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FAQ: All About Health Insurance Exchanges And How To Shop For Coverage

Posted: October 11, 2013

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Shopping for health insurance is getting easier in some ways, and more confusing in others. Here's everything you need to know about how the new exchanges work.

This is one of several explainers to help consumers navigate their health insurance choices under the Affordable Care Act, or as some call it, Obamacare. Click here for answers to other common questions. Have a question we missed? Send it to health@npr.org. We may use it in a future on-air or online segment.


About The Exchanges

What is a health insurance exchange?

It's an online marketplace where individuals and small employers can shop for insurance coverage. Enrollment began Oct. 1 for policies that will go into effect on Jan. 1. The exchanges will also help people find out if they are eligible for federal subsidies to help cover the cost of coverage or if they are eligible for Medicaid, the federal-state health insurance program for the poor.

When can I shop at my exchange?

You can enroll until March 31, 2014, though you'll need to sign up and pay your first premium by Dec. 15 of this year if you want to be covered when the mandate to carry health insurance kicks in on Jan. 1. If you sign up and pay premium between Dec. 16 and Jan. 15, 2014 - coverage starts on February 1.

Jan. 16 - Feb. 15: coverage begins March 1.

Feb. 16 - March 15: coverage begins April 1

March 16 - 31: coverage begins May 1.

Generally, people will be able to enroll in or change plans once a year during an annual open enrollment period. This first year, that period is unusually longer in subsequent years the time period will be shorter, running from Oct. 15 to Dec. 7.

Do all states have exchanges?

Yes. Sixteen states and the District of Columbia are running their own exchanges and the federal government is setting them up in 27 states. In seven states, federal and state officials are partnering to run the exchanges. You can get information about the exchange at healthcare.gov, which has details on the federal exchanges and links to state-run exchanges.

Do I have to buy insurance on an exchange?

Some people do, but definitely not everyone. These exchanges are for two major groups of people: Those who don't have insurance now, and those who currently purchase their own insurance, meaning they don't get it through an employer.

If you have insurance at your job or through a public program like Medicare, Medicaid or the VA, you don't need to pay attention to the exchanges unless you lose that coverage for some reason. If you have insurance through your employer, you can shop for and buy insurance on an exchange if you like, but you probably won't qualify for a subsidy or tax credit. And you would lose the contribution your employer makes toward health insurance.

How does it work to shop for insurance from an exchange?

In theory, you can do it all or most of it online. You go to healthcare.gov or to your state-run exchange, if there is one, and create an account. You provide some basic information, like where you live and how old you are and you'll get a list of plans available in your area. If you provide income information, you'll be able to get an estimate of whether you'll eligible for federal help paying for insurance or whether you might qualify for Medicaid.

The exchange will offer a list of health plans and their premiums and out-of-pocket costs, including deductibles and co-payments. If you decide to buy one of those plans, in most cases, you will be directed to the insurer's Web site to make the payment. Some plans or insurance companies may require a phone call to set up payment. In some jurisdictions, consumers will make their first premium payment to the exchange and then further monthly payments to the insurer.

If your income makes you eligible for a tax credit subsidy, it will be applied upfront to the monthly premium payment. You won't have to wait until you file your taxes in 2015 to get the credit.

You can also fill out paper applications or apply over the phone.

What if I need help with signing up?

The federal government has set up call centers to answer questions from people in states with federal exchanges. That phone number is 1-800-318-2596. States running their own exchanges also have individual call centers.

Most states have also trained people called assisters and navigators who can walk people through the process, although in some states the training for them has been delayed. Contact information can be found on the exchange websites.


Who Shops At Exchanges

If my employer (or former employer, if I'm retired) offers me insurance, can I shop on the exchange to get a better deal?

Even if your employer offers coverage, you can opt to buy a plan on the exchange. However, you may not be eligible for a subsidy.

If I am buying coverage on my own, do I have to buy it on the exchange?

