Health Insurance Exchanges

Under the implementation of Affordable Care Act, each state will have an operating Health Insurance Exchange where individuals, families and small business can purchase standardized health insurance plans. It is probably more helpful to call them marketplaces. Insurance companies can submit plans to be included on each marketplace where consumers can then choose the company and plan most suitable for them.

Implementation of the Exchanges

The mandated State exchanges will be implemented in one of three ways

  1. The State can opt to operate its own state exchange.
  2. The State can opt for a Partnership Exchange where the federal government would be responsible for the selling of insurance policies and qualifying consumers for subsidies on the federally run Health Insurance Marketplace. The State in this case would be responsible for regulatory oversight on insurance and would also be in charge of outreach and education of its residents directing them to the Health Insurance Marketplace 
  3. The State defaults to the federally run Health Insurance Marketplace.

Currently 16 States and the District of Columbia are pursuing the development of state exchanges, 7 intend to implement a partnership exchange with the rest defaulting to the federally run Health Insurance Marketplace.

What types of plans will be sold on the Exchange?

In order to standardized insurance offerings, plans offered on the state exchanges will be broken up into 4 metal tiers (Platinum, Gold, Silver and Bronze) with one additional category (Catastrophic) for young Americans. Plans will be classified into tiers based on the % of expected medical costs an insurer will cover under the plan, otherwise known as actuarial value (AV). Platinum plans will have the highest AV with Bronze plans having the lowest. Of course, platinum plans will also cost the most in terms of annual premium. It is important to note that the AV%s are based on the entire pool of policyholders, so the amount of cost sharing your family may personally experience may differ.

When can I start?

The policies on the exchanges will go into effect January 1st, 2014. Consumers interested in purchasing insurance on these state exchanges will be able to take advantage of open enrollment beginning October 1st, 2013, the period when the plans are first made available for the public. Depending on the state you reside in you will either visit your state exchange website or the federally run healthcare.gov site for more information.

Furthermore each state will have set up "Navigators" who will help interested consumers navigate the insurance exchanges to find insurance policies suitable for their family.

Why should I buy insurance on the Exchange?

While insuresr will be allowed to offer plans on and off the insurance exchanges, the most imporant part of the exchanges will be the availability of premium and cost sharing subsidies for low to middle come households. Only consumers who purchase plans on the exchange will be eligible for these subsidies. 

Families making under 400% of the Federal Poverty Level(FPL) will be eligible for premium subsidies that will reduce the monthly costs of insurance. For those families with household incomes under 250% of FPL, they will be eligible for further cost savings through cost sharing reductions, that serve to reduce the out of pocket amounts the policyholder would normally be responsible for.

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