Guest Article

(From the August 9, 2010 issue of Deloitte's Washington Bulletin, a periodic update of legal and regulatory developments relating to Employee Benefits.)

DHHS Requests Comments on Establishment of State Health Insurance Exchanges

Taking the first step toward issuing guidance on the establishment and operation of the new health insurance exchanges which are required to be up and running under the Patient Protection and Affordable Care Act by January 1, 2014, the Department of Health and Human Services published a request for comments from interested stakeholders - including the employer community.

Creation of State Exchanges

The Patient Protection and Affordable Care Act allows each state to establish a health insurance exchange (an "Exchange") to facilitate the purchase of qualified health plans ("QHPs") by individuals and certain employers within the state. For those states that will not have an Exchange operable by January 1, 2014, a Federally-operated Exchange will serve them. The Exchanges will perform myriad functions, including certifying QHPs, maintaining an internet website by which QHPs can be compared, rating QHPs on the basis of quality and price, and enrolling eligible individuals in QHPs.

Facing the enormous task of developing standards for the establishment and operation of the Exchanges, the Department of Health and Human Services (DHHS) published a request for comments on August 3 to obtain input and consult with "interested stakeholders." The request merits a review by any party potentially interested in commenting on the how the Exchanges will work. It covers a wide swath of areas, including how the DHHS should grant awards to the states to establish the Exchanges, what the implementation tasks and timeframes would be for establishment of the Exchanges (including the information technology needs), what the certification criteria should be for QHPs, how to rate the QHPs on the basis of quality and price, how the Federal Exchange should be established to best serve nonelecting states, and how the Exchanges should conduct enrollment in QHPs (including determining whether individuals are eligible for participation, premium tax credits, cost-sharing reductions and individual responsibility exemptions).

Employer Input Requested

Beginning in 2017, the states will have the option of opening their Exchange to large employers. Before then the Exchanges will be open only to small employers (i.e., with no more than 100 employees). Before 2016, the states have the option of further restricting the availability of their Exchange to even smaller employers (i.e., with nor more than 50 employees).

Beyond the potential opening of the Exchanges to large employers in 2017, with the establishment of the Exchanges in 2014 employers who do not offer affordable coverage will be interacting with the Exchange . including when their employees purchase coverage through the Exchange.

For these reasons, employers may be interested in the design and operation of the Exchanges. Beyond the comments requested otherwise, the DHHS specifically asks employers to identify the:

Comments are requested by October 4, 2010.

The information in this Washington Bulletin is general in nature only and not intended to provide advice or guidance for specific situations. If you have any questions or need additional information about articles appearing in this or previous versions of Washington Bulletin, please contact: Robert Davis 202.879.3094, Elizabeth Drigotas 202.879.4985, Mary Jones 202.378.5067, Stephen LaGarde 202.879-5608, Bart Massey 202.220.2104, Tom Pevarnik 202.879.5314, Sandra Rolitsky 202.220.2025, Deborah Walker 202.879.4955. Copyright 2010, Deloitte.