Countdown to Health Insurance Exchanges

The Affordable Care Act of the Obama administration is designed to provide affordable and comprehensive health insurance to millions of Americans. An important part of this law is the setting up of health insurance exchanges.

Health insurance exchanges expected to create competition

Proponents of the law say that health insurance exchanges will create competition among health insurance companies and create affordable health insurance plans as a result. However, some experts warn that premiums can also rise if more healthy people avoid the exchanges.

Let’s take a closer look at these exchanges:

A health insurance exchange is a marketplace where individuals and small employers can compare and choose the right health insurance plan that suits them. Customers can enroll starting Oct. 1, 2013, and coverage will take effect on Jan. 1, 2014. Those looking for a plan can also find out if they are eligible for Medicaid coverage through the exchanges.

Some states will opt to partner with the federal government

Every state shall have its exchange. They can set it up on their own, or in partnership with the federal government. For states that opt out of the exchange, the federal government will step in and run the exchanges for their residents.

Initially, only individuals and employees of businesses with 100 or fewer workers (50 or fewer in some states) are allowed to access the exchanges. Most Americans will still get their coverage through their jobs and not through the exchanges. Authorities expect that the majority of customers will be those who are eligible for subsidies. Undocumented immigrants are not allowed to purchase insurance through the exchanges.

What will the exchanges look like?

Choosing and buying coverage can be confusing, health insurance exchanges are designed to make comparing and buying health insurance easier. Those looking for coverage can compare different policies sold by insurance companies with a few mouse clicks. Think of it as the Travelocity of health insurance plans. There will be four different plans available through the marketplace, based on the level of coverage: bronze, silver, gold, and platinum. All plans must possess the minimum essential health benefits as determined by the health care law. These benefits include:

• Ambulatory patient services, such as doctor’s visits and outpatient services
• Emergency services
• Hospitalization
• Maternity and newborn care
• Mental health and substance use disorder services, including behavioral health treatment
• Prescription drugs
• Rehabilitative and habilitative services and devices
• Laboratory services
• Preventive and wellness services and chronic disease management
• Pediatric services, including oral and vision care

Toll-free hotlines will be available to help consumers compare plans based on quality and price; choose a plan; and determine eligibility for government subsidies or Medicaid.

What will health insurance plans in the health insurance exchanges look like?

All plans purchased through the exchanges will have a cap on the annual cost-sharing or the amount the customers must pay out-of-pocket before insurance payments kick in. The amount will be equal to that allowed for health savings accounts: around $6,000 for individual plans and $12,000 for family plans.

Premiums will vary according to the type of plan you choose and where you live. Insurance companies can no longer deny coverage or charge extra because of a preexisting condition. They are also not allowed to charge older people more than three times what they charge younger ones.

For more information, visit the Health Insurance Exchange guide.