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Health Benefit Exchanges

Updated on December 20, 2012
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Health Benefit Exchanges Will Help the Uninsured and Job-Locked Find Affordable Health Insurance Coverage

A staggering 48.6 million Americans had no health insurance in 2011, according to the Census Bureau.

Millions of others who obtain health insurance through their employers suffer from "job lock" because they are unable or unwilling to leave their current jobs for fear of losing their coverage.

All of these Americans will soon have a new option for obtaining affordable health insurance coverage: health benefit exchanges. Enrollment will start on October 1, 2013 for plans that will go into effect on January 1, 2014.

Online Shopping for a Qualified Health Plan

By October 1, 2013, consumers will be able to comparison shop for a qualified health plan (QHP) using an online health benefit exchange for their state or region. The online exchange will be similar to the online marketplaces for other goods and services that consumers are already familiar with. The coverage will go into effect on January 1, 2014.

Each QHP offered by an exchange will meet a list of requirements specified by the Patient Protection and Affordable Care Act (ACA). These requirements cover marketing, choice of providers, plan networks, essential benefits and other features. Only insurers licensed by a state will be eligible to sell their plans through that state's exchange. Consumers purchasing a health insurance plan from an exchange will thus be assured of purchasing a plan offering essential benefits from a reputable insurer.

The QHPs offered by insurers will be allowed to vary by state or region. For example, California consumers may have different choices than New York consumers. However, all QHPs will still need to meet ACA requirements, including coverage of essential health benefits.

Essential Health Benefits

Each plan sold through a health benefit exchange will include essential health benefits defined by the Department of Health and Human Services. These benefits will include:

  • ambulatory patient services;
  • emergency services;
  • hospitalization;
  • maternity and newborn care;
  • mental health and substance use disorder services, including behavioral health treatment;
  • prescription drugs;
  • rehabilitative and habilitative services and devices;
  • laboratory services;
  • preventive and wellness and chronic disease management; and
  • Pediatric services, including oral and vision care.

Thus, consumers purchasing a plan from an exchange will have the piece of mind of knowing the plan they purchase should meet their essential healthcare needs.

Levels of Coverage

The QHPs offered by the health benefit exchanges will provide different levels of coverage for the essential benefits. The levels will be referred to as bronze, silver, gold and platinum. Bronze plans will cover 60% of the actuarial value of the expected health care costs covered by the plans. Silver, gold and platinum plans will cover 70%, 80% and 90%, respectively, of the actuarial value of the covered expected health care costs.

The benefit package offered by an insurer's plan will be the same for all four levels of coverage. The only difference between the plan will be the cost structure. Consumers who purchase the bronze plans will pay the lowest premiums, but will bear the most risk as they'll face higher out-of-pocket costs than consumers who purchase the silver, gold or platinum plans. In contrast, consumers who purchase the platinum plans will pay the highest premiums but will bear the least risk of out-of-pocket costs.

Consumers who purchase a QHP from an exchange will not be rejected for having a preexisting condition, and will not need to pay higher rates than a healthy consumer. Insurers can charge older consumers more than younger consumers, but cannot charge the oldest consumers more than three times as much as the youngest adults.

Costs for Qualified Health Plans

The costs of qualified health plans purchased through health benefit exchanges is expected to be less than the costs of similar plans currently available to individual purchasers and small businesses. The cost savings are expected to be driven by lower administrative costs due to the larger customer base.

The Congressional Budget Office (CBO) has estimated the nationwide average monthly premium for a bronze plan will be about $400 for an individual and $1,020 for a family by 2016. The average premium for the silver, gold and platinum plans will be higher due to their higher levels of coverage.

However, the CBO estimates do not include the impact of subsidies or premium credits that will substantially lower the health care costs of millions of qualified consumers.

To qualify for a subsidy, a consumer must be:

  • lawfully in a state in the U.S.;
  • not enrolled in an exchange plan as an employee or their dependent;
  • have a modified adjusted gross income of less than 400% of the federal poverty level;
  • not eligible for Medicaid;
  • not enrolled in an employer's qualified health plan, a grandfathered plan, Medicaid, Medicare, military or veterans' coverage of another recognized plan; or
  • not a full-time employee of a company that offers health insurance and makes a substantial contribution towards that coverage.

