ACA Exchanges Debut Oct. 1 Amid Uncertainty

September 24, 2013

In This Article

How the Exchanges Will Work

The ACA exchanges are designed to make buying health insurance, in theory at least, as easy as buying airline ticket online.

Sixteen states chose to operate their own exchanges, and not surprisingly, all but 2 have Democratic governors. Washington, DC, which has a Democratic mayor, also is in this camp. Twenty-seven other states, all but 2 with Republican governors, said no thanks, with the exchanges there defaulting to federal control. Another 7 states are collaborating with the feds in some fashion.

The exchange experience begins with filling out an application with demographic information such as household size, income, and citizenship status. Users then will be able to see coverage options, including whether they are eligible for Medicaid, or premium subsidies for a private health plan. They will be able to compare plans side by side based on benefits and cost.

Each health plan on the exchange must provide certain essential benefits that range from inpatient and ambulatory care to prescription drugs and chronic disease management. They come at 4 price points reflecting how much beneficiaries will pay out-of-pocket. The government chose 4 metals to describe these plans in terms of the beneficiary's share of healthcare costs — platinum for 10%, gold for 20%, silver for 30%, and bronze for 40%. The higher the cost-sharing level, the lower the premium will be.

Plan applicants can't be denied coverage for preexisting conditions, or charged extra for them. Women and men will pay the same premium for the same coverage.

The government expects that most exchange buyers will qualify for a sliding-scale tax credit that will be applied immediately to premium costs. The credit kicks in for those with incomes at 100% to 400% of the federal poverty level, or $11,490 to $45,960 per year for individuals and $23,550 to $94,200 for a family of 4. In addition to help on premiums, insurance buyers with incomes up to 250% of the federal poverty level may qualify for reduced out-of-pocket costs.

Premiums for competing plans will be posted on every exchange Web site as of October 1. Some Republican opponents of the ACA have warned of exchange sticker shock. However, 17 states and Washington, DC, have already disclosed their rates, and a recent study by the Kaiser Family Foundation found them "generally lower than expected." A 40-year-old man in Portland, Maine, earning about $29,000 per year, for example, would pay $295 per month for the second lowest-costing silver plan, which the government uses as a benchmark for calculating the tax credit. His credit would reduce the premium to $193 per month. In Hartford, Connecticut, the same man would pay just $97 per month after the tax credit is applied for a less expensive bronze plan.

The Department of Health and Human Services (HHS) did its own premium study and announced on September 16 that 10.8 million Americans, or almost half of the uninsured who are eligible to get coverage on the exchanges, may be able to pay $100 or less per month for subsidized coverage. Of these individuals, 60% would be buying a benchmark silver plan, and 40% a bronze plan.

Open enrollment for insurance coverage in 2014 ends on March 31, 2014. That period for coverage in 2015 extends from October 15, 2014, to December 7, 2014, which will be the rule for all subsequent enrollment periods. Individuals may be able to sign up outside these time frames if they experience major life events such as moving to a new state, getting married, or having a baby.

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