Consumers can shop for coverage on or off the exchange. However, subsidies for those who are eligible are generally available only for plans sold on the exchange.

Can I wait until I get sick to sign up for insurance?

No. You can't just sign up when you're sick and facing big medical bills. Otherwise that's what everyone would do. The exchanges under the Affordable Care Act have been designed pretty much the same way most employer insurance plans are: There's an open season every year when you can buy or change plans, and that's generally the only time you can buy or change plans.

I am on Medicare. Do I need to use an exchange?

No. Medicare is not part of the health insurance exchanges and Medigap policies are not being sold or subsidized through the exchanges. As a Medicare beneficiary, you can enroll at Medicare.gov to get the program's traditional drug coverage or a Medicare Advantage plan, where Medicare enrollees get coverage through private health insurance plans. The Medicare open season begins Oct. 15.

If I am sick and unable to work and have no income, can I get a plan on an exchange for free?

If you are disabled and have no income, you most likely won't be shopping for insurance on the exchanges. Rather, you may qualify for Medicaid. In most states, if you qualify to collect Supplemental Security Income, or SSI, you also qualify for Medicaid. For more information on Medicaid eligibility and links to your state's Medicaid office, click here.

What about federal workers?

Most federal workers will continue to get their health coverage through the Federal Employees Health Benefits Program and not be required to purchase coverage through the health law's marketplaces. Members of Congress and their personal staffs, however, will be required to buy health insurance through the exchanges.

I'm a U.S. citizen living abroad. Do I need to buy health insurance on an exchange?

No, if you live abroad for at least 330 days within a 12-month period, you are not subject to the mandate to have health insurance. Insurance bought on the exchanges generally wouldn't cover you while overseas anyway (neither does Medicare, by the way). You'll need to find insurance that will cover you in the country where you live. The State Department keeps this list of companies that provide international coverage. For country-specific information, look here.

What if I am an immigrant in the U.S. legally?

Legal immigrants are permitted to use the marketplaces — and may qualify for subsidies if their income is less than about $46,000 for an individual and $94,200 for a family of four. Legal immigrants may qualify for Medicaid if their income is low enough. The laws governing benefits to lawful immigrants are quite complex. The federal Department of Health and Human Services has a guide to Medicaid and other benefits for immigrants.

What if I am an undocumented immigrant?

Immigrants who are in the country illegally are barred from buying insurance on the exchanges.

Do small businesses have to shop at the exchanges to cover employees?

There are no requirements for employers with fewer than 50 workers to buy health insurance for their employees. Many small business do offer health care as a benefit, however, and for them, the insurance exchanges represent a new option for them in terms of where to shop.

Certain employers with fewer than 25 workers are eligible for federal tax credits. To qualify, the company has to cover at least half of the premium for all of its employees, and also have average wages of less than $50,000. For details on these tax credits, see this answer sheet from the IRS.


Costs And Subsidies

How much will insurance cost me on the exchange?

It depends on several factors, including your income, the state in which you live, your age, whether you smoke or not and your family size, among other factors. You could end up paying very little or nothing at all if your income falls within a certain range. If you do not qualify for a subsidy, coverage could be quite expensive — well over $1,000 a month in some cases. But this may still be lower than what you are paying now, if you have an individual policy.

There are caveats. One is that the cheaper plans come with big deductibles and lots of other out-of-pocket costs. Now, if you don't think you're going to have much in the way of medical expenses, that may be fine. But people should be aware that if they buy a plan that only costs $40 or $50 a month, they may have a $5,000 or $10,000 deductible before the plan starts paying benefits.

The other is that some of these less expensive plans come with very limited lists of doctors and hospitals. So if you have a particular doctor or hospital you know you want to use, you should check that before you sign up.

What if I can't afford the premiums?