For 2012, 400% of the federal poverty level would be $44,680 for an individual and $92,200 for a family of four. These amounts will be adjusted for inflation. Thus, many lower and middle income individuals and families will qualify for subsidies.

The ACA also caps the annual out-of-pocket costs for consumers who buy a QHP from an exchange. The cap matches the maximum out-of-pocket limit for health savings accounts, which for 2012 is $6,050 for individuals and $12,100 for families.


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    • Jillian Barclay profile image

      Jillian Barclay 4 years ago from California, USA

      Great article!

      Perhaps when the exchanges begin, the misinformation about the ACA will end. For example, the comment from tamarawilhite: It is not the ACA that has caused the rise in premiums. It is the greed of private insurers, they just now have a convenient excuse for gouging and many people believe them...

      A government option (like Medicare) or single payer would have been better, but Congress would not allow it. Congress (check contributions to individual members), health insurers and Big Pharma will not risk losing the profit motive in health care. They all have a stake in profits--more so than in health care for people.

      The same can be said for big corporations that are so angry about participating. Those corporations have never wanted health care benefits for their employees. Their employees are expendable...

    • AudreyHowitt profile image

      Audrey Howitt 4 years ago from California

      The statistics are sobering! Thank you!

    • tamarawilhite profile image

      Tamara Wilhite 4 years ago from Fort Worth, Texas

      Why has the Affordable Care Act resulted in 5-10% insurance rate hikes each year for the past two years, when it promised to lower costs?

    • teaches12345 profile image

      Dianna Mendez 4 years ago

      Interesting topic and well covered. I know many will find this information helpful in making a decision for health coverage.

    • tipstoretireearly profile image
      Author

      tipstoretireearly 4 years ago from New York

      72 people dying daily from no insurance is a very sobering statistic. It's difficult to understand how a first-world country like the U.S. is saddled with a second- or even third-world healthcare system. Hopefully the health benefit exchanges will start to address some of the system's problems. Thanks for stopping by and commenting!

    • eHealer profile image

      Deborah 4 years ago from Las Vegas

      Hey Tips, I have read this article about 3 times now, it's really very good and very well written. It is such a problem that is not fixed yet, we have a long way to go to get healthcare to work in the USA, but 72 people dying a day from no insurance does not make this the greatest country in the world. In addition, the price of healthcare, if it continues to rise at the current rate, won't be available to anyone in the long run. Great hub and voted up, pinned and FB'd!!

    • tipstoretireearly profile image
      Author

      tipstoretireearly 4 years ago from New York

      Many details have yet to be worked out, but it'll be worth looking at these new exchanges once they become available. If they can reduce premiums by providing real competition between insurers and through increased administrative efficiency, they may be a good alternative to traditional employer-provided health insurance. One things for certain ... the traditional health insurance model is doing a poor job of controlling health care costs.

    • Abby Campbell profile image

      Abby Campbell 4 years ago from Charlotte, North Carolina

      My husband's employer offered health insurance to us with him being 75 percent covered. However, we still could not afford it as a family of four. Without maternity benefits, our premiums were $1,500+ per month. That was just outrageous! Therefore, we opted for private insurance through Blue Cross Blue Shield. At $408 per month, we are able to have all preventive care (i.e., labs, vaccines, screenings, etc.) covered 100 percent. Each one of us is also able to go see the physician four times per year at only a $25 co-pay. After that, our deductible kicks in which is $3,500 per person and capped at $10,500 for the family. There is no max cut off either. It was a win-win for us, and I would highly recommend all people to check into private insurance when they can't afford their employers insurance.

    • Angela Blair profile image

      Angela Blair 4 years ago from Central Texas

      Thanks for so clearly setting out this info. I'm not, however, an advocate for Obamacare so will wait and see how this all works out. Guess my first question is how are so many going to get care from a medical community (doctors specifically) that are leaving the profession in droves because of Obamacare. Again, good Hub with excellent information/explanation. Best/Sis

    • billybuc profile image

      Bill Holland 4 years ago from Olympia, WA

      Good information my friend. I have been without medical since 2006....good thing I'm healthy, huh?