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State Health Insurance Exchanges 101

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What you need to know about coverage.

By Nitin Chhoda, PT, DPT

State Health Insurance Exchanges are organizations set up to facilitate the purchase of health insurance in different states across the country in accordance with the Patient Protection and Affordable Care Act (PPACA).

The health insurance marketplace is intended to provide a set of government-regulated and standardized health care plans from which individuals may purchase health insurance policies eligible for federal subsidies. Different payors provide different plans, and the pricing of the same plan can vary slightly from one state to another.

Some states have implemented their own state-run health insurance exchanges. Other states have asked the federal government to run the health insurance exchange for them, while some states have taken an alternative route and partnered with another state to help them run the exchange. States have a degree of flexibility in regard to the Affordable Care Act and are offered the freedom to develop a structure, partnership, and type of exchange in the manner they choose.

Therefore, these state health insurance exchanges are not always run by the state. Depending on the state where the patient lives, the state health insurance exchange can be state-based, federally facilitated, or a “partnership marketplace.” At the end of the day, the objective is to provide the patient with federally subsidized health insurance.

Mandated Health care Is Here to Stay

The Health Insurance Marketplace (HIM) helps uninsured individuals find health coverage and the dissemination of this coverage happens through state insurance exchanges. Most individuals must have health coverage in 2014 or pay a penalty.

If patients do not have coverage, they will pay a fee of either one percent of their income, or $95 per adult ($47.50 per child), whichever is higher. This fee must be paid on their 2015 income taxes. Some people qualify for an exemption to the fee, based on income or other factors. Patients are considered covered if they have Medicare, Medicaid, CHIP, any job-based plan, any plan they bought themselves, COBRA, retiree coverage, TRICARE, veterans’ administration health coverage, or some other kind of health coverage. If they buy insurance outside the marketplace, they will not be eligible for premium tax credits or lower out-of-pocket costs based on income.

Any job-based health plan that a patient has can qualify as minimum essential coverage. Individuals do not need to change to a marketplace plan to avoid the penalty to which uninsured individuals are subjected.

Important Considerations for Patients

Before a patient explores marketplace coverage options in his or her state, several important items must be considered.

With most job-based health insurance plans, an employer pays part of an employee’s premiums. If an individual decides to select a marketplace plan instead, the employer does not contribute to those premiums. It is the responsibility of the patient to consider this carefully before comparing marketplace plans.

Eligibility Through Insurance Exchanges

Most individuals are eligible for health coverage through the HIM. To be eligible for health coverage through the marketplace, an individual must live in the United States, be a U.S. citizen or national (or be lawfully present), and cannot be currently incarcerated.

Patients with Medicare coverage are not eligible to use the marketplace to buy a health or dental plan. United States citizens living in a foreign country for at least 330 days of a 12-month period are not required to obtain health insurance coverage under the Affordable Care Act for that 12-month period.

If an individual is uninsured and living abroad under this definition, he or she does not have to pay the fee that other uninsured citizens may have to pay.

The Nuances of State Health Insurance Exchanges

So how do your patients get coverage? This is exactly where the state HIM comes in.

Depending on your state, the patient will either use healthcare.gov or the health insurance marketplace your state has created to shop for federally regulated and subsidized health insurance.

Additionally, all states will have a health insurance exchange (marketplace), but some states do not run their own exchange. States have the option of establishing the exchange as part of an existing state agency or office (operated by the state), as an independent public agency, or as a nonprofit entity.

As mentioned earlier, states have a great deal of flexibility in determining the role of the exchange with respect to contracting with health plans. All exchanges are required to contract only with health plans that meet minimum federal requirements for qualified health plans.

States can choose to have the exchange contract with all qualified health plans or states can choose to have the exchange contract with selected health plans and/or negotiate premium prices with health plans.

How Patients Can Get Coverage

Four ways are available for a patient to sign up for the marketplace.

  1. A patient can find information about their state’s HIM by visiting the website www.healthcare.gov and signing up online.
  2. A patient can get help in person by identifying local resources. This information is available at www.localhelp.healthcare.gov.
  3. A patient can call the marketplace helpline 800-318-2596.
  4. A patient can also mail in an application by downloading a template from www.healthcare.gov.

Nitin Chhoda, PT, DPT, is an Impact editorial board member, a business consultant, and chief executive officer of the Referral Ignition marketing system. He can be reached at nitin@referralignition.com.