With less than 2 years to go before the Affordable Care Act’s state-based health insurance exchanges launch, the federal government issued its framework for how these one-stop insurance shops should be structured and how states can determine who can enroll.
The Department of Health and Human Services on March 12 released a final regulation outlining what states need to do to get their exchanges ready by Jan. 1, 2014.
The regulation offers significant flexibility in how to accomplish those tasks. For instance, it will be up to each individual state to decide if it will run its exchange through an existing agency, form a nonprofit entity to operate it, or partner with other states on a regional exchange. States also will have the power to set additional requirements – above the federal exchange standard – for health plans seeking to participate in the exchange.
Under the final rule, exchanges will offer a simple, Web-based system for individuals and small businesses to determine eligibility and to shop for insurance.
Individuals will use a single application to check eligibility for federal subsidies and to enroll in a health plan. That means states will need to coordinate between Medicaid, the Children’s Health Insurance Program, and the health plans in the exchange to process applications.
The rule also outlines how small business owners can purchase insurance for their employees through the Small Business Health Options Program (SHOP). Under the rule, small businesses can choose a level of coverage and then allow their employees to select any qualified health plan within that level. Employers can also choose to offer coverage through a single plan in the exchange.
In 2014 and 2015, states will be able to set the size of the small group market for participation in SHOP at either 1-50 employees or 1-100 employees. In 2016, all employers with up to 100 employees will be able to participate in SHOP. Starting in 2017, states will be able to open up SHOP to businesses with more than 100 employees.
The federal government also is giving states more time to prepare their exchanges. Under the Affordable Care Act, states were required to have their exchange plans approved by HHS by Jan. 1, 2013, but the new final rule allows states to get "conditional approval" from HHS on that date, even if they can’t demonstrate complete readiness.
States that are preparing to launch their own exchange but won’t be ready by Jan. 1, 2014, can apply to HHS to begin operating their exchange in 2015 or later.
In the meantime, HHS is preparing to step in with a federally run health exchange in any state that isn’t prepared to launch by 2014. The agency has yet to issue regulations on how the federally run exchanges will be run.
The March 12 final rule combines two proposals issued last summer. The first, published on July 15, 2011, proposed a framework for building the exchanges. The second, published on Aug. 17, 2011, contained the proposed standards for eligibility to enroll in health plans and subsidy programs.