A health exchange will be created in each state by 2014. The health reform legislation (Patient Protection and Affordable Care Act) signed into law in March 2010 by President Obama creates state-based health insurance exchanges. States can choose to operate their own exchanges or participate in a multi-state exchange.
The purpose of the health insurance exchanges is to make health insurance more affordable and easier to purchase for small business and individuals.
Creation of Health Insurance Exchanges
Beginning on January 1, 2014 health insurance exchanges will be created where an individual or small business can compare the costs of various health plans and different types of health coverage benefits. If your state decides not to operate its own health insurance exchange, you will be able to purchase a health plan from a multi-state, or regional exchange run by a government agency (such as the federal Department of Health and Human Services) or a non-profit organization.
Only U.S. citizens and legal immigrants who are not imprisoned will be eligible to purchase a health plan in one of the exchanges.
According to the health reform bill, small businesses with up to 100 employees can purchase health coverage for their employees in an exchange. Beginning in 2017, the states may allow businesses with more than 100 employees to purchase coverage in the exchange.
Starting in 2011 and continuing through 2014, your state can receive financial assistance to help pay for the cost of creating the exchange.
Multi-State Health Plans
Each health insurance exchange must offer at least two health plans that are available in two or more states. At least one of these health plans must be a non-profit organization and each plan must be licensed in each state. Enrollment in one of these plans would give you access to healthcare services in different states and, hopefully foster competition to lower premiums.
For example, if you live in New Jersey and enrolled in a multi-state plan that included New Jersey, New York, and Connecticut, your children could see a local pediatrician in your neighborhood and you could get care from a primary care physician in downtown Manhattan, near your office.
Consumer Operated and Oriented Plan
The health reform bill will provide loans and grants to create non-profit, member-run health insurance companies known as Consumer Operated and Oriented Plans (CO-OPs). To be eligible to receive federal funds, an organization wanting to set up a CO-OP must meet the following requirements:
- not be an existing health insurer or sponsored by a state or local government
- its activities must only consist of the providing and managing health benefit plans in each state in which it is licensed
- control of the organization must be subject to a majority vote of its members
- must operate with a strong consumer focus
- all profits must be used to lower premiums, improve benefits, or improve the quality of health care delivered to its members
One-Stop Shopping and Information Resource
A significant benefit of the health insurance exchanges is to make it easy for you to purchase and enroll in a health plan or provide health coverage for your employees. Some of the ways the exchanges will promote choice and competition include:
- Health plan options in your zip code will be listed on a website maintained by your state. On this site you can learn about health plan benefits and costs, and then enroll.
- If you have limited access to the Internet, your state will provide resources for you to get information and enrollment materials through the mail and at publically-designated places in your community.
- To allow for easy comparison of plans, the exchanges must use a standard form, definitions, and marketing materials. You will be able to enroll online, in person, by mail or by phone.
- A call center to assure good customer service
To make this work smoothly, the health reform law recommends that your state contract with “navigators” to provide information about the available health plans and to assist you with enrollment. This concept is based on the experience of Massachusetts – a state that implemented health reform (wich includes mandatory health coverage) in 2006. Massachusetts created the Health Connector, an independent state agency that helps citizens of the state find the right health insurance plan.
Health Plan Benefits
If you purchase insurance through an exchange, you will be able to choose health coverage that is best for you and your family. Each of the health plans to be offered will include an essential set of benefits that provide comprehensive health care services with different levels of cost sharing.
Also, your annual out-of-pocket expenses (deductibles, copayments, and coinsurance) are limited to an amount equal to the Health Savings Account (HSA) current law limit. For example, if you enrolled in a health exchange plan in 2010 (remember, the exchanges will not be available until 2014) your out-of-pocket expenses could not be more than $5,950 for an individual or $11,900 for a family).
The benefit categories will include:
- Bronze Plan: provides essential health benefits and pays for 60% of the costs of the plan with the HSA out-of-pocket limits
- Silver Plan: provides essential health benefits and pays for 70% of the costs of the plan with the HSA out-of-pocket limits
- Gold Plan: provides the essential health benefits and pays for 80% of the costs of the plan with the HSA out-of-pocket limits
- Platinum Plan: provides the essential health benefits and pays for 90% of the costs of the plan with the HSA out-of-pocket limits
- Catastrophic Plan: available to those up to age 30 or to those who are exempt from the mandate to purchase coverage
If you cannot afford to purchase a plan in an exchange, you may be eligible for a subsidy from the government based on your income and family size. If your yearly income is higher than 133% of the federal poverty level but less than 400% of the poverty level (about $43,000 for an individual), you will get a tax credit to help you pay your health plan’s premiums and out-of-pocket expenses.