Each state may establish an Insurance Exchange (more often termed the Marketplace) to help individuals and small employers that reside in their state obtain coverage. If a state fails to establish a Marketplace, its residents must use the Marketplace established by the federal government. The primary purpose of the Marketplace is to provide a source for insurance meeting the requirements of the Affordable Care Act.
Insurance can only be purchased through the Marketplaces during open enrollment periods, except certain life events and status changes (examples: marriage, birth or adoption of a child, divorce) can make people eligible for a Special Enrollment Period to enroll in or adjust health coverage through a Marketplace. For coverage in 2015, the open enrollment period is November 15, 2014 through February 15, 2015.
Benefit options will be in a standard format and a single enrollment form used for all policies. Plans offered through the Marketplace must provide essential health benefits, limit cost sharing, and provide specified accrual benefits (i.e., the percentage amount paid the insurer).
Plans in the individual and small group markets use a metallic designation for the accrual benefits provided:
- Bronze 60%
- Silver 70%
- Gold 80%
- Platinum 90%
Individuals who purchase health care policies through a Marketplace may be eligible for low-income premium subsidies, and/or a “premium tax credit.” The amount of the premium assistance is based on the taxpayer’s income as a percentage of the federal poverty guidelines. The credit phases out between 100 and 400 percent of the poverty level based on family size. Individuals should be sure to notify their Marketplace if their household income or family size changes during the year so that any advance premium tax credit can be adjusted accordingly. This will prevent an unexpected tax surprise when their income tax return for the year is completed.