What are Health Insurance Exchanges and how do they affect my business?

The Affordable Care Act has led to the establishment of Health Insurance Exchanges. According to the Center on Budget and Policy Priorities, these are marketplaces in each state that allow small businesses and consumers to purchase group health insurance at competitive and affordable rates. Under the ACA, every state is allowed to create its own exchange. The United States Department of Health and Human Services will establish federally facilitated exchanges in states that can't or don't want to create their own marketplaces. 

However, states have been slow to participate. The Kaiser Family Foundation reports that as of May 2013, 27 states will use the federal marketplaces, seven will operate partnership exchanges and only 17 will have their own.

The ACA also requires employers to submit written notification to their employees about the existence of these exchanges. The U.S. Department of Labor states that companies must inform employees on or before October 1, 2013. Further, businesses must notify all new staff members about the exchanges "at the time of hiring" as of October 1. Next year, employers can wait 14 calendars days before providing notices to their new workers.

The DOL goes on to explain that notices must be written or disseminated electronically. All notifications must be written in such a way that they can "be understood by the average employee." To that end, the DOL created a model notice that employers can use to comply with these provisions of the ACA. 

The DOL's template points out certain information that your employees need to know about their insurance options. First, the notice states that workers may be eligible for tax credits by buying coverage through the exchange. However, employees only qualify for these tax credits if your company's coverage plan costs more than 9.5 percent of a worker's household income and doesn't cover the "minimum value" of medical expenses. 

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