About Us Exchanges

 

What is a Health Insurance Exchange?

A Health Insurance Exchange will be a new marketplace where consumers will be able to purchase health insurance. The Affordable Care Act authorizes each state to create its own Exchange in 2014. The law provides for two types of Exchanges: The “American Health Benefits Exchange” for individuals and the "Small Business Health Options (SHOP) Exchange" for small employers. Each state may operate both Exchanges separately, operate one combined Exchange for both individuals and small groups, or decline to operate its own Exchange altogether. Consumers in states that do not have their own Exchange will still be able to purchase coverage, known as a “Qualified Health Plan,” through a federally facilitated Exchange.

What is a Qualified Health Plan?

A Qualified Health Plan (QHP) is a health insurance plan that has been certified by an Exchange as meeting a set of minimum standards. The QHP certification is required before a plan can be sold to consumers through the Exchange. Certification requires that a plan:

  • Meet marketing requirements that do not discourage enrollment in the plan by individuals with significant health needs;
  • Ensure a sufficient choice of health care providers for enrollees;
  • Include in the plan network essential community providers, where available, that serve low-income and medically underserved individuals;
  • Be accredited on clinical quality measures and consumer assessment surveys;
  • Implement a quality-improvement strategy;
  • Utilize a uniform enrollment form;
  • Present benefits and plan options in a standardized format; and
  • Meet other applicable quality and reporting requirements.

In addition, all QHPs must provide coverage for the "Essential Health Benefits" package, and can only be sold by an insurer who:

  • Is licensed in the relevant state;
  • Agrees to offer at least one QHP in both "Silver" and "Gold" coverage levels; and
  • Agrees to charge the same rate for the plan whether it is purchased through the Exchange or directly from the insurer.

What do Bronze, Silver, Gold, and Platinum mean? What are the "precious metals"?

Bronze, Silver, Gold, and Platinum (sometimes referred to as the "precious metals") are categories that the Exchange will use to label different QHPs. The labels are based on a standard known as "actuarial value," which refers to the average portion of eligible health care costs that a plan will cover. For example, a member with a plan that has an actuarial value of 80% would be responsible, on average, for 20% of covered health care costs. Because actuarial value is only an average, a member's actual costs may be higher or lower. The precious metals labels correspond to the following actuarial values:

  • Bronze: 60%+
  • Silver: 70%+
  • Gold: 80%+
  • Platinum: 90%+

What is a "Catastrophic Plan" and who can buy one?

A Catastrophic Plan is a Qualified Health Plan that does not meet the actuarial value standards of any precious metals category but still provides coverage for the Essential Health Benefits package. Only individuals under age 30 and individuals for whom other coverage has been deemed unaffordable may purchase a Catastrophic Plan.

What are "Essential Health Benefits"?

The Department of Health and Human Services has not published a complete list of all the benefits and services that will be included as "Essential Health Benefits" (EHB). The ACA does require the scope of these benefits to be based on the benefits in a "typical employer plan," and will include benefits in the following categories:

  • Ambulatory patient services
  • Emergency services
  • Hospitalization
  • Maternity and newborn care
  • Mental health and substance use disorder services, including behavioral health treatment
  • Prescription drugs
  • Rehabilitative and habilitative services and devices
  • Laboratory services
  • Preventive and wellness services and chronic disease management
  • Pediatric services, including oral and vision care

On December 16, 2011, the Center for Consumer Information and Insurance Oversight published a bulletin discussing the Federal Agencies’ flexible approach to the definition of Essential Health Benefits (click here to read the bulletin). The Center’s proposal would model the EHB package and benefits on an existing “reference” or “benchmark” health plan, most likely selected by each state, which also reflects the benefits offered by a “typical employer plan” in a given state. The benchmark plan design would then be supplemented as necessary to ensure coverage for each of the 10 categories listed above. A state that does not choose its own benchmark plan would default to the design of the most popular small employer plan in the state. Final regulations are still being developed and many details of the proposed approach to EHB have yet to be released. UPMC Health Plan continues to work closely with both state and federal regulators to ensure that all Pennsylvania consumers have a variety of competitive, comprehensive coverage options from which to choose.

Who can purchase coverage through the Exchange?

The law permits a "qualified individual" or a "qualified employer" to purchase coverage through the Exchange.

  • A "qualified individual" is a U.S. citizen or legal immigrant who is a resident of the state that established the Exchange and who is not incarcerated at the time of enrollment.
  • A "qualified employer" is a small employer that elects to make all of its full-time employees eligible for one or more QHPs offered through the Exchange. The ACA defines a small employer as having fewer than 100 employees, but a state may substitute a limit of 50 employees until January 1, 2016. In 2017, a state may expand the definition of "qualified employer" to include large employers.

Is there any financial assistance available for buying coverage through the Exchange?

Yes. First, the Exchange is required to provide a variety of tools — including a website, a toll-free hotline, and special consumer assistance agents known as "Navigators" — to help consumers determine whether they are eligible for any financial assistance. The Exchange is also required to tell consumers if they are eligible for coverage through a state's Medicaid or CHIP program.

The Exchange will provide two types of financial assistance for consumers whose household income is more than 100 percent but less than 400 percent of the Federal Poverty Level (FPL) for their family size. The FPL is updated annually and published by the U.S. Department of Health and Human Services. In 2011, the FPL for an individual and a family of four was $10,890 and $22,350, respectively.

  • Premium Assistance Credits are refundable tax credits that can be claimed at the time an individual purchases a QHP. Individuals with lower income will receive more generous credits to help them purchase coverage.
  • Cost-Sharing Subsidies are federal payments that reduce the out-of-pocket spending limits in an individual's "Silver" health plan by up to two-thirds. Individuals with lower income will receive more generous subsidies to help them afford the cost-sharing for covered benefits under their plan.

What if I don't want to buy coverage through the Exchange? Can I keep the health plan that I already have or buy a plan without using the Exchange?

While the Exchange is designed to offer a variety of affordable and robust coverage options, some individuals and employers may find that the coverage options in their state's Exchange are not quite right for them, that they like the plan they currently have, or that they simply prefer to purchase coverage elsewhere – through their producer, through an association, or directly from an issuer like UPMC Health Plan. The Exchange is designed to exist concurrently with the insurance markets that we have today, and, depending on how Pennsylvania sets up its Exchange, all of these purchasing options should still be available after the Exchange has been established.

Is Pennsylvania going to have its own Exchange?

In November 2011, Governor Tom Corbett’s administration announced that Pennsylvania will move forward with its own Health Insurance Exchange. UPMC Health Plan is working with its partners and talking with Pennsylvania lawmakers and regulators to support the operation of a well-balanced, competitive health insurance marketplace that provides all Pennsylvania consumers with a choice of affordable, high-quality health insurance options. Click here for information on Exchanges from the Pennsylvania Insurance Department.

Click here to read UPMC Health Plan’s public comments regarding Exchanges. These comments were shared with the Pennsylvania Insurance Department and other stakeholders in August 2011.