The health law provides fairly generous subsidies for many people, effectively lowering their monthly premiums. The subsidies are on a sliding-scale, though, so they become less generous as your income grows. If your income is income between 100 percent of the federal poverty level ($11,490 for an individual) and 400 percent ($45,960), you can get some help paying for premiums. A family of four can get a subsidy, although just a small one, with income up to $94,200.

Some people also can get help with deductibles and co-payments. To qualify, your income has to be less than 2.5 times the poverty level ($28,725 for an individual or $58,875 for a family of four). You also have to choose a so-called silver plan. That's the second lowest cost of the four levels of coverage that will be available — bronze, silver, gold and platinum.

Subsidy amounts are calculated based on your modified adjusted gross income, a figure you can find on your annual tax return by adding lines 8b and 37 on IRS form 1040. That includes things like wages and interest, less deductions like tuition and alimony, and additional payroll taxes paid by the self-employed. it does not include assets such as the value of your house, stocks or retirement accounts. You'll be asked to estimate what your income will be for next year; if you're wrong, you'll have to reconcile with the IRS come tax time the following year.

What if I guess wrong on what my income will be for next year?

If your income increases during the year, notify the exchange promptly so that you can avoid having to pay back the subsidy. On the other hand, if your income goes down, you could be eligible for a bigger subsidy. Either way it's important to notify the exchange if your income changes.

How do I claim the subsidy?

If you qualify for a subsidy to pay your premiums, you can choose to either have the credit sent directly to the insurer or pay the whole premium up front and claim the credit later on your taxes.

If you qualify for help with deductibles and co-payments, that subsidy will be sent directly to the insurer, and you won't have to pay as much out of pocket.

Will everyone pay the same price?

You won't have to pay more for insurance if you have a medical condition and that condition will be covered when your policy begins. But older people can be charged more than younger people and smokers face a surcharge.


About The Plans And Benefits

Do the exchanges have a good selection of plans to choose from?

The number of plans that you can choose from varies widely. In some states, only a couple of insurers are offering policies though the marketplace, while in others there may be a dozen or more. Even within a state, there will be differences in the number of plans available in different areas. Insurers generally offer a variety of types of plans, including familiar models like PPOs and HMOs.

What health services are covered?

Each plan offered has to cover 10 "essential health benefits." These include prescription drugs, emergency and hospital care, doctor visits, maternity and mental health services, rehabilitation and lab services, among others. In addition, recommended preventive services, such as preventive mammograms, must be covered without any out-of-pocket costs to you. It's important to keep in mind that the insurer does have some discretion about which specific therapies they'll cover within each category of benefit. So it's very important to study the plans carefully to make sure it is offering any specific benefits you may need.

There's a cap on how much you pay out-of-pocket for medical services each year. That cap is $6,350 for individual policies and $12,700 for family plans in 2014. Your regular monthly premiums do not count toward the cap.

What's this about Bronze, Silver, Gold and Platinum plans?

Plans are divided into four different types – bronze, silver, gold and platinum – varying based on the size of their deductibles, copayments and other consumer cost-sharing. The bronze plan pays for 60 percent of medical costs; the platinum, 90 percent. Premiums are highest and deductibles the lowest for platinum plans. Bronze plans generally have deductibles in the thousands of dollars; $5,000 and $10,000 deductibles are not unusual for bronze plans. Within each tier, the amount you pay for deductibles, copayments and co-insurance may vary from company to company and even from plan to plan within companies.

No matter which plan you choose, the 10 essential benefits remain the same. There is also the option to purchase catastrophic insurance — low cost plans that cover minimal services but provide a safety net in the event of an accident or serious illness. But those plans do not come with subsidies.

People up to age 30 will have the option of buying a catastrophic plan that will cover only minimal services until they meet a deductible of roughly $6,400. The premium is usually much lower than the other plans. After the deductible is met, the plan covers the 10 essential health benefits — a kind of "safety net" coverage in case you have an accident or serious illness, according to the Healthcare.gov website. Catastrophic plans usually do not provide coverage for services like prescription drugs or shots. And there are other limits.

