Exchanges Won’t Replace Employer-Sponsored Coverage

mobile-deviceWhile a number of large employers have made headlines in recent weeks by announcing that they intend to send part-time employees or retirees to public exchanges (online marketplaces) beginning next year, the vast majority of employers surveyed by global consultants Towers Watson say they continue to view health benefits as an integral part of overall employee compensation in 2014 and beyond.

Even though the Affordable Care Act (ACA) was promoted as a way to lower costs and simplify a highly complex system, confusion and concern on the part of employers and the public seem to have increased. While many employers with fully insured plans have opted to renew early as a way to delay the impact of key health provisions that will apply for plans that renew after January 1st, others are taking a close look at partial self-funding as a way to sustain a benefit that they believe in.

Employers Seek Flexibility and Value

The closer our clients get to 2014, the more they want to do everything possible to remain in a self-funded environment. Demand for self-funding on the part of groups with fully insured plans has increased steadily throughout the past year as more and more employers strive to control costs and gain the flexibility needed to adapt to drastic changes on the horizon.

Since ERISA has always had consumer protection and cost transparency at its core, self-funded plans were spared some of the punitive controls that were imposed on insurers, such as rate review and the Medical Loss Ratio. Some regulators worry that self-funded plans will undermine the ability of exchanges to spread the risk by attracting companies with healthier workforces and leaving less-healthy groups on the exchanges. Many in our industry feel this is why several states continue to try to bar stop-loss insurers from covering small groups, often those with 50 or fewer members.

After 3+ years of preparation, the new online marketplaces seem to be creating a greater level of appreciation for personal attention and a commitment to protecting clients from excessive care and cost. With these principles at the core of our mission, we remain confident in our ability to respond to the rapidly changing needs of our clients.

To view other articles from the SIP Fall Newsletter, please click here.

In cooperation with NAEBA

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