Health insurance Exchanges are online marketplaces where individuals and small groups can buy health insurance. Many individuals may be eligible for federal subsidies. All Exchanges must be fully certified by the federal government and operational by Jan. 1, 2014. There are three different 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.
People who don’t have health insurance through their employers can shop for coverage on the Exchange. Individuals can compare plans among health insurance companies, select a plan, apply for financial aid (premium subsidy) and be granted coverage, regardless of any health conditions they may already have.
Open enrollment on the Exchange begins Oct. 1, 2013. The first policy effective dates for the Exchange products will be Jan 1, 2014. Before Exchanges can move forward with complete certainty, some key things need to happen:
- The U.S. Department of Health and Human Services (HHS) has to provide final rulings or regulations on a number of provisions within the law.
- The state of Tennessee has to pass enabling legislation to establish a state-run Exchange. If it doesn’t, then the Exchanges in Tennessee will be run by the federal government.
- BlueCross, and other carriers, are likely to participate in a procurement process with the state to become certified as a Qualified Health Plan (QHP). Only QHPs can offer products on the Exchange.
The qualified health plans must cover the “essential health benefits” that the U.S. Department of Health and Human Services will define in combination with the state of Tennessee.
The estimates vary, but it is expected that the Tennessee Exchange would cost at least $15 million, and likely more than that. If the state decides to operate the Exchange beginning in 2014, then the federal government will pay for most, if not all, of these “startup” costs. However, Tennessee would be required to pay 100 percent of these costs if the state chooses to start the Exchange after 2014.
Health care reform law requires that Exchanges be self-sustaining (or functional without any direct federal or state government funding) by Jan. 1, 2015. States may generate funding in a number of ways. It’s possible that certain costs may be allocated to Medicaid and other programs in order to leverage federal funds. There may be administrative fees to employers participating in the SHOP Exchange or to qualified health plans participating in the Exchange. Additionally, there could be online advertising or direct marketing allowed through the Exchange to help fund it moving forward.
BlueCross BlueShield of Tennessee has long advocated for health care reform. We recognize people want and need affordable health insurance and the law helps expand coverage to thousands of our fellow Tennesseans. That’s a goal we believe in, and one we’ll continue to support by implementing the law in a manner that best benefits our members and the state. We’ll also continue to work with parties on both sides of the aisle to change those parts of the law that will disrupt the market and raise costs for consumers. Working with policymakers and other Tennessee health care leaders, we’ll push toward delivery system reforms and solutions that reduce costs and improve quality.
Eligibility and Enrollment
It is estimated that approximately 182,000 Tennesseans will become eligible for Medicaid under the new expansion laws.
With so many factors about Exchanges still unknown, the estimated number of Tennesseans expected to be eligible for tax credits and participate in an Exchange varies from 300,000 to more than 1 million.
Yes, the health care reform law requires that people can apply by mail, telephone and other ways.
Yes, the Exchange will be accessible to hearing-impaired persons, visually-impaired persons and persons with other disabilities.
Medicare-eligible individuals would enroll in Medicare plans rather than qualified health plans on the insurance Exchange. Depending on the structure of the eligibility rules, though, low-income Medicare recipients may be able to apply through the Exchange for either Medicaid or the Medicare Savings program, or both.
Yes, as long as the person is a U.S. citizen or legal resident. He or she may also be eligible for premium tax credits and cost-sharing subsidies to help pay for coverage purchased through an Exchange.
Individuals will be able to change plans only one time per year unless they have a special enrollment event.
We don’t know yet if there will be a limit on the number of times that a patient will be able to use any specific service. More information will be available when the Secretary of Health and Human Services defines the essential health benefits and provides guidance to the state on this issue.
Agents and Brokers
No, health care reform requires that insurers charge the same premiums for identical products, no matter how the customer purchases coverage.
Yes, but the requirements for this process have not yet been determined.
The state of Tennessee is working with the Department of Commerce and Insurance (TDCI), the National Association of Health Underwriters, Insurers of Tennessee, and the agents and brokers who participated in a technical advisory group to explore this issue. Several stakeholders have recommended that the TDCI establish a new licensure category with a separate continuing education requirement; others have suggested that the Exchange simply require agents who wish to participate in the Exchange to demonstrate mastery of content related to the insurance Exchange by passing a written examination.
