Big companies may tap state health exchanges

From: Business Insurance

By Jerry Geisel

WASHINGTON—States have the authority to decide whether large employers can purchase coverage through new state health insurance exchanges starting in 2017, according to health care reform regulations issued last week.

The exchanges are a pivotal part of the Patient Protection and Affordable Care Act. Starting in 2014, they will be available to individuals, especially those eligible for federal health insurance premium subsidies, and employers with 100 or fewer employees. But until 2016, states can limit employer participation in the exchanges to organizations with up to 50 employees.

Starting in 2017, states can open the exchanges to employers with more than 100 employees, according to the Department of Health & Human Services regulations.

However, the rules give states the authority to define the conditions, such as number of employees, under which larger employers can buy coverage through the exchanges.

“The scope of the term “qualified employer’ is expected to vary among states and over time,” according to the regulations.

“What is a large employer could well vary by state,” said Paul Dennett, senior vp-health care reform with the American Benefits Council in Washington.

The regulations do not address whether employers with early retiree health care plans could obtain coverage through the exchanges or the extent to which employers could pay a share of retirees’ premiums.

Additionally, the proposed regulations do not yet provide guidance on employers’ reporting responsibilities in situations where employees apply for coverage through the health exchange.

For example, employees with employer-provided health coverage may be eligible, if certain conditions are met, for federal health insurance premium subsidies to purchase coverage through the exchanges.

Employees will be eligible for the subsidies if the premium their employers charge for coverage exceeds 9.5% of family income and the employees’ adjusted gross income does not exceed 400% of the federal poverty level.

In that situation, the employer providing health coverage would be liable for a penalty of $3,000 for each employee receiving the subsidies to purchase coverage in an exchange.

The exchange receiving an employee’s application would need information about the employer-provided coverage and its cost. The format that employers would have to follow to provide the information also has not yet been provided by regulators.

“There is much more guidance to come,” said Frank McArdle, a principal with Aon Hewitt Inc. in Washington.

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