A Walk Down the Health Insurance Exchange Lane

Let’s take a closer look at how to apply for coverage through the new health insurance exchange.  As mandated by the Patient Protection and Affordable Care Act (PPACA or ACA), each state is required to have a Health Insurance Exchange (or Marketplace) operational by October 1, 2013.  This Exchange will be an on-line tool that will assist legal Americans in finding, comparing, qualifying for tax premium credits, and possibly purchasing health insurance.

I stress the word possibly because you are not required to purchase health insurance through an Exchange.  The ACA mandates that you HAVE insurance by 2014 but not HOW you get it.  I want to make this clear — you can purchase insurance through your state’s Exchange OR you can purchase it on the open market.  Either way is acceptable just as long as you have it.

Through a Health Insurance Exchange, low- to moderate-income individuals and families may qualify for free health insurance or for premium tax credits that will help make health insurance coverage more affordable.  Premium tax credits will be determined on a sliding scale based on your income and the federal poverty level rate.  The Exchange is to provide individuals at the lower end of the income scale with more financial help.

Now, let’s see if you qualify for a premium tax credit.  First, answer this question – do you receive or can you receive affordable employer-sponsored health insurance, Medicaid or Medicare?  If yes, you won’t qualify for premium tax credits and purchasing through an Exchange would be just like purchasing through the open market. 

If no, then your next step is to complete an application.  This multi-page, lengthy form will capture your total family income and the number of family members you need insurance for.  Note, the application process is supposed to provide instantaneous results on your qualification state IF you complete it online.  However, should you choose to print and mail your application to your state’s Health Insurance Exchange Office, expect to wait 1-2 weeks for an answer.  The Exchange, via your application, will then verify both who you are through the Department of Homeland Security, and your income data through the IRS.  Once the application process has been completed and you have been found eligible for premium tax credits, you will then be able to purchase your health insurance through the Exchange with your premium costs offset by the tax credit. 

You will then be provided with a list of insurance programs that you qualify for based on your application.  Now you get to select your plan.  Standardized benefit plans will be offered through the Exchange and you will be able to make side-by-side comparisons of the plans to determine which one best suits your needs.    (For more information, refer back to our blog on the Four Metallic Plans.)

States are in the process of developing on-line calculators to assist you in better understanding how your income, your family size, and your age will affect your insurance premiums.    The State of California has one that makes it easy to see how the numbers change based on your inputs.  The website is:  http://www.coveredca.com/resources/calculating-the-cost/

But wait!  You didn’t qualify for a tax credit through the Exchange because of your income level.  Not to worry.  Not everyone will….and that’s not a bad thing.  You can still purchase your health insurance through the open-market.  (The open-market is where you can purchase your insurance through an insurance agent or broker or directly from the insurance carrier.)  Actually, that goes for anyone who qualifies to purchase health insurance through the Exchange as well.  Make sure you COMPARE all the different plans available to you – open-market plans and Exchange plans.  You may find that an open-market plan better fits your needs than a tax-credit standard plan available to you through the Exchange.  PLUS, the application process is shorter and a lot less complicated.  I keep stressing this – compare, compare, compare BEFORE signing on the dotted line.  

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