State and federal health insurance exchanges

Understanding the basics

Public exchanges are one of the hottest topics in our industry right now. How will they transform the health insurance landscape when they open their doors in October of this year?

It’s helpful to start with the basics – what are public exchanges, how will they work, and what new features will they offer?

What’s available and when

  • Beginning October 1, 2013, every state must offer an exchange to its residents, as part of the Affordable Care Act (ACA).
  • States can decide to run their own exchange or default to one that is run by the federal government.
  • During their first year, exchanges will offer an extended six-month open enrollment period, from October 1, 2013 to March 31, 2014 (for coverage effective January 1, 2014 and later).
  • There are two types of exchanges: one that will sell to individuals and one that will sell to small group employers. States must offer both models.
Health insurance plan criteria

  • Health insurance carriers can decide in which states they will offer their plans on exchanges.
  • To be sold on an exchange, a plan must be certified as a Qualified Health Plan (QHP).
  • To be a QHP, plans must meet specific criteria, such as:
    • Offering a core set of benefits (called essential health benefits) across all their plans
    • Meeting certain network adequacy requirements
    • Ensuring all plans fall within specific coverage levels, based on their actuarial level
  • All plans sold on the exchanges will be categorized by their metallic level, to make it easier for consumers to shop for and compare plans. The metallic levels are based on how much the insurance carrier will pay compared to how much the consumer will pay out of pocket, on average.

Metallic plan name Percentage of costs covered by the plan
Bronze 60%
Silver 70%
Gold 80%
Platinum 90%

Consumer help

  • To help make insurance more affordable, consumers who meet specific criteria may qualify for financial support when shopping on the individual exchanges.
    • Tax-based premium subsidies: Individuals and families with household incomes between 134 and 400 percent of the federal poverty level are eligible for a tax credit when they enroll through an exchange, to help cover the cost of premiums.
    In 2012, 400 percent of the federal poverty level was approximately $44,000 for an individual and $92,000 for a family of 4.
    • Cost-sharing subsidies: For individuals and families with household incomes at or below 250 percent of the federal poverty level, the ACA limits the amount of their own money they have to spend (“out of pocket”) when they receive care, if they enroll in a silver level plan through an exchange.
In 2012, 250 percent of the federal poverty level was approximately $28,000 for an individual and $58,000 for a family of 4.
  • Individuals who have access to affordable comprehensive benefits through their employers are not eligible for tax credits or subsidies via an exchange. Affordable, comprehensive benefits are defined as:
    • Not costing more than 9.5 percent of an individual’s income
    • Covering a minimum value of 60 percent of typical or average medical costs
Exchanges will create new channels that complement, but do not replace, the traditional channels through which our members and plan sponsors can shop for coverage with Aetna.