What Are Health Insurance Marketplaces?

Posted on: Wednesday, July 31, 2013

If you receive health insurance through your employer, which is the case for a majority of U.S. citizens, the Affordable Care Act likely will not affect you directly. However, beginning in October, people without this option will be able to shop for health insurance on what have come to be known as marketplaces (formerly called exchanges). These marketplaces serve as an alternative to buying coverage directly from individual health insurers, and will act as the principle system helping individuals and small businesses purchase health insurance coverage.

Each state will have its own public marketplace to help consumers compare and contrast various plans, as well as to administer the new health insurance subsidies in that state. These marketplaces will serve uninsured individuals, as well as small businesses who will offer insurance programs to their employees. This marketplace for businesses is called SHOP – Small business Health Options Program.

States have a few options:

  • A state can choose to create and run its own marketplace. 
  • If a state decides not to run its own marketplace, residents of that state can get their insurance through a federally run marketplace. 
  • Or a state can partner with the federal government, so the state and federal government share responsibility for operating that state’s marketplace.

 

Health plans on a public marketplace will be labeled platinum, gold, silver or bronze. Platinum plans will have the lowest out of pocket cost for members but the monthly premiums will generally be higher. Bronze plans, on the other hand, will have the highest out of pocket costs for members, but will typically feature lower monthly premiums. All plans on a marketplace will have basic features, such as prescription drug coverage and preventative and wellness benefits. Most importantly, however, subsidies and tax credits will be available to help make insurance affordable for many individuals who shop on the public marketplaces.

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There are also private marketplaces, which are available to individuals and businesses. For employers who are trying to keep the cost of offering health benefits manageable, private marketplaces offer an interesting solution. Employers can give their employees an agreed upon health insurance budget, and then direct them to a private marketplace, where they can shop for a health plan and other benefits, like dental insurance, based on what the employer has selected as options.

One concern with private marketplaces has been the reluctance of insurance companies and brokerage firms to jump in and offer their services in smaller states. More competition for this business would benefit people shopping around in private marketplaces by offering a choice of private health plans resembling what workers at large companies already get. Some states may require all carriers with a certain percentage of that state’s private insurance coverage to participate.

 

Whatever happens, public and private marketplaces are likely to appeal to different audiences. Individuals who do not have access to affordable health insurance today are more likely to shop on a public marketplace because of the subsidies, which are not available through private marketplaces. Small business employers are more likely to send their employees to a private marketplace. 


Do you have questions about the Affordable Care Act? We have a call center which is ready to help you navigate through the maze of complexities in the new world of health coverage.

 

Please call 1-877-214-2969. We’re ready to assist you.

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