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When President Barack Obama signed the Affordable Care Act (ACA) into law on March 23, 2010, it included a provision to create state-based, public health insurance exchanges to expand coverage.
States could build their own public health insurance exchanges, defer to the federal government's exchange, Healthcare.gov, or partner with the federal government on a state-federal exchange.
But it hasn't been smooth sailing for the state exchanges. Hawaii decided to abandon its Hawaii Health Connector because of projected revenue shortfalls and defer to Healthcare.gov, and Oregon did the same because of technical glitches. Back in 2013, the first iteration of the Massachusetts Health Connector failed catastrophically, causing officials to roll out new software that was still glitchy as recently as this past April.
If the public health insurance exchanges are suffering under the weight of ACA compliance, employers may not be faring much better.
Not only do they have to be ready to accommodate changes in federal regulations, they must worry about complying with the rules of every state where they do business.
What's driving people to public health insurance exchanges
Beginning October 2013, these public health insurance exchanges, also called marketplaces, opened nationwide, offering coverage that began January 2014. The exchanges provide government-regulated and standardized healthcare plans, enabling individuals to buy policies that are eligible for federal subsidies.
Under the ACA, employers with 50 or more full-time equivalent employees are required to offer affordable healthcare coverage to full-time employees and their dependents, or pay penalties.
Small employers can offer coverage through public exchanges. A "small employer" is one that had at least one but not more than 100 employees on business days during the preceding calendar year, and employs at least one employee on the first day of the plan year.
Large employers -- those with more than 100 employees -- are not allowed to offer coverage through public health insurance exchanges to their full-time employees. However, large employers that provide healthcare benefits to part-time or seasonal employees, some dependents, people eligible for COBRA benefits and retirees younger than 65, can move those individuals from group coverage to public health insurance exchanges.
Shawn JenkinsCEO, Benefitfocus Inc.
By early 2016, all employers with 50 or more employees that provide self-insured health coverage to their employees will be required to file annual returns with the Internal Revenue Service reporting whether and what health insurance they offered those employees.
"As individuals from any employer explore health insurance through a public exchange, the employer is going to have to be able to answer questions from [that] exchange," said Karen Frost, senior vice president of health strategy and solutions at Chicago-based Aon Hewitt.
For example: Is the individual eligible for the company's health insurance? Is the health insurance affordable? And when was the employee eligible to have coverage?
In March, the U.S. Department of Health and Human Services reported that nearly 11.7 million consumers selected or were automatically re-enrolled in qualified coverage through public health insurance exchanges as of Feb. 22. More than 80% of people who bought insurance have claimed the subsidies.
"One of the burdens an employer has that would affect the benefits area as well as the finance area -- and then it quickly goes into the tech areas -- is that employers have to notify people that there is a state or federal exchange," said Shawn Jenkins, CEO of Benefitfocus Inc., in Charleston, S.C., which sells a cloud-based benefits platform that is also used by companies that have set up their own private exchanges.
"There has to be a communication that tells the employees, 'We're not providing health insurance to you because maybe you don't have enough hours, but here's how you go get it,'" he added.
While the communication can be done through the company's HR portal, the employer must be sure to capture the fact that the affected employees received the message and then provide that information to the government.
"It could be as simple as having people click on a 'yes' button, saying they received the information and they know that there is a [public] exchange," Jenkins said. "That's a burden that the employer is going to have to comply with, which quickly becomes an IT project."
Federal audits, weekly employee hours will drive IT issues
Because of the ACA mandates on public health insurance exchanges, employers have to collect and store more information than in the past. They must archive the data because eventually they will be audited by the government to ensure compliance.
"In auditing, you have to have historical controls, so there is a whole body of work around protecting the data, archiving the data, and governing the data, and this will definitely become a bigger theme for the IT department," Jenkins said.
However, Bruce Elliott, manager of compensation and benefits at the Society for Human Resource Management based in Washington, D.C., said the public health insurance exchanges will have a minimal impact on HR and IT departments.
"Those [HR/IT] systems don't really talk to the public exchanges," he said. "State exchanges and the federal exchange are tied more to the individual insurance market. Those are for individuals whose employers don't offer insurance or they don't work enough hours to qualify for benefits."
The challenge for employers, though, is managing eligibility as it relates to the ACA 30-hour threshold, Elliott said.
Frost agreed that nothing requires employers to interface with public exchanges.
"We do expect that there will be inquiries, particularly if there's any kind of dispute between an employee and a public exchange on that individual's eligibility to get coverage there," she said. "That's one piece in the front end. On the back end, for all employers that offer coverage, there are reporting requirements to the federal government on an annual basis so people can prove when they file their taxes that they did have coverage."
Additionally, employers have to be able to prove that they've offered health insurance to eligible individuals, which means they have to track every employee's hours to determine whether they're full time for ACA purposes, according to Frost.
"They also have to track who had what coverage and that has to be reported to the employee and the federal government," she said.
If an employee isn't eligible to get insurance from his employer, the company has the burden to prove how many hours the employee worked, which means capturing the number of hours, Jenkins said.
If the employee falls below a certain threshold, the employer has to help the employee get his subsidy by leading the employee to the public health insurance exchanges. To get the subsidy, the employee must go to the exchange and do the calculation and get authorization, he added.
"That employer needs some sort of capability," Jenkins said. "It could be a human being on a phone, but, more and more likely, we'd want to do it via the Web."
Benefitfocus has built a way to go into a public exchange, authenticate the person, transmit the data back and forth, and figure out whether the person has subsidies available, he said.
Through its BenefitStore Inc., Benefitfocus creates a channel for employers to facilitate enrollment in qualified health plans for employees who may be eligible for federal subsidies through the public exchanges. Benefitfocus can exchange eligibility information directly with the public exchanges in real time, providing an enrollment channel for employees who qualify for federal subsidies as well as variable-hour employees who may not be eligible for company-sponsored coverage.
"We can then bring the subsidy credit back over to the individual," he said. "It's really fascinating technology, and we're just at the beginning of the next phase."
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