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Small Business Employee Benefits and HR Blog

Health Care Reform and Defined Contribution Q&A: Part 2

In Part 2 of our Q&A on Health Care Reform and Defined Contribution (see Part 1 on Defined Contribution and Health Care Reform), we'll summarize the most common health care reform questions on health insurance exchanges, health insurance trends and navigators.

health care reform, q

What are the New Health Exchanges?

A health exchange is simply a place where you buy health insurance. The concept of health exchanges isn't new, but the term has become a big buzzword with health care reform. There are two types of health exchanges: public and private.

  1. Private Health Exchange: A health insurance exchange managed by a private company (insurance company, insurance agent, etc). 

  2. Public Health Exchange: A health insurance exchange managed by a government (or government-contracted) entity.

For a closer look at private and public health exchanges, see:

Will Private Health Exchanges Exist After 2014? 

Yes. As long as health insurance can be sold outside of public exchanges, private health insurance exchanges will exist in 2014 and beyond.

How will State Health Exchanges Work?

Starting in 2014, health insurance coverage for individuals and small businesses will become available through new state (public) health insurance marketplaces.  

  • If a state does not set up a state exchange, they will default to the federally-run public exchange. For more information see: State by State Guide to Health Insurance Marketplaces

  • Most importantly, the key tax credits (e.g. the small business healthcare tax credits) and tax subsidies (e.g. individual health insurance tax subsidies) will only be available for coverage purchased via a state health insurance exchange.

For more information on how the state exchanges will work in detail see:

What will Health Care Reform do to Health Insurance Rates?

Inevitably, rates for an individual and family insurance policies will increase. Because of guaranteed-issued and community-rating, the pool of risk will include healthy, sick, young and old. Rates will go up, as we've seen in the five states that already have guaranteed-issue (MA, ME, NY, NJ, VT).

However, these increased costs will be offset by the significant tax subsidies provided by the government. If an individual is eligible, the tax subsidies will cap the cost of health insurance at 2% - 9.5% of income.  For more information on the subsidies, and who is eligible, see: Individual Health Insurance Premium Subsidies in State Exchanges.

What's the bottom line?  It will depend on your income. See Health Insurance Tax Credit Calculator.

What is a Health Insurance Navigator?

The Affordable Care Act requires state health insurance marketplaces to establish a “navigator” program. Navigators will help eligible individuals learn about their new coverage options through the exchanges, and enroll. States can award grants to entities that will provide these services. 

For more detailed overview on navigators, including who can become a health insurance navigator, see: What is a Health Insurance Navigator? 

What questions would you like us to answer about Health Care Reform and/or Defined Contribution Health Benefits?  Let us know in the comments below.