What the heck is a health insurance exchange?

(from BenefitsPro)

Most consumers have never heard of the state-based health care exchanges

June 1, 2012 • Reprints

Perhaps the lynchpin offering of President Obama’s health care reform legislation is the ability for consumers to buy subsidized health care policies in a competitive health insurance exchange.

Although they’re not required to be fully operational until 2014, many states have taken advantage of federal funding to begin work on these exchanges. But if you’re an average consumer, you wouldn’t know it. And if you don’t know what they are, how would you know that you might be eligible for a tax credit to help pay for premiums?

78 percent of consumers who would be eligible for new health care coverage under the Patient Protection and Affordable Care Act have never heard of the state-based health care exchanges where they will have to shop for coverage beginning in 2014. In addition, 60 percent of respondents said they believe they will need help in understanding health care insurance terms and descriptions and navigating the complex health care system.

CVS Caremark polled more than 1,000 consumers, 70 percent of whom did not have health insurance, and 30 percent were covered by individual policies. The survey found 78 percent of consumers who would be eligible for new health care coverage under the Patient Protection and Affordable Care Act have never heard of the state-based health care exchanges. In addition, 60 percent of respondents said they believe they will need help in understanding health care insurance terms and descriptions and navigating the complex health care system.

“Despite all the news coverage about health care reform, these survey results clearly show that consumers are confused about the potential changes to our health care system,” says Helena Foulkes, CVS Caremark executive vice president and chief health care strategy and marketing officer. “While awareness of the new law may grow over the next year as new services are put in place, consumers need help understanding the coming changes and support on how to sign up and participate in the exchanges.”

The research found respondents believe doctors are the most credible source for talking about exchanges, followed by pharmacists, nurse practitioners and independent insurance consultants.

7 things to know about health insurance exchanges:

1. Health insurance exchanges are primarily targeted to individuals and small businesses. They are required to be operational in every state by 2014.

2. People with incomes between 133 percent and 400 percent of poverty who purchase coverage through a health insurance exchange are eligible for a tax credit to reduce the cost of coverage. People eligible for public coverage and people offered coverage through an employer are not eligible for premium tax credits unless the employer plan does not have an actuarial value of at least 60 percent or unless the person’s share of the premium for employer-sponsored insurance exceeds 9.5 percent of income. (source: Kaiser Family Foundation)

3. Health plans offered in the exchange are guaranteed issue, meaning insurers will not be permitted to refuse to insure any individuals.

4. Plans will be offered in four comparable tiers ranging from bronze to platinum with limited out of pocket expenses.

5. There are no lifetime or annual limits for exchange health plans.

6. Out of pocket expenses are capped at $5,950 for individuals and $11,900 for families.

7. All health plans must offer what are called “essential health benefits,” a set of health care service categories that must be covered.

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