Health Insurance Marketplace, a.k.a. Exchange

Health Insurance Marketplace, a.k.a. Exchange

The Affordable Care Act establishes an online Health Insurance Marketplace also known as an exchange to be operated by either the federal or state government.  The purpose of the exchange is to provide an organized marketplace to find and compare private health insurance options for individuals and small groups.  

 ·         Individual and Small Group plans offered through a government or public exchange (as opposed to private exchanges) must be Qualified Health Plans (QHPs) and will satisfy the requirement that individuals have minimum essential coverage or pay a tax penalty,

o    and must include minimum essential health benefits

o   and fall into “metal” levels

 ·         Bronze – 60% actuarial value

 ·         Silver – 70% actuarial value

 ·         Gold – 80% actuarial value

 ·         Platinum – 90% actuarial value

 ·        Catastrophic – limited to young and those without affordable options in the market

 ·         Initial open enrollment begins October 1, 2013 for coverage starting as early as January 1, 2014.

 ·         Individuals enrolling for coverage on the exchange may qualify for a premium tax credit which can lower their monthly premium.

 o   If the individual’s household income for the taxable year is between 100% and 400% of the federal poverty line (FPL)

 o   If the individual purchasing coverage has no other “affordable” coverage which meets minimum value.

 o   If the employee’s cost for single coverage of the employer plan is more than 9.5% of the household income

 ·         Individuals who qualify would also apply for Medicaid through the Exchange.

 o   Kentucky is expanding the Medicaid Program to include individuals who are under age 65 with incomes up to 138% of the FPL ($34,038 for a family of 3 in 2012).

If an individual purchases a health plan through the Exchange instead of accepting health coverage offered by their employer, then they may lose the employer contribution.  Also the employer and employee contribution for the employer’s plan is often excluded from income for Federal and State income tax purposes and this tax advantage typically does not extend to individual purchases of health insurance.