What is an insurance Exchange?
An Exchange is a way to buy health insurance online. It offers an easy way for you to compare, shop and apply for health benefit plans.
There are three types of Exchanges:
- State-based Exchange
- Federal Exchange
- Exchange partnership between federal government and state
The state of Tennessee is currently exploring options before deciding which type of Exchange it would like to create. BlueCross BlueShield of Tennessee supports the establishment of a state-based Exchange.
The Patient Protection and Affordable Care Act (Affordable Care Act) became law in March 2010. Often called “health care reform,” the law has already made some major changes to the health insurance industry. For example, preventive services such as well-care visits and mammograms are covered at 100 percent. Children age 18 and younger are no longer denied coverage because of a pre-existing condition. Also, young adults up to age 26 can now remain on their parent’s benefit plan.
Starting in 2014, all states must offer health insurance Exchanges. These Exchanges will provide individuals and certain employers with a choice of insurance plans that compete based on price and quality.
Currently, an estimated 250,000 to 900,000 Tennesseans are uninsured. Health insurance Exchanges will give more people greater access to health insurance and wellness benefits. In addition, premium subsidies and tax credits will be available to those who qualify.
Why are insurance Exchanges needed?
- More people will qualify for Medicaid – Beginning in 2014, federal law will expand Medicaid to almost all people whose incomes are less than 138 percent of the federal poverty level – currently this is $15,028 per year for a household of one or $30,843 per year for a household of four. An estimated 1,593,200 additional Tennesseans under the age of 65 will have access to Medicaid, according to Kaiser Family Foundation data.
- More people will qualify for financial aid – People with incomes between 100 percent and 400 percent of the federal poverty level – currently about $10,890 to $43,560 per year for a household of one or $22,350 to $89,400 per year for a household of four – may qualify for tax credits and other subsidies to lower their insurance costs. Subsidies are only available when insurance plans are purchased through the Exchange.
- Everyone is required to have health coverage (Individual Mandate) – Beginning in 2014, most individuals will be required to have minimum essential health coverage. If they do not, the Internal Revenue Service could issue a financial penalty to those without coverage. Low-income individuals, those temporarily without coverage and those with religious objections may apply to be excluded from these penalties or fines.