What is a Health Insurance Exchange?
One of the fundamental elements of the Affordable Care Act (ACA), requires each state to create a health insurance exchange where individuals and small businesses can buy health insurance. California is the first state to pass legislation creating its exchange, the California Health Benefit Exchange. California has two more years to organize the program before it launches in January 2014.
Watch How an Exchange Works
How Individuals Will Get a Tax Credit
The exchange can determine eligibility and enroll low and middle-income individuals and families for an immediate health insurance subsidy. Households earning 133 percent to 400 percent of the federal poverty rate will be eligible for a credit to help offset the cost of coverage. Depending on income, qualifying households would pay no more than 2 percent to 9.5 percent of household income on health insurance.
Minimum Coverage Standards
Consumers choose between four levels of qualified health plans -- bronze, silver, gold, premium -- plus catastrophic coverage available for people younger than 30.
The four plan levels are:
- Platinum -- Covers 90 percent of average medical costs with consumer cost-sharing of 10 percent.
- Gold -- Covers 80 percent of average medical costs with consumer cost-sharing of 20 percent.
- Silver - Covers 70 percent of average medical costs with consumer cost-sharing of 30 percent.
- Bronze - Covers 60 percent of average medical costs with consumer cost-sharing of 40 percent.
Additionally, catastrophic coverage only plans will be available to individuals under the age of 30. Consumer cost-sharing includes things such as deductibles, copayments and coinsurance. Plans offering the most coverage, such as Platinum and Gold, will have higher premiums and a lower level of consumer cost-sharing. Bronze and Silver plans will be cheaper to buy, but will expose you to substantial cost-sharing over time.
One thing to keep in mind when considering the different plan levels -- all of the tiers must provide a basic level of essential benefits that offer coverage for things such as preventive care, hospitalization and prescription drugs. In addition, the Exchange web site and brochures will make plan comparison documents available that highlight differences in key plan features such as deductibles, co-pays, and benefit limits.
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Credits: The YouTube Video above was created by Workable Solutions, Inc. Workable Solutions actually introduced the first online benefits enrollment platform back in 1999. That same year they began administering one of the oldest continuously running Insurance Exchanges in the nation -- HealthPass in New York City.