The clock is ticking down to 2014 when all Americans must carry a minimum amount of health insurance. It is also ticking down to 2015 when the Affordable Care Act must become self-supporting.
In order to address these two issues, each state will have the opportunity to form a health insurance exchange. Should an individual state choose not to form such a group, Health and Human Services will operate the health insurance exchange for that state.
This is where insurance agencies who want to sell Obamacare may run into a difficult decision. As mentioned above, the Affordable Care Act, also known as Obamacare, must become able to finance itself by 2015. In order to make this happen, Health and Human Services has proposed that health plans that want to sell in the market must pay a user’s fee.
The monthly fee would begin in 2014 at 3.5 percent of the plan member’s premium and would likely go up from there.
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Like the federal government, several states including Connecticut, Hawaii, Oregon, and West Virginia have also passed laws allowing them to charge the insurance agencies with which they do business. Meanwhile other states are looking at different methods, such as grants, to fund their insurance exchanges.
Are insurers likely to participate in federal government exchanges if they are hit with a stiff user fee? The Obama administration is betting that they will. This is because the insurance agencies that are willing to participate and pay the fee will instantly gain access to millions of people in need of insurance who must purchase from the health insurance exchange.
This means that any fee insurance agencies pay to become involved with the federal government based insurance exchanges are likely to come back to them several times over. In fact, with health insurance exchanges bringing such stiff competition to the insurance business, many agencies will probably decide they have no choice but to pay the fee and become involved with selling Obamacare.
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Other agencies may seek other solutions. Some, for instance, will decide to participate only in state-based insurance exchanges that do not charge extra fees to insurance agencies to participate. Others may try to avoid the insurance exchanges entirely.
Whatever your preference, it’s time to make that decision for your insurance agency soon. Like it or not, the clock is ticking on some big changes, and your choices you make can spell success or disaster for your agency.