How Would an Insurance Exchange Work?
One of the key parts of health care reform was the establishment of health insurance exchanges, which states would have to set up by 2014, the year in which most of the law’s provisions go into effect.
The exchange is intended to create a more organized and competitive market by establishing standard levels of health insurance plans – labeled platinum, gold, silver and bronze – according to federal rules. With plans offering required benefits, they could be compared with each other. An exchange is supposed to encourage lower prices through retail competition and make it easier for individuals and small groups to shop for insurance. It also makes the coverage portable, because a policy sold through the exchange would not be tied to employment.
Those who can shop in the exchanges are:
- Workers at companies with fewer than 100 employees
- Workers at companies that do not provide health insurance
- People who are self-employed
- People who are unemployed
- Retirees who are not eligible for Medicare.
- Small businesses
- Medium-size and large businesses, after 2017
Exchanges are required to make certain that policies are “in the interest” of buyers. The exchanges cannot set premiums, but they can reject plans if companies cannot successfully justify rate increases. By 2014, companies will not be able to discriminate against those with pre-existing conditions.
If a state opts out entirely, the federal government would be able to set up an exchange.
The legal and tax information contained in these articles is merely a summary of our understanding and interpretation of some current provisions of tax law and is not exhaustive. Consult your legal or tax advisor for advice concerning your particular circumstances.
