Health Insurance Exchange: WHAT YOU NEED TO KNOW

Health Insurance Exchange: WHAT YOU NEED TO KNOW

An online marketplace where customers can compare and purchase individual health insurance plans is known as a health insurance exchange.

Recently, there have been more private marketplaces created by benefit firms and health insurance providers. The exchanges you're hearing about, however, are most likely the state-based health insurance exchanges created as a result of the Affordable Care Act (ACA) - those are the exchanges that are detailed here.

State-run health insurance exchanges provide a venue for individuals and small businesses to compare a wide range of health insurance policies side by side and pick the one that best suits their requirements.

Whether marketed on the exchange or off-exchange, all individual and small-group plans are subject to the same requirements under the ACA. The 10 essential health benefits, which must be included in all individual and small-group plans starting in January 2014 or later and which apply both on and off the exchange, include emergency care, hospitalization, preventative treatments, and more.

However, individuals may only get cost-sharing and premium subsidies if they get their insurance through the exchange.

You cannot transfer from an off-exchange plan to an on-exchange plan outside of open enrollment unless you have a qualifying event, and open enrollment periods are the same on and off the exchange.

The remaining 12 states and DC operate their own state-run exchanges and enrollment platforms; as of 2020, 38 states use HealthCare.gov as their exchange portal. Although five of the states that use HealthCare.gov are deemed state-based exchanges, they accept enrollment through the federal network (Arkansas, Kentucky, New Jersey, Pennsylvania, Oregon, and New Mexico).

Beginning in the fall of 2020, Pennsylvania and New Jersey, two states that will use HealthCare.gov in 2020, intend to establish their own state-administered health insurance marketplaces. Residents of those states can sign up for coverage for 2021 through state-run websites.

The Operation of Health Insurance Exchanges

Exchanges are made to foster competition and make comparing products easier. In the exchange, insurance providers compete for your business. The goal of this direct competition is to maintain affordable health insurance rates. By adopting a "apples to apples" comparison, exchanges and markets make it easier to compare plans:

Although the particular coverage that is provided will vary from state to state based on the benchmark plan that the state selects, all health insurance policies offered via the exchanges provide a minimum list of basic health benefits:

• Hospital care (outpatient care)
• Emergency assistance
• Hospitalization
• Newborn and maternity care
• Treatment for drug use disorders is a component of mental health services.
• Medicines on prescription
• Services for rehabilitating people and providing equipment
• Testing services
• Preventive medicine

Dental and eye care for children (adults do not need to be covered for these treatments). Additionally, the guidelines for kid dental coverage differ slightly from those for other necessary health benefits.

What Sets "On-Exchange" Apart from "Off-Exchange"?

When purchasing a health insurance policy in the individual market, you'll often hear individuals distinguish between "on-exchange" and "off-exchange" policies.

A plan that is "on-exchange" merely means that it was acquired via the exchange. People can either shop for exchange plans independently or with assistance from a broker or navigator (and in some circumstances, "on-exchange" plans can be purchased via an online broker's website or an insurer's website; ask lots of questions if you're working with a broker or a private website, to ensure that you're getting an on-exchange plan if that's your preference).

On the other hand, "off-exchange" plans are bought outside of your state's ACA exchange. They can be acquired either straight from an insurance provider or through a broker. Even if you would otherwise be qualified, premium and cost-sharing subsidies are not available if you choose an off-exchange plan.

And if you purchased an off-exchange plan, you cannot later use the premium subsidy on your tax return; but, if you purchase an on-exchange plan and do not use the premium subsidy, you may.

On- and off-exchange, however, the plans themselves are frequently same or very similar. Regardless of whether they are marketed in the exchange or off-exchange, all individual major medical plans with effective dates of January 2014 or later are required to be fully compliant with the ACA.

It's crucial to note that insurance firms are not permitted to provide major medical health plans that do not comply with the Affordable Care Act (ACA) in the individual market, even if they do so elsewhere.

The health plans provided on-exchange could need to conform to extra regulations beyond just being ACA-compliant, depending on how your state has set up its exchange (for example, some states require the plans sold in the exchange to be standardized, with the same set of specific benefits offered by each insurer).

