Beginning in 2014, each state is required to create an exchange (a governmental agency or nonprofit organization, established by the state) to facilitate the sale of qualified health plans (QHPs), including federally administered multistate plans and nonprofit cooperative plans. The law requires HHS to create an exchange in states that do not set up their own exchanges. However, the Patient Protection and Affordable Care Act (PPACA) does not provide the federal government with adequate funding to set up or operate federal health insurance exchanges.
States can create either one exchange to serve both small group and individual markets or separate exchanges for these pools. One goal is to facilitate a comparison of available health insurance options by purchasers. Standards for qualified coverage must include:
2. Are there any operating state exchanges?
Massachusetts and Utah have operating exchanges, but neither one has produced lower costs. Massachusetts has some of highest insurance rates in the United States, and Utah’s exchange rates are higher than purchasing outside the exchange.
3. What are the functions of the state health insurance exchanges?
The exchange functions and responsibilitiesinclude the following:
5. What are the primary federal requirements for state exchanges?
Only lawful U.S. residents may obtain coverage in an exchange. Exchanges must comply with federal regulatory standards in the following areas:
6. What is a Qualified Health Plan (QHP)?
A qualified health plan (QHP) is health insurance certified by a state Exchange that offers “essential health benefits.” A QHP must be offered by an insurer that:
(1) Is licensed and in good standing to offer health insurance coverage in each state in which it offers health coverage;
7. How are state health insurance exchanges regulated?
PPACA includes two federal requirements for state health insurance exchanges:
- Minimum functions that Exchanges must perform directly or by contract, and
- Oversight responsibilities Exchanges must exercise in certifying and monitoring the performance of Health Plans.
Plans participating in the exchanges also must comply with state insurance laws and federal requirements in the Public Health Service Act.
8. How should states set up health insurance exchanges?
The U.S. Department of Health and Human Services (HHS) issued final regulations that provide a framework to assist states in building health insurance exchanges, state-based competitive marketplaces authorized by the 2010 federal health care reform law. These rules set minimum standards for exchanges and give states some flexibility to design the exchanges to fit their insurance markets, subject to HHS approval. The regulations propose rules and guidance on how to structure the exchanges in two areas:
- Setting standards for establishing exchanges, setting up a Small Business Health Options Program (SHOP) , performing the basic functions of an exchange, and certifying health plans for participation in an exchange; and
- Ensuring premium stability for the exchanges, especially in the first three years.
According to HHS, forty-eight states and the District of Columbia have been awarded grants to help plan and operate exchanges. However, by August 2012, only approximately 30 percent of the states had taken action beyond receiving a planning grant, such as passing legislation or taking administrative action, to begin creating exchanges.
9. What is the Employer Exchange Notice requirement?
The 2010 health reform law amends the Fair Labor Standards Act (FLSA) to require that employers provide all new hires and current employees with a written notice (Employer Exchange Notice) about the exchange and some of the consequences if an employee decides to purchase a qualified health plan through the exchange in lieu of employer-sponsored coverage. Regulations implementing the Employer Exchange Notice requirement will be issued and enforced by the Department of Labor.
The Employer Exchange Notice requirement was effective on March 1, 2013. Employees hired on or after the effective date must be provided with the notice when they are hired. All employees already employed on the effective date must be provided with the notice no later than the effective date (i.e., no later than March 1, 2013).
10. What is the role of health insurance brokers or agents in the state health insurance exchanges?
The final regulation contains welcome news for agents and brokers of health insurance. HHS, in the final regulation, permits states to allow an agent or broker to enroll individuals, employers or employees in qualified health plans (QHPs), in a manner that constitutes “enrollment through the exchange,” on their own website. It is up to each state to determine whether its exchange can list approved insurance agents and brokers. [However, navigators need not be agents or brokers.] An individual can be enrolled in a QHP through an exchange with the assistance of an agent or broker only if the agent or broker ensures that the individual receives an eligibility determination through the state’s Exchange website.