What is a state health insurance exchange?
The Affordable Care Act was designed to be a federal and state partnership. The Act authorized each state to create, develop, staff, and organize an insurance exchange. These were to be marketplaces where citizens could visit online and at office locations to review and purchase qualified health insurance plans.
The exchanges were the place where insurance plans met the public, and the state could assist citizens in understanding their choices and using the financial advantages in the Affordable Care Act.
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The Individual Mandate
The Affordable Care imposes penalties on those that fail or refuse to get qualified health insurance coverage. The state exchanges offer policies that they have vetted to ensure they meet the standards of the law and avoid the penalty.
One can shop anywhere and get the same price for the same plan. During the open season, buyers can get financial benefits.
States that Used Obamacare
States that used Obamacare provided many benefits for their citizens. They got to use tax credits for lower premiums, received costs assistance when qualified, and got health insurance without fear of rejection for past illness.
Obamacare states embraced the opportunity to organize an exchange to help citizens take advantage of the new benefits.
They expanded Medicaid to catch anyone caught between the minimum income for the Exchange and the maximum income for Medicaid.
States that Refused Obamacare
It seemed that some state governments did not care that their most vulnerable citizens went uninsured, and they rejected Obamacare and the Medicaid expansion. Citizens in these states still had access to an exchange; they used the federal marketplace at Healthcare.gov.
The federal marketplace acted as a state exchange in the refusal states. The federal marketplace was a wholesale host; it ensured that plans met or exceeded the requirements of the ACA and the CMS rules.
The CMS did not take on the role of the active purchaser as was the case in California, Colorado, and New York.
The Open Enrollment Period
The best time to get health insurance is during the open enrollment period. Running from November 1, 2016, through January 31, 2017, the open enrollment period for the 2017 calendar year provides a great opportunity to visit a state exchange and get insured.
State Exchanges Extensions and Special Enrollments
State exchanges have authority to extend the open enrollment period. In the past, they have extended enrollment to account for storms, and floods, and other natural events that interfered with enrollments. They had also extended the time when high demand clogged the online systems.
The other type of enrollment requires a change in status. The life events qualify to create special enrollment periods.
The following life events are recognized by state exchanges as qualifying status changes for a new 60-day window to signup for insurance.
- Pregnancy( in New York State only)
- Loss of coverage as dependent at age 26
The Powers of the State Exchange
The state exchanges had the powers of the federal marketplace to authorize tax credits into premium payments and to provide cost assistance to qualified applicants. These exclusive powers separate the exchanges from the general public marketplace.
People can shop outside of the exchanges, but they can only get federal financial help from the state and federal exchanges.
Premium tax credits help reduce the monthly premium. These are the individual’s tax benefits applied to monthly costs.
Costs Reduction Assistance is a program operated by the exchanges to reduce the impact of out-of-pocket expenses. It lowers the consumer share of costs, and the amount needed to get total insurance payment for benefits.
Health Savings Accounts are valuable additions to health insurance.
Paired with High Deductible Health Plans, Health Savings Accounts allow beneficiaries to save pre-tax funds to pay health costs. They can save and spend up to $3,400 per year for an individual and $6,750 per family.
The rules allow an extra $1,000 for individuals and families over age 55. Unused funds roll over to the next year and eventually can become declared income. The income generated by the HSA is tax-free income.
Insurance Regulation Powers
States have the power to create or deny the right to operate an insurance business. Their regulatory powers over insurance companies are deep and encompass nearly very part of the operations. The states have institutional expertise in insurance regulation.
If they wish to be active purchasers, then they can bring these powers and assets to bear upon the opportunity to provide high-quality insurance at the lowest feasible prices and in a competitive business environment for health insurance providers.
The Active Purchaser
The state or federal government can choose to use its regulatory and other powers to influence the content of health insurance plans. They can set goals to improve the content and lower the prices of services in the plans sold on their exchanges.
States have more leverage; they are the legal source of authority to operate an insurance business within its boundaries.
The active purchase role may be the future of the federal government.
Its proposed rules expand the range of its activities. History has shown, the active purchaser can achieve the below-listed impacts.
- Drive down costs and prices
- Add services at no additional costs
- Sharpen estimates of future medical care costs
The Health Insurance Plan Clearinghouse Role
The states and the federal government have a duty to enforce the regulations from the Centers for Medicare and Medicaid that interpret the Affordable Care Act.
The regulations define the minimum essential coverage for qualified health insurance plans. They define the essential benefits and the limits on deductibles and out-of-pocket expenses that plans must have.
The Clearinghouse ensures compliance with the rules. The federal government and most states did not get involved in the details of the plans they offered on their respective health insurance exchanges.
Referrals to Medicaid and the CHIP
States operate Medicaid and CHIP in conjunction with the Centers for Medicare and Medicaid. The exchanges have the ideal position to connect people with the resources they need.
Understanding the State Insurance Exchange
A state health insurance exchange is an organization that provides a portal for reviewing and buying qualified health insurance. It has authority from the state government as well as the Affordable Care Act. It has oversight over policies and plans, and the power to make tax credits available. It can apply financial assistance features to help beneficiaries get and keep health insurance coverage. It manages a calendar of events that include open enrollment, extensions, exemptions, and special enrollment periods.
Comparison shopping is the ideal method for finding the best match of health insurance with personal or family needs.
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