Beginning March 29: To help insurance agents and financial advisors like you guide clients in making critical wealth, health and life decisions we will be moving our coverage from to

Our comprehensive coverage will help you expand your knowledge base and adapt a new client-centric approach that incorporates both insurance and investment solutions.

ThinkAdvisor’s new Life/Health channel is your roadmap to thriving in a disrupted environment.


Filed Under:Health Insurance, Individual Health

California exchange looks at shelf-space fees

How much will that shelf space cost?
How much will that shelf space cost?

The board of the California Health Benefit Exchange program is thinking about what the exchange should charge the "qualified health plans" (QHPs) that sell coverage through the exchange for slots.

California exchange managers are hoping to set the base fee for plans selling coverage through the individual exchange market at 3 percent of premiums and assess the fee on a per-member, per-month basis.

Exchange managers expect issuers to get the money for agent and broker compensation from the premium payments.

The base fee for products sold through Small Business Health Options Program (SHOP) small group exchange market would be 4 percent of premiums.

The SHOP exchange market also would charge "an additional component to cover the estimated cost of agent commissions."

Andrea Rosen and other exchange program staffers have given those details in an exchange plan contracting review and a brief on health plan participation fees prepared for the exchange board.

The Patient Protection and Affordable Care Act of 2010 (PPACA) calls for states and federal agencies to set us exchanges, or Web-based health insurance supermarkets, for residents of all states and the District of Columbia by Oct. 1.

A state can decide whether to provide exchange services for its residents or turn the job over to the U.S. Department of Health and Human Services (HHS). California plans to run its own exchange program under the name "Covered California."

Federal exchange managers have talked about setting the user fee for the federally run exchanges at 3.5 percent of the premiums of the coverage sold through the federal exchanges.

Rosen and colleagues noted in their description of the California exchange contracting process that exchange managers want to offer exchange fee discount plans to some plans and impose extra charges on others.

Carriers could end up paying a user fee of as a little as 2.7 percent of exchange premiums if they roll a large number of people who already have health coverage into exchange plans.

Carriers that fail to meet exchange service standards could end up paying total user fees of up to 3.3 percent of exchange premiums.

Issuers that failed to make timely payments would owe a 1 percent late fee.

In the participation fee brief, exchange staffers said the fixed charge for supplemental dental coverage and supplemental vision coverage sold through the exchange system would be 3 percent of premium revenue for all plans.

If, for example, a dental plan cost an average consumer $40 per month, the exchange participation fee would be $1.20 per member per month.

To keep the exchange participation field from putting QHPs at a disadvantage, issuers of individual and small group plans sold outside the exchange system would pay exchange support fees equal to half of the fees that the issuers would pay if the plays were sold inside the exchange system.

In the plan contracting review, Rosen and colleagues also described the California exchange managers' plan contracting timeline.

The managers set Jan. 23 as the deadline for the first round of exchange plan bid documents.

Would-be bidders are supposed to give managers details about provider networks by Thursday and premium rates by March 31.

The exchange managers hope to start giving preliminary contract approvals by May 15 and complete rate reviews by June 30.

The managers could start loading exchange plans into the CalHEERS exchange administrative system starting July 1.

See also:


Featured Video

Most Recent Videos

Behind the scenes with Vicki Gunvalson [VIDEO]


In this exclusive interview, Vicki Gunvalson shares how she built a $15 million a year annuity business by planning for...

Regulator: Market may need to reinvent LTCI


Cioppa says Maine's governor wants to spur the creation of better products.

Dementia: It's more than Alzheimer's


An association calls for policymakers to remember lesser-known neurodegenerative conditions.

Protesters Disrupt WellPoint Annual Meeting


Hecklers call for more disclosures of information about political contributions.

Related resources

More Resources


Power your business with up-to-the-minute insurance news, analysis, and best practices from LifeHealthPro Daily eNewsletter – FREE.

Power your business with LifeHealthPro Daily eNewsletter – FREE.

Enter a valid email address.
Nichole Morford

Nichole Morford
Managing Editor

Thank you for subscribing to LifeHealthPro Daily!

Check Out More eNewsletters Now! Close

Advertisement. Closing in 15 seconds.