I have read that the subsidy can only be applied to a Silver plan. Is that true?

It depends on which subsidy you're talking about.

One subsidy is to help pay your monthly premiums. If you qualify for that subsidy (use our calculator), you can apply it toward the purchase of any plan — bronze, silver, gold or platinum. Where silver plans come into play here is in calculating the amount of your subsidy: It's based on the price of the second-lowest silver plan in your area. If you choose a gold or platinum plan, you'll still get the subsidy. But those plans have higher monthly premiums and you'll have to make up the difference. Likewise, if you choose a bronze plan, you'll get the subsidy and your monthly premiums will be less.

There's another subsidy to be had in the form of help with deductibles and co-payments. To qualify for that subsidy, you do have to choose a silver plan. Your income also has to fall below $28,725 for an individual or $58,875 for a family of four.

How do I know which health plan is best for me?

You should carefully weigh the state of your health with your financial situation. For example, a person who's 27 and in excellent health may decide that the low premium and high deductibles of a Bronze or Silver plan are their best bet. Of course, an illness or accident can arise at any time, so you'll need to take that into consideration. That's why they call it insurance.

For older adults with a chronic health condition or regular prescription expenses, it may be best to consider a Gold or Platinum plan with a higher premium that gives you a policy with lower out-of-pocket expenses for doctors visits and hospital stays.

Can I keep my doctor?

If you're shopping for a new policy on the insurance exchanges or are eligible for Medicaid, the answer is "Maybe." For private policies purchased through the exchange, it all depends on the list of doctors that the health plan considers 'in network.' If your doctor isn't in the plan's network, you'll likely pay a higher amount for co-insurance or copayment. The number of doctors who take Medicaid is growing in states where the program is being expanded, but the number of doctors who take Medicaid is still limited in most areas.

Can my insurer drop me?

Your insurer generally can't drop you, as long as you keep up with your insurance premiums and don't lie on your application.

Do all insurance companies have to offer policies through the exchange?

No. Insurers are not required to sell through the exchanges. In several states, for example, the largest insurers decided not to offer insurance this year, while they wait to see what happens. Some were concerned about the negative publicity that might result if the exchanges got off to a shaky start. Others wanted to wait to see if this market would be profitable.

Can insurers deny me coverage because I have an existing medical condition?

No. The Affordable Care Act prohibits discrimination on the basis of prior or existing health conditions.


Other Questions Related To Exchanges

Can I change insurance plans?

Generally, you are only able to enroll in or change plans once a year during an open enrollment period. This first year, that period runs from Oct. 1, 2013 to Mar. 31, 2014. In subsequent years the time period will be shorter, running from Oct. 15 to Dec. 7.

There are certain circumstances when you will be able to change plans or add or drop someone from coverage outside the regular annual enrollment period. This could happen if you lose your job; get married or divorced; give birth to or adopt a child; or move to a different state. Any of those life events triggers a special 60-day enrollment period where you can change or buy health insurance on an exchange. Otherwise, you'll have to wait until the next open enrollment.

What personal information will I have to give the exchange?

You'll need to set up an account with your name, address and social security number. If you have an email address, you can provide that, too. The exchange will want to know about your marital status; the number of children under 18, birthdays of anyone who'll be covered; whether you smoke; financial information and citizenship status. The financial and citizenship information will be checked against records at the Internal Revenue Service and other government agencies.

See other Frequently Asked Questions on the Affordable Care Act:

Additional coverage from NPR Member Stations:

This FAQ was produced through a collaboration between NPR and Kaiser Health News, an editorially independent program of the Henry J. Kaiser Family Foundation, a nonpartisan health-care policy research organization. The Kaiser Family Foundation is not affiliated with Kaiser Permanente.

Copyright 2014 NPR. To see more, visit http://www.npr.org/.

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