As part of the Affordable Care Act (ACA), health insurance coverage for individuals will become available through new individual health insurance marketplaces (also called "exchanges"). Outlined here are four (4) key facts for individuals, businesses, and insurance professionals about how the individual health insurance marketplaces will work.
Each state's individual health insurance marketplace opened October 1, 2013 with coverage beginning January 1, 2014.
Here's an outline of how the individual health insurance marketplaces work.
Step 1: Individual goes to his or her state's individual health insurance marketplace website (look up a state's marketplace website here).
Step 2: Individual completes 1 of 2 applications:
Applicants only need to fill out one application. See sample Marketplace applications here.
Step 3: Individual health insurance marketplace displays all available plan options within metallic tiers with displayed cost factoring in tax credit. All plans are guaranteed-issue, and portable (meaning the policy is not tied to employment).
Step 4: Individual selects plan.
Step 5: Individual health insurance marketplace bills individual for his or her portion of premium (i.e. the total premium minus tax credit) and marketplace forwards payment to the carrier.
The plans offered through the individual health insurance marketplace are guaranteed issue (cannot be denied because of pre-existing condition). But, there's a catch. Consumers can only enroll in guaranteed issue health insurance during designated enrollment periods.
Open Enrollment 2015: November 15, 2014 to February 15, 2015
Why Enrollment Periods? The enrollment periods ensure that individuals and families don’t wait until they get sick to enroll in coverage.
*Outside of the open enrollment period, individuals can enroll in or change from one plan to another as a result of the following triggering events:
Unless specifically stated otherwise, an individual or enrollee has 60 days from the date of a triggering event to select a plan.
All individual plans sold on the individual health insurance marketplaces must meet the federal ACA definition of a Qualified Health Plan (QHP). The plans will be offered by level of coverage for essential health benefits (EHB), to allow consumers to compare plans on an "apples to apples" basis.
The four metallic levels are: Bronze (plan pays 60%), Silver (plan pays 70%), Gold (plan pays 80%) and Platinum (plan pays 90%).
Last, but certainly not least, massive tax credits will be available for households earning up to 400% of the Federal Poverty Line (FPL)... the majority of Americans. A key fact is that individuals can only access the premium tax credits through the individual health insurance marketplace. Here are the 2014 FPL guidelines by household size, and the premium range after federal tax credits:
Source: Affordable Care Act 101 Guide