One of the most significant aspects of the new healthcare reform law is the creation of health insurance exchanges. And yet with all of the confusion surrounding the new law, this provision could easily be the one your employees and/or clients know the least about.
According to a recent CVS Caremark poll of over 1,000 consumers, 78 percent of these consumers who would be eligible for coverage under the Patient Protection and Affordable Care Act have never heard of these exchanges.
So what exactly are health insurance exchanges?
Health insurance exchanges are new organizations set up to create a more organized and competitive market for buying health insurance. They will offer a choice of health plans and provide information to help consumers better understand their options. For consumers in states that choose not to form an exchange, a national health insurance exchange will be in place to help them obtain coverage.
Some of the goals of these new exchanges include:
- Ending discrimination based on health status
- Slowing the rate of healthcare inflation
- Subsidizing health insurance for low and modest income consumers to make it affordable
- Promoting transparency and accountability
Since private health insurance markets today aren’t very organized, one of the main goals of these new exchanges is to more effectively organize the insurance market for consumers who have no healthcare coverage. Another goal is to provide coordination and guidance to insurance markets to help them comply with consumer protections and compete in more cost efficient ways.
Beginning in 2014, these exchanges will mainly serve individuals buying insurance on their own and small businesses with up to 100 employees, although states can choose to include larger employers in the future. Under the law, states are expected to establish exchanges, which can be a government agency or a non-profit organization, but the federal government will step in if a state does not set them up.
What you need to know:
- If a person’s income is between 133 percent and 400 percent of poverty and he/she buys coverage through a health insurance exchange, he/she is eligible for a tax credit to reduce the cost of coverage.
- Health plans offered in the exchange are guaranteed issue, meaning insurers will not be allowed to refuse to insure any individual. There are also no lifetime or annual limits for exchange health plans.
- Out of pocket expenses will be capped at $5,950 for individuals and $11,900 for families, and all available health plans are required to offer "essential health benefits," a set of health care service categories that must be covered.
For more information about health insurance exchanges, visit http://www.whitehouse.gov/realitycheck/faq. If you are an insurance professional who wants to know more about offering COBRA in the age of healthcare reform, click here to download our free report that will help you respond to employers' most frequently asked questions.