A Quick Guide to Understanding Health Insurance Marketplaces (Exchanges)


Today marks the first day individuals and families can begin using the Health Insurance Marketplace to find quality healthcare coverage for effective dates beginning January 1, 2014. The public marketplace, comprised of “exchanges” run by either state or federal government, has been designed to meet the needs of the Affordable Care Act (ACA) to provide individuals and families with standardized health insurance benefits.

What to Expect on Public Exchanges
An individual can now access their state’s Marketplace to compare their coverage options side-by-side, learn about subsidies or cost-reductions that may be available to them, and enroll for coverage. In addition to viewing health plan details—including benefits and rates—they can access to a number of tools to help them select the most appropriate coverage. They may use cost calculators, benefit comparisons, or work with a trained representative via live online chat or toll-free hotline. If applicable, they may also connect with their state’s Medicaid or Children’s Health Insurance Program (CHIP) or certify if they are exempt from the ACA’s individual mandate.

Health Plans in the Marketplace
All of the health plans introduced in the federal and state exchanges today are offered by private companies and have qualified for participation. The aim is for these plans to give individuals the scope of coverage they’d be likely to receive under a large group plan in their state. Organized into four categories differentiated by their monthly premium and cost-sharing (what the policyholder pays out-of-pocket, such as copays and deductibles), each plan covers a different percentage of medical costs:

• Bronze—pays 60%
• Silver—pays 70%
• Gold—pays 80%
• Platinum—pays 90%

While the plans are set apart by their cost-sharing structures, they’re all required to provide coverage in 10 essential health benefit categories, including preventive care, maternity and newborn care, prescription drugs, and emergency services. Furthermore, the ACA mandates that insurers cannot deny coverage based on a preexisting condition, drop an insured’s coverage or raise their premiums due to an illness, or apply a lifetime maximum on essential medical benefits. Additionally, children can stay on a parent’s health plan until the age of 26, and annual out-of-pocket medical and prescription costs in 2014 will be capped at $6,350 for individuals and $12,700 for families.

States’ Role
Prior to the opening of the Marketplace, states chose how they wanted to participate—whether they would utilize the federally-managed healthcare.gov exchange, develop their own exchange, or use a combination of federal and state resources. With respect to health plan design and pricing, states have some flexibility as to what is covered and, as has always been the case, states have jurisdiction over premium rates.

View our ReformWatch map to see what each state is doing.

The Role of Private Exchanges
Individuals who don’t qualify for a subsidy may use a health insurance exchange run by a private organization, such as an insurer or other portal, selling qualified plans. While most consumers qualifying for a federal subsidy will enroll for health insurance coverage through a public exchange, a little-known rule proposed in June allows them to buy an exchange-approved plan—and receive a health law subsidy—from the insurance company itself rather than from the exchange. Private exchanges are still largely under development as both consumers and the organizations running the exchanges are in the early process of understanding how the marketplaces will work and what types of tools and technology are needed to operate effectively and remain complaint under the law.

Fine-Tuning Marketplace Tools
For many, if not all, federal and state-run exchanges may not be fully operational at launch. Exchanges may not provide full functionality out of the gates, as testing, troubleshooting, and bug-fixing typically follow in the wake of such a technology-based launch, especially with the significant data-sharing demands of the Marketplace. According to an article on the New York Times website, exchange websites are experiencing a wide range of delays and/or difficulties with functions such as subsidy qualification applications, rate calculation tools, and even the availability of Spanish-language versions of content.

Looking Ahead
Among the expected—or hoped-for—long-term results of a introducing a consumer-driven Health Insurance Marketplace are increased competition and lower rates, making coverage more accessible and affordable for everyone. Time will tell how many people will use the Marketplace and how the economics of healthcare may shift, but as of today, the Congressional Budget Office estimates that 24 million people will get coverage through exchanges in the next 10 years—suggesting tremendous growth with a powerful impact on our health care system. 

The Healthcare Trends Institute will be monitoring the Marketplace over the next several days, weeks, and months to assess its progress. Stay tuned for our first week in review content as the story unfolds. In the meantime, explore the following resources to learn more:

Consumers can use these to find certified help for the exchanges:

localhelp.healthcare.gov – list of organizations closest to consumers’ town or zip code

nahu.org/consumer/findagent2.cfm – directory of insurance brokers

http://www.healthcare.gov/what-is-the-marketplace-in-my-state – state information from Healthcare.gov

http://kff.org/interactive/subsidy-calculator/ – subsidy calculator

1-800-318-2596 – federal call center number

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