A Look at the Affordable Care Act: Exchanges

shutterstock_51078184*Each month AssuredPartners NL will discuss a different aspect of the Affordable Care Act. Stay tuned for more updates on the second Thursday of each month.  

Exchanges are a vital piece of Affordable Care Act legislation and, in just a few short months, will change the landscape of how your healthcare insurance coverage could be offered. Healthcare exchanges can provide increased purchasing power for individuals and small business by pooling many insurance buyers together. Read on to learn more about healthcare exchanges and tips for how you can navigate them.

What is an Exchange?
 An Exchange creates a competitive marketplace where individuals and small businesses alike can compare prices and shop around to purchase private health insurance coverage. Additionally, insurers must be prepared to comply with a new set of market reforms associated with the Exchanges. Exchanges are scheduled to become operational by Jan. 1, 2014, with an enrollment period on track to begin on Oct. 1, 2013.

When it comes to implementing Exchanges, states have three options:

• Establish its own state-based Exchange
The deadline for states intending to pursue a state-based Exchange has now passed. States were required to submit a declaration letter and an Exchange outline to the Department of Health and Human Services (HHS) for approval. States offering state-based Exchanges include:  California, Hawaii, Oregon, Washington, Nevada, Idaho, Utah, Colorado, New Mexico, Minnesota, Kentucky, Maryland, the District of Columbia, New York, Connecticut, Rhode Island, Vermont and Massachusetts.*

• Have the Department of Health and Human Services operate a federally facilitated Exchange (FFE)
HHS will operate federally facilitated Exchanges in each state that did not move forward with implementing its own Exchange or partnering with HHS. HSS will work with these states to preserve the traditional responsibilities of state insurance departments when creating the FFEs. FEEs will be funded through monthly user fees, a proposed 3.5 percent of the premium, although this is subject to change. These states include: Montana, Wyoming, Arizona, Alaska, Texas, Oklahoma, Kansas, Nebraska, South Dakota, North Dakota, Wisconsin, Missouri, Louisiana, Indiana, Ohio, Pennsylvania, New Jersey, Virginia, North Carolina, South Carolina, Tennessee, Mississippi, Alabama, Georgia and Florida.*

• Partner with HHS so that some FFE operations can be performed on the state level
The deadline for states intending to pursue a state partnership has now passed. States were required to submit a declaration letter and an Exchange outline to HHS for approval. These states include: Iowa, Illinois, Arkansas, Michigan, West Virginia, Delaware and New Hampshire.*

How will Exchanges impact me?

If you’re interested in pursuing healthcare options offered through an exchange, you’ll need to meet the following criteria:

• Be a citizen, national or non-citizen lawfully present in the U.S., and is reasonably expected to remain so for the entire period for which enrollment is sought

• Not incarcerated

• Resides in the state covered by the exchange

Each Exchange will determine whether you meet the eligibility criteria for enrollment. If eligible, you will receive written notice. Exchanges will have an initial open enrollment period, an annual open enrollment period and also special enrollment periods at certain times.

Individuals can only enroll in a qualified health plan through an Exchange during permitted enrollment periods. The initial enrollment period is anticipated to run from Oct. 1, 2013 – March 31, 2014. The annual enrollment period for 2015 and following years will begin Oct. 15 and extend through Dec. 7 of the preceding calendar year. In 2013, Exchanges must provide advance written notice to each enrollee about annual open enrollment in September.

Beginning in 2014, the ACA requires most individuals to maintain acceptable health coverage, or they will be subject to a financial penalty. This penalty is expected to be $95 per person in 2014, and will increase each year.

How will Exchanges impact my business?

Small businesses are able to purchase healthcare insurance through an Exchange. States can choose their own definition of a “small business,” initially setting the size of the small group market at either one to 50 or one to 100 employees. In 2015, employers with 100 or fewer employees can participate in a Small Business Health Options Program, or SHOP. Beginning in 2017, states may also allow employers of any size to purchase coverage through the Exchange.

What do you think about the new healthcare Exchanges? Check back on the second Thursday of each month as we discuss the Affordable Care Act and what it means to you. For questions about the Affordable Care Act, contact a AssuredPartners NL representative.

As part of AssuredPartners NL’ commitment to educating our clients on Affordable Care Act changes, we offer monthly webinars through Proskauer law firm to provide insight. Click here to watch the latest webinar for tips on navigating Affordable Care Act fees, penalties and taxes.

This post is not intended to be exhaustive, nor should any discussion or opinions be construed as legal advice. Readers should contact legal counsel for legal advice.

*State exchange information from InsuranceJournal.com.

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