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Small Business Employee Benefits and HR Blog

Individual Health Insurance Marketplaces 101

May 30, 2013
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As part of the Affordable Care Act (ACA), health insurance coverage for individuals will become available through new individual health insurance marketplaces (also called "exchanges"). We've outlined four (4) key facts for individuals, businesses, and insurance professionals about how the individual health insurance marketplaces will work.

Each state's individual health insurance marketplace will open October 1, 2013 for enrollment in coverage beginning January 1, 2014.Individual health insurance marketplaces, marketplaces, marketplace

Health Insurance Marketplaces 101

Here's an outline of how the individual health insurance marketplaces will work.

Step 1: Individual goes to his or her state's individual health insurance marketplace website (look up a state's marketplace website here).

Step 2: Individual completes 1 of 2 applications:

  • Application for Insurance with Tax Credit 
  • Application for Insurance without Tax Credit 

Applicants will only need to fill out one application. See sample Marketplace applications here.

Step 3: Individual health insurance marketplace displays all available plan options within metallic tiers and displayed cost will factor in tax credit. All plans will be guaranteed-issue, and are portable (meaning the policy is not tied to employment).

Step 4: Individual selects plan.

Step 5: Individual health insurance marketplace bills individual for his or her portion of premium (i.e. the total premium minus tax credit) and marketplace forwards payment to the carrier

Health Insurance Marketplaces - Enrollment Periods

The plans offered through the individual health insurance marketplace will be guaranteed issue (cannot be denied because of pre-existing condition). But, there's a catch. That is, consumers can only enroll in guaranteed issue health insurance during designated enrollment periods.

  • Initial Enrollment Period, October 1st, 2013 - March 31st, 2014

  • Annual Enrollment Periods, October 15th - December 7th

  • Special Enrollment Periods, After a Triggering Event*

Why Enrollment Periods? The enrollment periods ensure that individuals and families don’t wait until they get sick to enroll in coverage.

*Outside of the enrollment periods, individuals can enroll in or change from one plan to another as a result of the following triggering events:

  • Loss of minimum essential coverage.
  • Marriage, birth, adoption, or placement for adoption.
  • Gaining citizen or national status.
  • Gaining access to new qualified health plans (QHPs) as a result of a permanent move.
  • A qualified individual’s enrollment or non-enrollment in a plan is unintentional, inadvertent, or erroneous and is the result of the error, misrepresentation, or inaction of an officer, employee, or agent of the Health Insurance Marketplace or HHS, or its instrumentalities as evaluated and determined by the Health Insurance Exchanges.
  • An enrollee demonstrates to the Health Insurance Marketplace that the plan in which he or she is enrolled substantially violated a material provision of its contract in relation to the enrollee.
  • An individual is determined newly eligible or newly ineligible for advance payments of the premium tax credit or has a change in eligibility for cost-sharing reductions, regardless of whether such individual is already enrolled in a QHP. For example, the marketplace must permit individuals whose existing coverage through an eligible employer-sponsored plan will no longer be affordable or provide minimum value for his or her employer’s upcoming plan year to access this special enrollment period prior to the end of his or her coverage through such eligible employer-sponsored plan.

Unless specifically stated otherwise, an individual or enrollee has 60 days from the date of 
a triggering event to select a plan. Click here to read more about the health insurance marketplace enrollment details.

Health Insurance Marketplaces - Plans Available

All individual plans sold on the individual health insurance marketplaces must meet the federal ACA definition of a Qualified Health Plan (QHP). The plans will be offered by level of coverage for essential health benefits (EHB), to allow consumers to compare plans on an "apples to apples" basis.

The four metallic levels are: Bronze (plan pays 60%), Silver (plan pays 70%), Gold (plan pays 80%) and Platinum (plan pays 90%). All states are expected to release plan and carrier details by late summer 2013.

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Health Insurance Marketplaces - Tax Credits

Last, but certainly not least, massive tax credits will be available for households earning up to 400% of the Federal Poverty Line (FPL)... the majority of Americans. A key fact is that individuals can only access the premium tax credits through the individual health insurance marketplace. Here are the 2013 FPL guidelines by household size, and the premium range after federal tax credits:

FPL Guidelines

What additional questions do you have about the individual health insurance marketplaces? Let us know in the comments below.


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