BREAKING NEWS: HHS Releases Final Exchange Regulations

Under the long-awaited final rules released this week, and in an apparent effort to generate interest and spread the word, insurance brokers and third-party administrators (TPAs) (a) will be allowed to direct people to state insurance exchanges and (b) will be allowed to check to see whether the individual is qualified for tax credits.

That means a possible new business model for brokers and other companies looking to set up an access point to the exchanges. What’s more, the federal government will not regulate how these entities guide people into the exchanges’ charge-and-collect fees, as those relationships are regulated at the state level. Note: At least two states–Virginia and Pennsylvania–were already contemplating such arrangements.

States are essentially expected to build their exchanges from scratch, and have been eagerly anticipating (even clamoring) for these “rules of the road” before investing heavily in any type of infrastructure. 

HHS’s latest publication lays out several functions, which include: certifying qualified health plans;[1] operating a website for comparing plans; running a toll-free hotline for consumer support; providing grants to “navigators”[2] for consumer assistance; determining eligibility of consumers for enrollment; calculating how much government aid (if any) for which each household is eligible; etc. The rule also outlines the eligibility standards employers must meet to participate in the Small Business Health Options Program (SHOP).[3] 

The administration was quick to point out that the final rule differed slightly from its interim guidance. Most notably, insurers and other industry representatives will now get to fill as many as half of the seats on the governing boards, a move likely to seriously disappoint consumer advocates.

If a state is not ready to implement an exchange by the Jan. 1, 2014 start date, the law requires the federal government to step in. (Meanwhile, this round of instructions fails to explain exactly how it would do so.) The Obama administration’s request for $800 million to operate the federal exchange has received a frosty reception from congressional Republicans. 

Due to the mere fact that insurance companies will soon be vying for business on a level playing field, it’s assumed that the increased competition will drive down costs and give individuals and small businesses the same purchasing power already enjoyed by big business today.

TASC Governmental Affairs will continue to scan the 644 page document in order to fully understand its impact on our services and our customers. Rest assured, once potential opportunities and/or threats are identified, we will report back in depth. Stay tuned!

[1] State exchanges will determine the number and type of plans that are made available, as well as the minimum standards that health insurers must meet to participate in an exchange.
[2] Navigators are entities charged to assist individuals and small businesses in finding coverage, conducting outreach, providing education, etc.  States can choose at least two navigator organizations, one of which must be a community or consumer focused nonprofit.
[3] Starting in 2014, small employers purchasing coverage through a SHOP Exchange may be eligible for a tax credit of up to 50% if they have 25 or fewer employees, pay an average annual wage of less than $50,000, offer coverage, and pay at least 50% of the premium.  States can set the size of the small group market at either 1 to 50 or 1 to 100 employees.

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