2014 will bring many changes to health insurance, including how you may purchase coverage. If you don’t have coverage available through your employer, or if your employer offers coverage you feel you can’t afford, you can purchase your own health coverage on an exchange. The federal government often refers to exchanges as “online marketplaces.”
What is an Exchange?
Exchanges are online portals where you can compare and buy health coverage, similar to the way many travel websites are set up today. Some exchanges will be public, run by the federal or state governments, and others will be private, run by private companies like insurance carriers or brokers.
Exchanges will include a variety of plans to fit your needs and your budget. Comparing plans and understanding your options is easier with an exchange. You can compare different plans using the same criteria, so you can make an apples-to-apples comparison.
Public v. Private Exchanges
Individuals can shop on a public or private exchange. The Affordable Care Act (ACA) requires states to offer a public exchange. A state has three options:
- A state can run its own exchange
- A state can decide not to run an exchange and the federal government will set up an exchange for that state’s residents
- A state can partner with the federal government and share the responsibility of operating an exchange
Private exchanges are run by private groups or companies, like a broker or health insurance company. They will run similarly to public exchanges with the biggest difference being financial assistance to pay premiums which is only being offered through the public exchanges.
What is a Qualified Health Plan?
Qualified Health Plans (QHPs) are the type of health insurance plan you’ll find on a public exchange. They are required to:
- Provide Essential Health Benefits – services the ACA requires health insurance plans to cover
- Follow limits established by the government on how much you will pay out of your own pocket vs. how much the plan covers
- Meet other requirements determined by each state’s exchange
Am I Eligible for Financial Help?
When you buy a health insurance plan through a public exchange, you may be eligible for a subsidy in the form of a tax credit if your employer offers coverage that does not meet affordability or minimum value requirements or if your employer doesn’t offer coverage at all.
Under the ACA, coverage is “affordable” if your premium contribution is less than 9.5 percent of your household income. Minimum value means the percentage of the total allowed benefit costs provided under the plan is no less than 60 percent.
You must also meet income requirements to receive a subsidy, which can help pay for coverage you purchase on an exchange. If your household income is between 100 and 400 percent of the federal poverty level, you may be eligible for a premium tax credit. If your household income is between 100 and 250 percent of the federal poverty level, you may be eligible for a cost sharing subsidy. If you are eligible for Medicaid, you won’t be eligible for a premium tax credit or a cost sharing subsidy. All public exchanges will include a process to verify your income level when you apply for health insurance coverage.
Please note: Medical Mutual provides links for informational purposes only and doesn’t guarantee the accuracy of the information.
To learn more about online health insurance marketplaces and other healthcare reform topics, visit our What Does Healthcare Reform Mean to Me? section.