Health insurance brokers, employers and individuals are all eagerly awaiting full-scale implementation of the California Health Benefits Exchange, a centerpiece of the Affordable Care Act, but it's still anyone's guess as to what it will look like.
While details of what the exchange, also known as Covered California, will look like have emerged recently, a key piece of just how effective it will has not yet been determined: the monthly premiums for plans that will be offered to individuals and employers.
[caption id="attachment_72289" align="alignleft" width="180"] Victor McKnight[/caption]
"People are confused," said Victor McKnight, a principle with EPIC Insurance in Petaluma.
Specifically, no clear answer has emerged to the question on everyone's mind as open enrollment season quickly approaches in October, when Covered California will launch with plans taking effect on Jan. 1, 2014: Should employers continue providing coverage for employees or should they opt out and send them to the exchanges, where they may be eligible for subsidies to purchase individual health plans?
Covered California has released a basic framework of how its plans will be structured. It will have a tiered system for its plans -- ranked by "metal levels" -- as such: Platinum level plans will have a coverage level of 90 percent by the health plan and 10 percent by the individual. Gold level plans will cover 80 percent of all costs and 20 percent will be paid by the policy holder. Platinum plans will have no deductible and doctors' visits would cost $25 (platinum) and $45 (gold). Silver plans cover 70 percent and will have a $2,000 deductible with $45 doctor visits, plus an additional $500 deductible for medication. Bronze plans will cover 60 percent and will have a $5,000 deductible for both medical and costs and prescription drugs.
The higher the level of the plan, the higher the monthly premium will be, but brokers and the exchange doesn't anticipate on getting an idea of the premiums by July 1.
A number of factors could dictate how much monthly premiums will cost, said Jordan Shields, a broker with The SSM Group, a division of United Benefits Advisers in Novato.
[caption id="attachment_72290" align="alignright" width="144"] Jordan Shields[/caption]
"We've basically told clients that we'll hold off until July 1," Mr. Shields said. "Until we actually see the numbers, we don't know."
One such factor, Mr. Shields said, could be if Covered California charges non-participating health plans an administrative fee -- thought to be in the range of 3.5 percent -- to help fund the exchanges. If that happens, it could inflate other premium rates.
Another unknown is just how many carriers will offer plans through the exchange, although Covered California has set a goal of having no fewer six health plans in each of its seven geographic regions. The number of available plans could have particular impact on the Small Business Health Options Program, or SHOP, which is geared specifically toward employers with 100 or fewer workers.
Recently, the Obama Administration announced it would only be able to offer one plan through the federal exchange, but California's exchange is moving forward.
The consensus among brokers is that the exchange will be used more for the individual market than the SHOP side.
"We definitely see it geared toward individual side," Mr. Shields said.
But that shouldn't encourage employers to assume they can drop coverage and send employees to the exchange, Mr. McKnight of EPIC said.
"Here's one thing that small business owners need to know -- if they're saying I'm just going to drop coverage, I would say the thing they need to know is that they may be dumping their employees onto an exchange that's pretty unfavorable," he said, particularly if the premiums on the metallic plans are high.
Those who enter the exchange could be eligible for sizable subsidies from the federal government, depending on their income and whether or not benefits are offered through their employer.
A subsidy calculator is available through Covered California -- www.coveredca.com -- as well as through the Kaiser Family Foundation -- http://healthreform.kff.org/subsidycalculator.aspx#incomeAgeTables.
