Understanding the Affordable Care Act: Health Insurance Exchanges

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Starting October 1, if you do not have health benefits through your employer you will have a new option for purchasing health insurance with the new Health Insurance Marketplace. The Health Insurance Marketplace is the hallmark benefit of the Affordable Care Act, commonly referred to as Obamacare.

The Health Insurance Marketplace is sometimes known as a health insurance “exchange.” The health insurance exchanges are slated to open October 1 for small businesses, uninsured people, and for people who don’t get health benefits at work. At the site, you will be able to comparison shop and learn whether you qualify for financial assistance. If you receive health benefits from a large employer or you are enrolled in a government program like Medicare, you don’t need to use the exchanges. Under the law, if you meet the law’s standards and don’t get coverage from your job, you will be able to choose among health insurance plans sold through the exchange marketplaces.

The US government announced in April that options for small businesses has been limited for 2014. Originally, the exchanges were supposed to let small business owners offer their employees a choice between several options which experts believe would help bring down rates. However, citing operational challenges, the administration has delayed that component until 2015. Until the exchanges are fully functional, most business owners will be limited to selecting just one plan to cover all their employees under the new federal system. Some may have additional choices if their states run exchanges with more flexibility.

The Health Insurance Exchanges are sites for you if you do not get health benefits at work. You will be able to shop among health insurance plans. In addition, if your earnings are between the poverty level (which is $11,490 for a single person this year) and four times that amount, you can learn whether you qualify for financial assistance or Medicaid. Coverage through the exchanges will take effect January 1, 2014.

When you use the Health Insurance Marketplace, you’ll fill out an application and see all the health plans available in your area. You’ll provide some information about your household size and income to find out if you can get lower costs on your monthly premiums for private insurance plans. You’ll learn if you qualify for lower out-of-pocket costs. The Marketplace will also tell you if you qualify for free or low-cost coverage available through Medicaid or the Children’s Health Insurance Program (CHIP).

All private health insurance plans offered in the Marketplace will offer the same set of essential health benefits. These are services all plans must cover. The essential health benefits include at least the following items and services:

Ambulatory patient services (outpatient care you get without being admitted to a hospital)
Emergency services
Hospitalization (such as surgery)
Maternity and newborn care (care before and after your baby is born)
Mental health and substance use disorder services, including behavioral health treatment (this includes counseling and psychotherapy)
Prescription drugs
Rehabilitative and habilitative services and devices (services and devices to help people with injuries, disabilities, or chronic conditions gain or recover mental and physical skills)
Laboratory services
Preventive and wellness services and chronic disease management
Pediatric services

Essential health benefit are minimum requirements for all plans in the Marketplace. Plans may offer additional coverage. You will see exactly what each plan offers when you compare them side-by-side in the Marketplace.

Many people worry about the affordabiity of the Exchange plans. When you apply for a plan on the health insurance marketplace, you’ll be asked to provide income information to determine whether you’re eligible for a premium tax credit. That subsidy will be available to anyone with incomes up to 400 percent of the federal poverty level ($45,960 for an individual in 2013, or $94,200 for a family of four).

If you qualify, you can opt to receive the tax credits in advance, and the exchange will send the money directly to the insurer every month. This subsidy will reduce how much you owe up front. You can also choose to receive their credit when you file your taxes the following year.

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