Attention has been focused on the idea of health insurance exchanges with the enactment of the Affordable Care Act (ACA). The law makes available multiple private insurance options in standardized coverage tiers through a federal or state sponsored exchange to people buying insurance on their own. Additionally, depending on income, they may be eligible to receive a tax credit to subsidize their premiums. Though not fully implemented in most of the country, the ACA also created SHOP exchanges for small businesses.

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An emerging option for employers

Both fully-insured and self-insured employers are looking to a new strategy that offers their employees diversity of choice, leverages technology to aid in making decisions regarding health benefits but still allows the employer the ability to manage its health costs from year-to-year. This strategy includes the deployment of a retail marketplace that offers a wide array of health insurance products to employees and sets an allocation of dollars per employee. This retail marketplace is often referred to as a private health insurance exchange or a “private exchange”.

What are exchanges?

Private exchanges are marketplaces of health insurance and other related products. Employers purchase health insurance through the private exchange, and then their employees can choose a health plan from those supplied. A big attraction for private exchanges is they allow employers to retain some involvement in their employees’ healthcare all while shifting to a defined contribution model.

What are the advantages to a private exchange?

There are two major classifications of exchanges that have emerged:

Single Carrier Exchange-This type of exchange is promoted by a single payor and targets employers that want to keep some control by choosing both the insurance carrier and design of the plan. Products can be customized and priced for the employee group or individuals, depending on how involved employers want to be in benefits design and negotiation.

Multi Carrier Exchange-This type of exchange is promoted by third-party intermediaries such as brokers or benefits consultants who will provide a broad range of payor and plan design options encouraging employers to take a more hands off role.

Unfortunately, COBRA can be difficult to manage in an organization, especially for business owners who are inexperienced with it. Here are some of the best practices for handling COBRA concerns in your organization.

Understand the Difference between COBRA and the Affordable Care Act

The biggest difference between COBRA and the Affordable Care Act (ACA) is that COBRA is continuation coverage for people who have recently left a job or were laid off.

The Affordable Care Act is a sweeping reform to healthcare, both employer-sponsored and individual. The Affordable Care Act has resulted in the creation of insurance marketplaces, where employers and employees can go to shop for the plans that work best for them. COBRA does not have this type of open plan system; it is limited to one plan, the same one that the employee had at their former workplace.

Generally speaking, someone who has eligibility for COBRA will also be able to purchase an insurance plan on a state’s marketplace. However, COBRA usually requires the policy holder to pay for the full cost of the insurance premium, while the Affordable Care Act provides tax credits for citizens below a certain income level.

Know who is eligible

COBRA isn’t just for employees; it also extends to their dependents, including spouses and children. However, there are some qualifying events that may cause a person to lose COBRA coverage. For example, if an employee divorces their spouse, they can only get COBRA coverage for a maximum of 36 months after the divorce is finalized. This is why it’s important to take a thorough survey of your team and understand who is eligible for COBRA benefits.

Provide employees with sufficient information

It’s very important that your staff knows their rights when it comes to COBRA and other insurance concerns. For example, last year the Department of Labor announced that employers must make it clear to employees eligible for COBRA that they are allowed to choose a plan from the Health Insurance Marketplace. You should also be certain that you have a resource available for them to consult with when they need to get questions answered about the various employer-sponsored insurance options that are available.

Keep up to date with legislation and eligibility changes

It’s vital to make sure that you are up to date on laws that relate to COBRA and the Affordable Care Act, as this is an area that is currently changing quickly as a result of new legislation going into effect over the next few years.

To help you create an easier, more efficient system of monitoring, consider investing in modern tools designed to simplify the way that businesses handle COBRA and other insurance concerns. Paypro offers numerous HR solutions to help manage insurance plans, as well as a number of group health options to ensure that your employees have access to all of the health insurance that they need. You can also turn to Paypro for help with your benefits administration: the Employee Self-Service platform allows your team to get the information they need, while our Benefits Specialists are able to provide expert insight into how you should be managing employee benefits. Paypro has everything your business needs to spend less time worrying about staying compliant with insurance laws and more time leading the company to success.