What is a health insurance exchange?

An online marketplace where consumers and small businesses can shop for health insurance under the Affordable Care Act. The goal of the exchanges is to make health insurance more comprehensive and affordable.

Some states will operate their own exchanges, while Maine and 26 other states have opted to have them run by the federal government.

The exchanges will allow consumers to compare and purchase insurance from private carriers. Government-sponsored insurance, such as Medicaid and Medicare, will be offered next year much as it is now.

Four basic types of plans will be available: Platinum plans will pay 90 percent of the cost of covered medical services, on average, with consumers picking up the other 10 percent; gold plans will pay 80 percent; silver plans 70 percent; and bronze plans 60 percent. Premiums will vary, with platinum plans generally costing more than bronze plans.

Consumers can use the exchange to determine if they’re eligible for Medicaid and the Children’s Health Insurance Program.

Almost everyone who can afford health coverage must have it by 2014 or pay a penalty. In states that have declined to expand Medicaid under the law, including Maine, people who earn less than 133 percent of the federal poverty level ($15,282 for an individual, $31,322 for a family of four) will be exempted from the penalty.

When can I shop on Maine’s exchange?

Enrollment in the plans begins in October, with the plans taking effect Jan. 1, 2014. Consumers and small-business owners will be able to sign up online or through a toll-free phone hot line.

Which carriers will offer plans on Maine’s exchange?

Two health insurers have applied to sell policies on Maine’s exchange, Anthem Blue Cross and Blue Shield and the nonprofit Maine Community Health Options, a new player in Maine’s insurance market that will be governed by policyholders.

Who can shop on the exchange?

For the most part, people who have health insurance through their employer and those covered by public insurance — Medicaid, Medicare, and military and veterans’ coverage — won’t be shopping for insurance on the exchanges. That’s most of Maine’s insured population.

About 5 percent to 8 percent of Maine’s population is expected to shop for insurance on the exchange, according to the Maine Bureau of Insurance.

Individuals — those lacking insurance and people who already buy their own insurance rather than get coverage through an employer — and small businesses with 50 or fewer full-time equivalent employees will be eligible. Small companies of that size aren’t required to offer health insurance to workers, but larger companies will be penalized if they don’t, starting in 2015.

In Maine, that’s an estimated 257,000 people.

But how many of those people actually buy their coverage on the exchange is a guessing game. The final number could be a fraction of those who are eligible.

Consumers will have other options, as insurance companies can sell policies on the exchange, outside the exchange or both. Maine Community Health Options plans to sell individual, family and small-business policies both on and off Maine’s exchange. Anthem will sell its small group policies on and off the exchange.

Some of the 33,500 Mainers who buy their own insurance (about 4 percent of the population) may opt to purchase plans off the exchange directly from health insurers. Roughly a third now buy their insurance from companies other than Anthem, primarily Mega Life and Health Insurance Co., and may stick with that coverage. Mega still will sell plans in Maine, but not on the exchange.

Similarly, some of the 91,000 people who have coverage through a small business could continue getting coverage from several insurers that plan to stay in Maine’s market but not sell policies on the exchange.

Another group eligible to shop on the exchange, Maine’s 133,000 uninsured (about 10 percent of the population), are more likely to do so. But they could choose to remain without coverage and pay a penalty, become eligible for Medicaid, or find a way to afford an off-exchange plan.

People who accept health insurance through an employer or a family member’s employer can’t shop for insurance on the exchanges, except in limited cases. Or they can turn down the coverage (and lose any contribution from their employer) and shop on an exchange. They won’t be eligible for any help paying their premiums, though, unless the employer’s coverage isn’t considered affordable and comprehensive under federal standards.

Here’s where it gets even more complicated: If the premium offered by the employer costs more than 9.5 percent of a person’s annual household income — for individual, not family coverage — or if the employer’s plan pays less than 60 percent of the cost of covered benefits, then the employee can drop employer coverage and shop on an exchange, and may be eligible for a tax credit.

People with public health insurance, including Medicaid, Medicare, and veteran’s coverage, won’t really be affected by the exchanges. Roughly 500,000 of Maine’s 1.3 million people are covered by public health insurance.

What kind of financial help will be available to pay for health insurance?

By logging on to the exchanges, consumers can learn if they’re eligible for two types of financial help to pay for health coverage, depending on income and family size.

Some people can get a tax credit to lower the amount of their monthly premium. Individuals and families with incomes of up to 400 percent of the federal poverty level ($45,960 for an individual and $94,200 for a family of four in 2013) may be eligible.

There’s also a new option to lower out-of-pocket costs, including deductibles, co-payments and co-insurance. The “cost-sharing subsidy” is available to those with incomes of up to 250 percent of the poverty level ($28,725 for an individual and $58,875 for a family of four in 2013).

The less income a family has, the larger the subsidy.

For small businesses, some with fewer than 25 employees may qualify for a tax credit of up to 35 percent of premium costs in 2013 and up to 50 percent in 2014.

What benefits will the plans include?

All plans are required to offer a comprehensive set of health benefits including doctor visits, preventive care, maternity care, hospital treatment, mental health and substance abuse treatment, and prescriptions.

Plans can’t deny coverage to people with pre-existing conditions or charge them more. Maine beat federal health reform to the punch on that requirement. It has placed limits on insurers denying coverage to people with many pre-existing conditions since the early 1990s, which the Affordable Care Act outlaws starting in 2014. Nationally, this will lead to higher premiums for healthy people compared with before the law and lower premiums for the sick.

Next year, the Affordable Care Act also prohibits insurers from setting a dollar limit on how much they spend for a core group of benefits over a policyholder’s lifetime.

For information about health insurance exchanges, visit www.healthcare.gov.


Jackie Farwell

I'm the health editor for the Bangor Daily News, a Bangor native, a UMaine grad, and a weekend crossword warrior. I never get sick of writing about Maine people, geeking out over health care data, and...