Governments Readying for 2014 by Creating Health Care Insurance Exchanges

Beginning in January 2014, all U.S. citizens will be guaranteed health coverage from one of three sources: public insurance (primarily Medicare and Medicaid); employer-sponsored insurance; or private insurance purchased through newly created health marketplaces, called “exchanges.”

Exchanges are online marketplaces where individuals and businesses can shop for coverage, and they are a central component of the Affordable Care Act (ACA). An estimated 26 million people, many of them now uninsured, are expected to obtain coverage through a healthcare exchange over the next 10 years.

States were given several options for how to run their exchanges: 24 states opted to run their own exchanges, while 26 will have federally facilitated exchanges.

Availability of health coverage through the exchanges will be crucial for many providers of long-term supports and services as well as for direct-care workers who do not qualify for Medicaid coverage. Nearly half of all direct-care workers earn less than 200 percent of the federal poverty level (FPL); if they don’t have employer-sponsored insurance, they have difficulty buying coverage today on their own. And given that nearly one-third of the direct-care workforce — about 900,000 workers — have no insurance, it is likely that more than half a million could be seeking insurance through an exchange.

Below we answer some Frequently Asked Questions regarding these new health care marketplaces.

What is an exchange? An exchange — operated by the governmental agency or a non-profit organization — is a marketplace that  provides affordable, good-quality coverage options to individuals and small businesses (those who have fewer than 100 employees). Exchanges will offer four types of plans — bronze, silver, gold, and platinum — and are required to certify that plans are “Qualified Health Plans” (pdf).

What is considered to be affordable coverage? To make coverage affordable for individuals who do not qualify for employer-sponsored insurance or public coverage, the ACA includes health insurance tax credits for people who buy insurance through the exchanges. The subsidies are designed so that if a family enrolls in a lower-cost “silver” plan, its out-of-pocket spending on premiums will not exceed a certain percentage of a family income.

Subsidies will be available on a sliding scale for individuals living in households that earn between 138 and 400 percent of the federal poverty level. At the lower end of the income scale, premiums may not exceed 3 percent of the family’s income; for those with incomes between 300 and 400 percent of FPL ($58,590-$78,120 for a family of three), out-of-pocket costs cannot exceed 9.5 percent of household income. However, these subsidies are based on the cost of the premium for an individual health plan, not a family plan, which may increase cost considerably for families unable to access coverage for their children through Medicaid/CHIP.

How will exchanges help consumers? Exchanges will help consumers determine their eligibility for enrollment in public plans or plans sold on the exchange. For direct-care workers — who often have fluctuating hours and income, and thus move back and forth between eligibility for employer-sponsored insurance and Medicaid — exchanges will provide expert assistance in choosing the right plan for an individual or family, and assist with enrollment. The ACA also includes other tools to support consumer information and enrollment, such as websites and navigators (organizations that can help inform people about their coverage options). The goal is to have a seamless access to coverage and premium assistance tax credits.

How will exchanges help employers? Beginning in 2014, small businesses (generally those with fewer than 100 employees) will be able to shop for health plans in the exchange. The available choices and pricing are expected to be better than in today’s private market, because small employers will be bundled into a single large “group.” For many long-term services and supports employers — from home care agencies to assisted living facilities, nursing homes and group homes — this new marketplace, along with new regulations that end practices such as charging higher premiums for female employees (i.e., gender rating), offers the chance to purchase affordable coverage for the first time, or to reduce current health coverage costs.

More information on state decisions is available at the website of State Refor(u)m.

Fact sheets on health insurance exchanges can be downloaded at the Center for Consumer Information & Insurance Oversight website.

— by Carol Regan, PHI Government Affairs Director