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What’s a health insurance exchange?

For Americans who don’t have health insurance, a new place for one-stop shopping will be available soon.

health-insurance-exchangeStarting on Oct. 1, 2013, individuals will be able to enroll in a plan through a health insurance exchange (also referred to as a health insurance marketplace) in their state. It offers a website that allows you to shop for a health plan and enroll yourself. Exchanges also let you compare prices, coverage levels and other details for various plans. It’s similar to the way lets you compare the features and prices on flights.

If consumers enroll this fall through a health insurance exchange, the start date for their coverage would be Jan. 1, 2014.

If you have health benefits from an employer, but you feel that your employer’s plan is too expensive, you can look for a cheaper plan on the exchange. Most people who are already receiving health care through an employer will most likely have no financial incentive to shop the exchanges. However, if your share of your employer-provided health insurance exceeds 9.5 percent of your income, you can enroll in a health insurance exchange and qualify for tax credits.

The purpose of the exchanges is to make buying coverage easier and more affordable for consumers who don’t have coverage from their employer, Medicare or Medicaid. In 2011, 48.6 million Americans (about 15.7 percent of all Americans) did not have health insurance, according to the U.S. Census Bureau.

The exchanges will be a central hub for information on plan options and costs. Without the exchanges, it has been difficult for consumers to comparison shop because they have to collect price and benefit information from each insurer separately. The exchanges must use a standardized format for presenting information about the plans, to make it easier for consumer to compare plans on an apples-to-apples basis.

“Each marketplace will offer insurance shoppers a variety of tools, such as a consumer-friendly website, a toll-free hotline for assistance and a network for one-on-one assistance—all intended to help the residents of that state find and purchase the quality, affordable health insurance policy that best suits their personal or family needs,” says Ron Pollack, executive director of Families USA, a nonprofit organization that advocates for health care consumers.

Low-income Americans can turn to the exchanges to find out whether they qualify for a free or low-cost plan, a tax credit or other programs, such as Medicaid and the state Children’s Health Insurance Program.

The Affordable Care Act, sometimes referred to as Obamacare, requires each state to set up a health insurance exchange. If a state fails to do so, the federal government will establish and operate an exchange there.

Seventeen states and Washington, D.C. will operate their own exchanges, while 26 states plan to let the federal government step in. Another seven states plan to run a state-federal partnership exchange, at least at the beginning, according to the Kaiser Family Foundation, a nonprofit organization that researches health care topics.

“What is most important is that, regardless of who operates and maintains these marketplaces, every state will have such a marketplace, and every resident of every state will have access to one,” Pollack says.

To ensure that patients will have adequate coverage, only plans that meet certain standards on benefits and costs will be allowed to participate in the health insurance exchanges. The exchanges will certify whether plans are qualified, and will monitor their premium increases.

Starting on Jan. 1, 2014, all Americans must have health insurance, either through an employer, a government program or one of the insurance exchanges. Those who don’t obtain coverage will have to pay a fine on their tax returns.

After Jan. 1, 2014, patients won’t have to worry about getting denied because of pre-existing medical conditions, since insurers won’t be allowed to refuse to cover someone.

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