Given the option, most people would prefer to have their employer provide group health insurance coverage. But, if this is not an option for you, it is still important for you to seek coverage. You may be pleasantly surprised with the variety and affordability of the individual and family health insurance options available. You may also be eligible for a government subsidy through the State and Federal marketplaces.

The Affordable Care Act helps increase the access to health care.

Health insurance exchanges will be an important part of that.

Most people get health insurance through their employers. But people without this option will now be able to shop for health insurance on exchanges, as an alternative to buying coverage directly from individual health insurers.

So what are exchanges? How do they work? How will things change? And why is this important?

Let’s talk about it!

Think of an exchange as an online marketplace.

It’s a website where shoppers can research all their options and then buy health insurance.

There are different types of exchanges… first let’s talk about a public exchange.

The Affordable Care Act requires every state to offer an exchange to its residents.

States have a few options:

• A state can choose to create and run its own exchange.
• If a state decides not to run its own exchange, residents of that state can shop on an exchange that will be run by the federal government.
• Or a state can partner with the federal government. In a partnership model, the state and federal government share responsibility for operating that state’s exchange.

No matter what each state decides to do, an Exchange will be available to residents in every state.

Public exchanges will exist for both individuals, who are buying insurance for themselves, and for small group employers, who can buy insurance to offer to their employees. The small group exchange is called SHOP – short for Small Business Health Options Program.

Why are exchanges so popular?

The Affordable Care Act no longer allows insurers to deny coverage or charge people more based on their health status or pre-existing conditions. So, many people who were unable to buy coverage in the past will now start shopping for a health plan.

The Affordable Care Act will provide tax credits and subsidies for individuals who qualify, to help make insurance more affordable, when they shop on a public exchange.

Many individuals who shop on exchanges will be new to health insurance.

To help make shopping easier, health plans on a public exchange will be labeled platinum, gold, silver or bronze. The metallic level helps shoppers understand the level of coverage a plan offers – how much they will need to pay and what the plan pays.

Platinum plans will have the lowest out of pocket cost for members but the monthly premiums will generally be higher. Bronze plans, on the other hand, will have the highest out of pocket costs for members, but will typically feature lower monthly premiums.

All plans on an exchange have to offer some core benefits – called “essential health benefits” - like preventive and wellness services, prescription drugs, and coverage for hospital stays.

Public exchanges are designed to help shoppers choose a plan that fits their needs and their budget.

So that’s the public exchange – offered by the government – either state or federal, or both. 

There are also private exchanges. Private exchanges are not part of the Affordable Care Act. They are created by private sector companies – for example, by a health insurance company or a brokerage or consulting firm.

Like public exchanges, private exchanges can sell to both individuals and employer groups.

For employers who are trying to keep the cost of offering health benefits manageable, private exchanges offer an interesting solution. Employers can give their employees a set amount of money and then direct them to a private exchange. There, they can shop for a health plan and other benefits, like dental, based on what the employer has selected as options.

Public and private exchanges are likely to appeal to different audiences. Individuals who do not have access to affordable health insurance today are more likely to shop on a public exchange because of the subsidies, which are not available through private exchanges. Employers are more likely to send their employees to a private exchange. And both individuals and small employers will still be able to shop for coverage as they do today, directly from health insurers.

So to highlight a few key messages about exchanges:

• Exchanges give people additional access and more opportunity to buy insurance. 
• A public exchange may be run by the state or federal government, or by the state and federal government working together.
• Every state will have a public exchange available to its residents.
• Subsidies and tax credits will help make insurance affordable for many individuals who shop on the public exchanges.
• Small group employers can buy and offer insurance through an exchange, as well.
• Private exchanges are not run by the government but by a private sector company, like a health plan or a consulting firm.
• These exist today, but they will become more popular as employers look for new ways to offer affordable benefits to their employees.
• One thing is certain: Exchanges are going to change the way millions of Americans view their health insurance – whether it’s how they shop for a plan, what plan they decide to buy or how they use their benefits.

Here at Baron & Associates, we’re ready to do our part to help make health care easy to shop for, to understand, and to use.