READ: 7 Best Health Insurance Companies for Self-Employed in 2022

Note that Washington DC does not permit the sale of plans off-exchange; there, ACA-compliant individual and small group health plans can only be purchased through DC Health Link, the District's health insurance exchange. Some insurers choose to only sell their plans on-exchange, while others choose to only sell them off-exchange.

Who May Access the Exchanges?

All U.S. citizens and residents with legal status who are not in prison and who are not enrolled in Medicare are qualified to purchase a health plan through the state-based exchange. Even without premium subsidies, undocumented immigrants cannot sign up for coverage through the exchanges.

Small companies can acquire insurance through the exchange in various states (in most states, this is limited to businesses with up to 50 employees). It should be noted that in states that use HealthCare.gov's small business exchange, enrollment is now handled directly by companies and insurers, not via the exchange. 

This strategy is employed by several of the state-run exchanges, making small group health coverage scarce on marketplaces.

Congress members and their workers are obliged to enroll in coverage through the exchange as a result of the Grassley Amendment to the Affordable Care Act (ACA). 

The government devised a workaround that permits Congress and staff to enroll in small group plans through the state-run exchange in the District of Columbia in order to satisfy this requirement and prevent them from losing their employer premium payments (DC Health Link).

About 11,000 of the small group registrants at DC Health Link were members of Congress and their employees as of April 2017. Members of Congress and their staff have a month-long open enrollment period each year in the fall.

This enrollment period is not the same as the open enrollment period that applies to those who buy their own health insurance via DC Health Link because it is for employer-sponsored coverage.

How many individuals are covered by the ACA's Exchanges?

Total exchange enrollment in individual market plans was at little over 14.5 million individuals at the end of open enrollment for 2022 coverage (which concluded on January 15, 2022, in the majority of states), including enrollments made through HealthCare.gov and the 18 state-run exchanges.

Due in significant part to the subsidy improvements made possible by the American Rescue Plan, membership in this program reached a record high.

Less than 200,000 people countrywide were enrolled in small business exchange plans in 2017, despite the fact that small firms are permitted to do so. The vast majority of ACA exchange subscribers obtain coverage through the individual market.

In several jurisdictions, the exchanges offer standardized plans. All of the plans are same across the exchange in California.

All health insurance plans sold through the exchange are required to fall under one of the following five coverage tiers: catastrophic, bronze, silver, gold, or platinum. The benefit tier (bronze, silver, gold, or platinum) of a policy, also called as the actuarial value (AV) of the plan, specifies the percentage of typical insured healthcare costs that the plan will pay, both on- and off-exchange. 

The article "Bronze, Silver, Gold, and Platinum—Understanding the Metal-tier System" has further information on how these benefit tiers operate.

The individual/family market for platinum plans is either extremely limited or nonexistent in the majority of the country. All sections of the nation have access to silver and gold plans (insurers offering policies on the exchange must do so at a minimum at the silver and gold level).

Nowadays there are bronze plans accessible in every county in the US, while there have been years when some regions lacked bronze plans.

Catastrophic plans are required to conform to the ACA's restriction on out-of-pocket expenses even if they only cover less than 60% of the cost of basic health benefits for a typical population. 

As with other ACA-compliant plans, catastrophic plans offer three primary care office visits before the deductible and complete coverage for some preventative services. Everything else is subject to the deductible and is only compensated once it has been reached.

Although there is no longer a federal penalty for not having coverage, the mandate itself still exists, and an exemption is still necessary in order to purchase a catastrophic plan if you are 30 or older. Catastrophic plans are only available to those under the age of 30 or to those who qualify for a hardship exemption from the mandate to purchase coverage.

Exchanges offer financial assistance for purchasing health insurance. The only way for Americans with low incomes to get government subsidies (premium tax credits) that lower the cost of health insurance is through health insurance exchanges. 

A government health insurance subsidy is available through your health insurance exchange, and it is only valid for health insurance purchased through the exchange. "Can I Get Help Paying for Health Insurance?" has further information about health insurance subsidies.