Understanding the Fundamentals of Health Insurance Exchanges

Not too long ago, there was a big debate about whether the federal government should be involved in private health care coverage. Nowadays, the discussion has shifted to how health care coverage should be mandated for everyone. One of the key issues is the creation of health insurance exchanges.

These exchanges are designed to help people without insurance find and choose the right health plan. Here’s what you need to know about health insurance exchanges, how they work, and how to use them to pick a health care plan.

### Understanding Health Insurance Exchanges

First off, if you ever see “HIX” mentioned online, it stands for Health Insurance Exchange. A HIX is a marketplace specifically for health care plans aimed at individuals without coverage and small businesses with up to 100 employees.

Whether employees at larger companies will eventually use these exchanges is still uncertain. For those pursuing a master’s degree in public health, this could be an important policy issue for your career.

### When Health Insurance Exchanges Start

Health insurance exchanges began with the Patient Protection and Affordable Care Act (PPACA) signed by President Obama in March 2010. The law mandates that starting January 1, 2014, all states must offer a selection of health plans to residents needing to buy their own insurance. States can comply by:

1. Creating their own health insurance exchange,
2. Partnering with the federal government,
3. Letting the federal government run the exchange for them.

### Types of Health Insurance Exchanges

There are three types of health insurance exchanges:

1. **State Exchange**: Some states set up their own exchanges (deadline was December 14, 2012).
2. **State-Federal Partnership**: Some states opted for a partnership with the federal government (deadline was February 15, 2013).
3. **Federal-run**: States that didn’t select either of the above options have exchanges run by the federal government.

### Levels of Health Insurance Plans

A common question is, “What types of health plans are available and what do they cover?” There are four basic plan levels and one catastrophic plan with specific eligibility. All plans include essential health benefits like emergency care, hospital care, maternity care, prescription drugs, pediatric care, and laboratory work. The main difference is the cost coverage:

– **Bronze Level**: Covers 60% of service costs.
– **Silver Level**: Covers 70% of service costs.
– **Gold Level**: Covers 80% of service costs.
– **Platinum Level**: Covers 90% of service costs.
– **Catastrophic Plan**: Available only for individuals under 30 or those exempt from other plans.

### Affording Mandatory Health Insurance

Another big concern is, “What if I can’t afford the premiums?” Fortunately, those earning between 133% and 400% of the federal poverty level might be eligible for subsidies to help with costs.

While some details are still being ironed out for a smooth rollout in 2014, these basics should help you start choosing and budgeting for the right health care plan.