Affordable Care Act Aims to Expand Employee Health Care Options

September 26, 2013

State health insurance exchanges, a component of the Affordable Care Act, are set to launch October 1, U.S. News & World Report stated. As the deadline approaches, many consumers are confused as to what these exchanges are and how exactly the exchanges will affect them, if at all.

As NJ.com explained, state health care exchanges are virtual marketplaces where consumers can shop for insurance policies. The exchanges allow thousands of consumers to come together online and negotiate prices with insurance providers as a group, thereby bringing down prices.

As of 2014, individuals who can afford health insurance but do not have it will face a fee of $95 per person or one percent of their income. The exchange program can serve as an avenue for these people to get insurance and avoid the fee. Virtual exchanges also aim to expand options for individuals who are uninsured or unsatisfied with their employer's options. U.S. News noted that workers who turn to the exchange may qualify for subsidies as well as tax credits on their insurance premium, as long as the annual premium for their individual coverage surpasses 9.5 percent of their household income.

Those whose employer coverage meets the Affordable Care Act's requirements, however, may want to think twice before taking advantage of the exchanges. Linda Schwimmer, vice president of the New Jersey Health Care Quality Institute, told NJ.com that if consumers' employer coverage "meets all the minimum standards under the act, an employee is not going to be able to get a subsidy on the exchange -- no matter what their income." Moreover, employers are not required to make contributions towards workers' premiums under marketplace plans, so the exchange option may actually prove more costly to workers than their regular employer plan.

While the exchanges may not be ideal for currently employed individuals, they can benefit the unemployed. Individuals who are out of work often receive temporary coverage through COBRA, which covers both workers and their families. As of January 1, however, they can opt for the marketplace plan instead. "People will still have the option to pick up coverage through COBRA," Maura Collinsgru, a health policy advocate for New Jersey Citizen Action, stated, "but if you are able to get a subsidy through the exchange, then you're going to get more affordable heath insurance. The exchange may be a better option."

In addition to providing coverage options to the unemployed and individuals of large corporations, the Affordable Care Act also has provisions for small business workers in a separate exchange known as the Small Business Health Options Program (SHOP), U.S. News explained. The Washington Post provided examples of some state's health care marketplaces for small firms. The District of Columbia's exchange, or DC Health Link, allows businesses with 50 or fewer employees to select from 267 plans from four carriers: United, Aetna, Kaiser Permanente, and Carefirst. The first three of these carriers have all recently decreased their insurance rates on the exchange. Employers can select either one plan for the entire company or several plans from which workers can choose.

Unfortunately, not all state plans are as refined as DC's. Maryland, for example, has delayed enrollment for small business exchanges to early 2014, and in Washington, only one insurance company has enrolled in the exchange, which will offer coverage to residents of limited areas. Most states are falling back on federal insurace marketplaces, run by the U.S. Department of Health and Human Services. The federal portal, however, offers less flexibility than do some state exchanges, as employers can choose only one plan for the entire company during the first year.

Schwimmer suggested in NJ.com that to better understand their insurance options under the Affordable Care Act, individuals should conduct further research before the exchanges go into effect.

Compiled by Aneesha Jhingan