Thursday, November 15, 2012

Health Care Exchanges and the Affordable Care Act

One of the many new features of the Affordable Care Act (commonly referred to as ObamaCare) passed in 2010 and taking full effect in 2014, is the creation of Health Care Exchanges. These state established organizations will make it easier for the approximate 30 million individuals currently without health insurance to obtain affordable coverage regardless of their health conditions, including any pre-existing conditions.  Each state will be responsibility to set up its exchange.  For those states which opt out of the process by Nov. 16th, the Federal government will assume this responsibility in that individual state.

According to Julie Rovner at NPR News, "So far, nearly 30 states haven't formally said what they'll do. Just over a dozen states have passed legislation to take on this task themselves. Governors in another handful have said they want no part of it. That means federal officials will step in and run the state exchanges for them. There is a third option: States can partner with the federal government to run the exchange. And now states can wait until as late as February to decide if they want to do that." For more on the NPR report click here:

So what will possible health insurance look like from one of these Exchanges?

When an individual or employee chooses to shop for insurance using an exchange, he will be able to purchase a "bare bones benchmark" policy.  The law states that an employer need only pay for 60% of the costs, leaving the remaining 40% to be paid by the employee. Presently, most plans pay for about 85% of the costs with employees paying the remaining 15%.  Employees who want more coverage will have to pay a greater amount each month under their employer health plan. Of note, individuals who purchase health insurance through the exchange are eligible for a subsidy if they earn up to 400% of the federal poverty level.  The subsidy is given in the form of a tax credit on a sliding scale based on income.

Another significant feature of the Health Exchange provision relates to employer groups with less than 25 employees.  These groups may be able to get tax credits up to 50% of their cost to help offset their insurance cost.  Presently, the tax credit allowance is up to 35%. This actually benefits smaller employers and gives them a greater incentive to provide coverage to their employees.  Under the new plan, employers with 50 or more employees who do not offer affordable health care coverage are subject to financial penalties. For more information click here:

While each Exchange will vary from state to state, The National Association of Insurance Commissioners has established some uniform criteria for all the state's Exchanges:

  1. All plans provided through the Exchange must provide an "essential" benefits package which, at a minimum, includes ambulatory services, emergency care, hospitalization, prescriptions drugs and pediatric services.  
  2. A Small Business Health Options Program must be set up by each state to help employers enroll their employees.
  3. Exchanges must offer a variety of plans with different coverage levels from catastrophic to more basic coverage.
The bottom line is that the Affordable Health Care Act is the new law of the land and the Health Care Exchanges will be an integral part of shaping the landscape for future affordable and accessible  health care to all. Americans.

Stay informed. Stay positive. Stay healthy.
- The Patient's Advocate