Q: What are health insurance exchanges?
A: Exchanges are health insurance marketplaces. They allow individuals and small businesses without health insurance to purchase coverage. Each state will decide whether to operate its own marketplace, default to the federal marketplace, or operate a hybrid marketplace in partnership with the federal government. Private insurers will offer health coverage through the marketplaces. Individuals and small businesses will be able to compare prices and services to select the plan that's right for them.
The marketplaces will also help people with the enrollment process. They can help people enroll in private insurance, Medicare, and low-income insurance programs, such as Medicaid or the Children's Health Insurance Program (CHIP). In addition, the marketplaces will help people find out if they qualify for financial assistance, such as tax credits or subsidies.
Q: Do I have to buy my insurance through an exchange (marketplace)?
A: No. You can continue to buy insurance through your employer or through an agent or broker outside the marketplace. However, federal subsidies will be available only for plans sold through the marketplace. Therefore, you must buy health insurance through a marketplace if you need financial assistance.
Q: When does open enrollment occur for the health insurance exchanges?
A: Open enrollment starts on October 1, 2013, and closes on March 31, 2014. Insurance coverage you buy through a marketplace takes effect as early as January 1, 2014. Check your state marketplace for changes or updates to specific dates and other information about open enrollment. You can use the government’s state marketplace finder or the Kaiser Family Foundation’s state health insurance marketplace finder.
Q: Why does the law require me to purchase health insurance coverage?
A: One goal of the Affordable Care Act, also known as “Obamacare,” is to provide affordable health insurance for everyone. Currently, many young, healthy people choose not to buy health insurance. But for the health insurance marketplaces to work, everyone needs to buy insurance, even if they're healthy. This spreads out healthcare costs. Buying healthcare insurance also provides coverage should you develop a disease or sustain a serious injury.
Under the Affordable Care Act, people who choose not to buy healthcare insurance will pay a penalty fine. Income information on your federal tax return will determine the penalty amount you must pay.
Q: Do I have to give up my current coverage?
A: No. Your current health insurance coverage is "qualified coverage" if it was in effect as of March 23, 2010. Qualified coverage means it meets the individual mandate.
Q: If I have insurance through my employer, can I switch to a policy purchased through my state's health insurance exchange?
A: Large employers — those with 50 or more employees — continue to play a central role in providing health benefits under the Affordable Care Act. These employers must offer health benefits to their full-time employees. Full-time employees are those working at least 30 hours per week.
Employees can opt out of their employers' health insurance if it is too expensive or is inadequate. A plan is inadequate if it does not cover at least 60% of an employee's healthcare expenses. A plan is too expensive if premiums exceed 9.5% of the employee’s household annual income. These employees qualify for federal healthcare assistance. The employer has to pay a $3,000 fine for every employee who opts out, which provides incentive to meet these requirements.
Employees may decline their employers’ health coverage even if it is affordable and adequate. If you choose to waive this coverage, you will pay a penalty if you do not find coverage under another qualified plan. Qualified plans could include a spouse’s plan or a plan you buy through a health insurance marketplace. However, you will not qualify for any financial assistance and your employer will not pay a fine.