Tax Credits and Cost-Sharing Subsidies
Premium tax credits are generally available to households with incomes less than 400 percent of the federal poverty level. Eligible households can use the credits to purchase coverage through the individual insurance Exchange.
Cost-sharing subsidies are also available to households with incomes under 250 percent of the federal poverty level, though subsidies are much larger for households with lower income levels. These subsidies lower the cost of the deductibles and other forms of cost-sharing that a consumer must pay when he or she gets care. For families with incomes of less than 150 percent of the federal poverty level, the subsidies would reduce the families’ deductibles and other cost-sharing by 80 percent.
Individuals with household incomes of more than 400 percent of the federal poverty level, incarcerated individuals and individuals who are not lawfully present in the United States are ineligible for the tax credits.
Yes, but such applicants would have to pay for the full cost of the premium because they are not eligible for the premium tax credits.
Yes, but these applicants would have to pay for the full cost of the premium unless they meet the “unaffordability” exception. Under the rules of the premium tax credits, applicants are ineligible for the credits if they are eligible for “affordable” coverage through their jobs. If the cost to the employee of self-only coverage is less than or equal to 9.5 percent of the employee’s income, then the coverage is considered affordable and the employee would be ineligible for the tax credits. If the cost of the coverage is greater than 9.5 percent of the employee’s income, then the coverage is deemed “unaffordable” and the applicant could qualify for the tax credits.
No, individuals eligible for premium tax credits can receive them only if they enroll in a qualified health plan through the Exchange.
Yes, small employers that purchase coverage through the Exchange can choose a Bronze, Silver or Gold tier and allow employees to purchase any qualified health plan within that tier. The employer may also choose a specific plan that they wish to offer employees.
Yes, as long as the small employer is headquartered in Tennessee.
No. Businesses with fewer than 50 full-time-equivalent employees face no penalties if they choose not to offer health coverage.
Applicants with access to employer-sponsored insurance will qualify for premium tax credits only if they meet the “unaffordability” exception. Employers with at least 50 full-time-equivalent employees may be penalized for those that meet the unaffordability exception and receive the tax credits.
Health Care Providers
To sell insurance through the Exchange, qualified health plans must establish a network of providers that satisfies that provider network adequacy standards. If the qualified health plan is unwilling to offer payment rates that encourage a sufficient number of providers to join the network, then it will not be able to participate in the Exchange.
It is our understanding that the state’s policy with both TennCare and the public employee health plans is that the state itself should not be directly involved with the bilateral contract negotiations between insurers and health care providers.
As we understand the plan, each insurer will have its own credentialing system and the state will play a limited (if any) role in this regard.
No, the individual and small-group risk pools can remain separate unless the state expressly decides to require insurers to merge these markets.
BlueCross BlueShield of Tennessee and Health Care Reform
The health care reform law brought sweeping changes to the health insurance industry and the way we traditionally do business. These changes impact product design, pricing factors, application processes and much more.
Many changes are already in effect, including:
- No longer any lifetime or annual limits on policies
- Dependents up to age 26 can remain on a parent’s benefits plan.
- Preventive services such as mammograms, colorectal cancer screenings and many other screenings are covered at 100 percent.
- Children age 18 and younger are no longer denied coverage because of a pre-existing condition.
- Individual products will play an even larger role in the industry as many more people gain access to coverage in this new marketplace. BlueCross BlueShield of Tennessee is pursuing unique channels through which it can reach new prospective individual customers. Examples include establishing a retail store, partnering with a retail chain, leveraging existing relationships with brokers and agents, community outreach efforts and more.
Immediately after health care reform was signed into law March 23, 2010, BlueCross BlueShield of Tennessee began work to fully comply with the law and make it work well for Tennesseans.
Since the third quarter of 2011, a formal Exchange planning and implementation effort has been underway.
In addition, there are 13 key areas currently identified across the company in which employees are working through the operational details of Exchange participation. Representatives from BlueCross also consult with state officials as requested to provide guidance as the state works on details for the Exchange implementation.