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Health Insurance Exchanges under the ACA
Practical Law Legal Update 3-522-3452 (Approx. 3 pages)
Health Insurance Exchanges under the ACA
by PLC Employee Benefits & Executive Compensation
| Published on 13 Nov 2012 • USA (National/Federal) |
An overview of key aspects of the health insurance exchanges required under the Affordable Care Act (ACA), including an employer notice requirement that becomes effective March 1, 2013.
Extensions of State Exchange Deadlines
In addition to the blueprint application deadline for state-based exchanges, the HHS letter to governors also impacted the deadlines for state partnership exchanges, a second kind of exchange under which a state partners with HHS and operates some, but not all, of the exchange activities. The HHS letter extends the deadline for both declaration letters and blueprint applications involving state partnership exchanges to February 15, 2013.
In general, the state exchanges must be operational by January 1, 2014. An exchange is a marketplace through which low- and middle-income individuals and certain employers can purchase health insurance. To ensure that individuals and families obtain comprehensive health care coverage, all health plans sold through an exchange must meet minimum benefit and eligibility standards.
Given the outcome of the November elections, many employers that currently offer fully insured and self-insured health insurance coverage to their employees may be considering whether to continue offering this coverage once the exchanges become operational in 2014. This feature outlines several key aspects of the exchanges, including an employer notice requirement that goes into effect in less than four months.
Purpose of an Exchange
The exchanges are intended to serve as a marketplace for the sale of health insurance to health care consumers. Initially, an exchange is intended to service:
- Employees of small employers, generally defined as employers who employ at least one but not more than 100 employees.
- Individuals and families in the individual market.
For more information, see Practice Note, The Health Insurance Exchange and Related Requirements under the ACA.
Functions of an Exchange
An exchange must perform several functions, such as:
- Operating a toll-free telephone hotline to respond to requests for assistance.
- Creating and maintaining a website.
- Assigning price and quality ratings to plans, using a rating system to be developed by HHS.
- Determining Medicaid eligibility and eligibility for the State Children's Health Insurance Program (SCHIP) and enrolling eligible individuals and families in these public programs.
Qualified Health Plans Offered Through an Exchange
The only type of health plan that may be offered through an exchange is health insurance coverage that has been certified as a qualified health plan (QHP). A QHP is a health plan that:
- Has been certified by the exchange.
- Includes the essential health benefits package.
- Is offered by certain licensed health insurers.
To be certified as a QHP, the plan must meet criteria set out in the Affordable Care Act (ACA) and established by the Secretary of HHS in implementing regulations.
Employer Notice of Exchanges (Effective March 1, 2013)
Employers must provide all employees a written notice describing certain aspects of an exchange. The notice requirement must be provided to:
- Current employees by March 1, 2013.
- New employees hired on or after March 1, 2013, on their hire date.
Information that must be provided in the notice includes:
- A description of the services provided by the exchange.
- How the employee can contact the exchange for help.
The government is expected to issue implementing regulations and a model notice for the notice, but this guidance has not been provided to date.