Who, What, When

When are health insurance exchanges going to be available?

In most states, the health insurance exchanges will be available beginning January 1, 2014. If the department of Health and Human Services determined before 2013 that a state would not have an operational exchange by 2014, the HHS secretary has stepped in and is establishing the exchange in that state.

Beginning in 2017, states will have the flexibility (for up to 5 years) to make changes related to the exchange, qualified health plans, cost-sharing reductions, tax credits and individual and employer responsibility requirements.

What’s the difference between the exchange for individuals and SHOP for small businesses?

The law provides for a separate exchange for small businesses (Small Business Health Options Program, SHOP) and one for individuals. The small group market is defined as employers with 2-50 employees. All employers with 50 or fewer employers may participate in the exchange. Beginning for 2018 coverage, small businesses interested in participating in SHOP must work with a broker or agent to purchase coverage. You can find more information about recent changes to SHOP here.

Is it true that there will be a number of benefit packages offered through the exchange and that they will have minimum coverage requirements? What are they?

Yes. The exchange will provide a choice of four categories of insurance packages, each with essential minimum benefits, plus “catastrophic only” insurance for select populations. The law allows a variety of products and benefits to be sold within those four levels as long as they meet the minimum standards of coverage. This will allow easier comparison among plans. The employer will decide what level of coverage to offer, and employees may pick any plan offered within the exchange at that level.

The law established broad benefit categories of typical employer coverage, called essential health benefits (EHBs). These include ambulatory patient services, emergency services, hospitalization, maternity and newborn care, mental health and substance use disorder services, prescription drugs, rehabilitative services and devices, laboratory services, preventive and wellness services and chronic disease management, and pediatric services (including oral and vision care). This provision is designed to make sure coverage is comprehensive.

To meet this requirement in every state, the rule defines EHBs based on a state-specific benchmark plan, including the largest small group health plan in the state. States would select a benchmark plan from four options identified in the proposed rule, and all plans covering EHBs would be required to offer benefits substantially equal to those of the benchmark plan.

If a state does not make a selection, HHS will select a default benchmark plan. If a benchmark plan is missing any of the 10 categories of benefits, the proposed rule requires the state or HHS to supplement the benchmark plan in that category.

The four coverage levels are based on the specified percentage of costs the plans will cover:

  • Bronze = 60%
  • Silver = 70%
  • Gold = 80%
  • Platinum = 90%

Also, if an insurer offers a qualified health plan, they must also offer a child-only plan at the same level of coverage.

The options within the four coverage levels must also limit cost-sharing:

  • Out-of-pocket costs can’t exceed Health Spending Account (HSA) limits.
  • Annual deductibles are limited to $2,000 for individuals and $4,000 for families in the small group market. The limit is indexed to the percentage increase in average per capita premiums.
  • No cost-sharing for preventive services.
  • No annual or lifetime caps on the dollar value of services.

How will administrative complexity be reduced for employers and individuals through the health insurance exchanges?

There are a number of provisions designed to reduce administrative complexity. These include:

  • The exchange will establish procedures to enroll small businesses and individuals; one simple enrollment form will be used.
  • The exchange will offer standardized benefit packages, and require insurers to describe benefits and policies in a standardized format that allows for easy comparison.
  • Individuals will be able to apply for coverage through the exchange, and will be informed if they qualify for Medicaid, CHIP or any other state or local public health program through one state-sponsored website, listed below. The exchange will determine whether an individual qualifies for a tax credit and/or subsidy to reduce cost sharing.
  • HHS has created a single website, www.healthcare.gov, where small businesses and individuals can find detailed information about coverage options.

There are also a number of new requirements for insurers on standardized operating rules to simplify elements of health insurance administration such as eligibility verification, service authorizations, claims status, payment procedures, and referrals. These changes should reduce waste, administrative cost and hassle; they were adopted July 1, 2011 and fully implemented as of January 1, 2013.