Smart Benefits: RI Employers Need To Prepare For Exchanges NOW
Monday, November 26, 2012
RI Exchange a Go… Even if Other State-Run Exchanges Aren’t
Last week, the Department of Health and Human Services (HHS) delayed by one month the requirement that each state declare their intent to run a state exchange. With close to 30 states refusing to start exchanges, the federal government will be operating more exchanges at the state levels than it perhaps originally intended, so it remains to be seen if HHS will need to delay the January 1, 2014, start date.
Employee Communication Required by March
For now, employers need to proceed as if the Rhode Island benefit exchange is going to be operational for January 1, 2014. That means, in March of 2013, employers will need to notify and communicate to employees that they may be eligible to opt off employer coverage and choose an exchange option instead. Between then and when the exchange becomes reality, employers will need to calculate employee eligibility for the exchange, which includes a variety of factors such as income, adequacy of employer-provided coverage, and cost sharing for coverage between employers and employees.
50+ Employees: Who’s Full Time?
Employers with more than 50 employees will need to focus on a few key areas for planning and budgeting. The threshold for full-timers will be 30 hours of employment, potentially increasing the number of benefit eligibles for some employers – and costs. Industries with high seasonality and the need for part-time workers will likely be affected most. The formula for determining whether employees previously not eligible will be considered full time is complicated at best. But suffice it to say, employers will need to decide if it makes more sense to have a few part-time employers with more hours, or more part-timers who work less than 30 hours and do not qualify for benefits. Employers also need to be keep in mind that waiting periods for newly benefit-eligible employees cannot extend past 90 days (if longer waiting periods are currently in place).
With the RI exchange looming, next year’s open enrollment will differ from previous years’, requiring significant communication about both the employer-sponsored and exchange plan options for those employers who will have employees jumping off their plan. Employers will also need to determine who is eligible for the exchange and educate those who qualify to help them determine whether it’s best of them to stay on the employer plan or elect the state exchange option instead. Employers will need to assess the financial impact of adding employees to the plan who were not previously eligible, as well as losing people who were on the plan but who instead qualify for the exchange. This change may also impact the rates for the existing population as the group characteristics will change.
Employers will need to start talking now with employees about the next phases of healthcare reform. Don’t assume employees understand what the exchange options are - most don’t.
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