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Federal Health Insurance Exchange Guidelines Released

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Federal Health Insurance Exchange Guidelines Released

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Federal guidelines recently released for state health care exchanges have brought the states needed guidelines in developing their health insurance marketplaces.

The U.S. Department of Health and Human Services released proposed guidelines for the exchanges, where individuals and small businesses will be able to shop for health insurance beginning in 2014. According to the Congressional Budget Office, about 9 million Americans are expected to purchase insurance through the exchange in its first year of existence. That number is expected to grow to roughly 24 million by 2021.

The exchanges are part of the Affordable Care Act sweeping package of federal health care reform passed last year. Earlier this month, Connecticut's Governor Daniel Malloy signed legislation that lays out the structure for Connecticut's exchange. The state has recently applied for about $6 million in grant money to help set up its exchange, said Jeannette DeJesus , Malloy's special adviser on health care reform and head of the state's new Office of Health Reform and Innovation. Connecticut already received about $1 million in federal money to aid in planning its exchange.

The proposed federal guidelines allow each state to structure its exchange in its own way: as a nonprofit entity established by the state, as an independent public agency or as part of an existing state agency. A state can also choose to operate its exchange in partnership with other states through a regional exchange, or it can operate subsidiary exchanges that cover specific geographical areas within the state. The guidelines allow states the ability to have a lot of freedom in choosing the number and type of health plans offered through the exchange.

AHIP's Reaction to Proposed Rules

"All health plans offering coverage in the new exchanges will be required to meet new quality and performance standards," Karen Ignagni said in a statement released by AHIP. "To enhance competition and preserve consumer choice, all health plans that meet these new standards should be allowed to offer coverage in the exchanges. Exchanges should be developed with input from all stakeholders to ensure they are able to provide individuals, families, and small businesses with the most accurate and up-to-date information about all of their coverage options."

“Exchanges can supplement existing channels for purchasing coverage but should not be consumers’ sole option for obtaining health care coverage. The establishment of exchanges should not cause consumers to lose their current coverage if they are satisfied with it," Ignagni continued.

Even under these relatively loose standards, however, there are some requirements. For instance, the marketplaces must post cost and quality information about the different plans online, allowing consumers to compare. Also, all plans offered through exchanges have to be certified as qualified health plans, meaning they meet basic standards.

In Connecticut, the recently passed legislation establishes the state's exchange as a quasi-public agency overseen by a board of 14 members, 11 of whom have voting privileges. While the federal guidelines permit insurers to hold seats on exchange oversight boards, Connecticut doesn't allow anyone currently employed by insurers to sit on its board. These protections caused at least one health care reform advocate to applaud Connecticut's legislation.

Exchange plans are supposed to be approved by HHS no later than Jan. 1, 2013. However, there will be some leniency for states that have made progress in establishing their exchanges, but aren't completely ready by the deadline. These states can be granted conditional approval. The public has 75 days to comment on the proposed rules. Final guidelines are expected later this year.

States also have discretion to allow businesses with more than 100 employees to purchase coverage in the Exchanges beginning in 2017. In addition, states may opt to allow the federal government to establish an Exchange in their state rather than implement their own.

The ACA specifically requires all new policies (except stand-alone dental, vision, and long-term care insurance plans), including those offered through the Exchanges and those offered outside of the Exchanges, to comply with one of the four benefit categories. Existing individual and employer-sponsored plans that achieve Grandfather Status do not have to meet the new benefit standards. This provision becomes effective January 1, 2014 at the same time the Exchanges become operational.

Benefit Mandates (also effective Jan. 1, 2014):

  • Limit deductibles for health plans in the small group market to $2,000 for individuals and $4,000 for families unless contributions are offered that offset deductible amounts above these limits. This deductible limit will not affect the actuarial value of any plans.
  • Limit any waiting periods for coverage to 90 days.
  • Allow states the option of merging the individual and small group markets.
  • Create an essential health benefits package that provides a comprehensive set of services, covers at least 60% of the actuarial value of the covered benefits, limits annual cost-sharing to the current law HSA limits ($5,950/individual and $11,900/family in 2010), and is not more extensive than the typical employer plan.
  • Require all qualified health benefits plans, including those offered through the Exchanges and those offered in the individual and small group markets outside the Exchanges, except grandfathered individual and employer-sponsored plans, to offer at least the essential health benefits package.
  • The states are also required in the individual and small group markets (including the Exchnages) to offer four distinct benefit tiers that cover at least 90%, 80%, 70%, and 60% respectively of the actuarial value of the covered benefits similar to what is listed above in describing the essential benefits package.

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