Health Insurance Exchanges

iStock_000015278853Small-250x166The Basics

Beginning in 2014, individuals and small businesses will be able to purchase private health insurance through competitive marketplaces called Affordable Insurance Exchanges, or ‘‘Exchanges.’’

Exchanges are intended to offer Americans competition, choice and clout. It is hoped that insurance companies will compete for business on a level playing field, which in theory should drive down costs. Consumers should have a choice of health plans to fit their needs, and Exchanges are designed to give individuals and small businesses the same purchasing clout as big businesses. Last March, the Federal Government issued its final rule on the implementation of health insurance exchanges.  For more information, the rules can be found at  77 FED. REG. 18310 .

Some Flexibility

With the January 1, 2014, deadline approaching fast, the U.S. Department of Health and Human Services (HHS) has developed a few flexible programs that offer different Exchange models, as well as some additional options within each program.

State-Based Exchanges:  Although States operate this option, the federal government can oversee certain activities such as:

  • Premium tax credit and cost sharing education determination;
  • Exemptions
  • Risk adjustment programs
  • Reinsurance programs

State Partnership Exchanges:  In this example, States operate activities for plan management and consumer assistance, and the States may elect to perform, or have the option to rely upon federal resources, for reinsurance programs and Medicaid/CHIP eligibility, assessment or determination.

Federally-Facilitated Exchange:  While HHS operates a State Exchanges, States have the option to oversee the reinsurance programs and Medicaid/CHIP eligibility, assessment or determination.  States can also let the federal government oversee these functions.

Additional information is available in a recent publication entitled “Blueprint for Approval of Affordable State-based and State Partnership Insurance Exchanges.”

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