to administer defined contribution health plans with ease. In most cases, these are what are called TPAs (or Third Party Administrators).
  4. Innovation & Creative Benefits Planning: Businesses and companies have been dealing with rising healthcare costs for quite some time (especially with standard group health insurance plans). It has been tiresome and burdensome to find the right coverage, and contain costs. Defined contribution planning can address both of these issues.

The above listed are a few of the reasons why defined contribution health planning is becoming more popular. Now that you have a better understanding, the remainder of this blog post will concentrate on the different strategies using defined contribution concepts and components.

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First off, we’re going to take a second to briefly define the concept. Here it is, in simple layman’s terms:

Defined contribution health plans are an allowance given to employees by an employer. An employer decides each month (or year) how much money they’d like to give to each employee to spend on healthcare benefits.

That’s all it is. As you can see, it’s very simple and budgetable. Once an employer gives each employee an allowance, the employee then decides how they would like to spend their money. It really is that simple.

There are a number of different strategies that can be utilized when setting up a defined contribution health plan. In this blog post, we’re going to describe those defined contribution strategies in their most basic form. We’ll get into further details about each strategy in later blog posts.

Here are currently some of the more popular defined contribution health plan strategies:

  1. Group Health Insurance Plans with an HRA: This is what is called an “integrated” HRA (it is integrated with a group health insurance plan). A group health insurance plan (typically a high deductible plan) is offered to employees. The employer then decides on a monthly allowance (the defined contribution) to give to each employee through the HRA. The employee utilizes the HRA funds towards qualified medical expenses (ie: the deductible, etc). Essentially an employer is partially self-funding with the HRA, and retaining funds that would normally go to insurance companies. 
  2. Group Health Insurance Plans with HSAs: Certain TPAs or Third Party Administrators (who are usually also technology companies), partner with insurance carriers to set up a pre-determined arrangement of group health insurance plans. Then, a TPA (like www.liazon.com) allows clients to select which products fit them best. The employer still decides the amount of money they would like to give to each employee each month, and employees chose the plan they want (still the defined contribution concept). In this strategy, HSAs are usually used instead of HRAs.
  3. After Tax Stipends: You “define a contribution” (ie: $300) per month, and employees then purchase their own individual health insurance plans. Employees can pick from insurance policies that are both on or off the public health insurance marketplaces (where they may receive substantial subsidies, based on income). This strategy is budgetable, and gets business owners out of the business of making insurance decisions. Employees make their own decisions and purchase their own plan. Effectively, all it is is an after-tax stipend. A raise.

As described above, there are a number of different strategies where an employer can utilize the “defined contribution” planning model. Those listed are only a few of them, and there are further details regarding all three. If you have questions, we encourage you to contact us. We work with the TPAs (Third Party Administrators) that can make defined contribution health benefits planning work for your company.

Defined contribution health benefits planning strategies will also continue to evolve and change, as further guidance is rolled out from the Department of Labor, and HHS. We stay on the front end of all of that, and will continue to keep you up-to-date.

Thanks for stopping by, we hope you found our information to be valuable. Check back at our blog to get further information about funding healthcare. Also, please share with your friends, clients, colleagues, and family. Here are a few of our other information outlets:

Home Page: https://policyadvantage.com

Twitter: http://www.twitter.com/policyadvantage

Facebook: http://www.facebook.com/policyadvantage

YouTube: http://www.youtube.com/policyadvantage

Pinterest: http://www.pinterest.com/policyadvantage

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