The basics of the Health Insurance Marketplace

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July 31, 2013

The health care reform law says that each state must have a Health Insurance Marketplace in place by January 1, 2014. A Health Insurance Marketplace is where individuals can buy health plans online if:

  • there is no employer-sponsored health plan or
  • if the employer-sponsored health plan is unaffordable or
  • if the employer-sponsored health plan doesn’t offer minimum essential coverage.  

Read below to find out the basics of Health Insurance Marketplace and the different levels of coverage it provides.

Who can buy insurance on the market place

Individuals can buy insurance on the marketplace. And if individuals meet certain income levels, they may even be able to get a tax credit to help pay for the coverage or subsidies to help pay their health care costs. But individuals have to buy insurance through a marketplace to get a tax credit or subsidy, if they qualify for it. 

The three marketplace options

Each state has to have a Health Insurance Marketplace. The state can set up its marketplace in one of three ways: 

  1. State-run facilitator model

The state runs this marketplace. Any health insurer that meets the minimum state and federal requirements set for marketplace can participate in this model. Health insurers compete in an open market.

  1. State-run active purchaser model 
    The state runs this marketplace. The state asks for bids from health insurers and chooses which plans it will offer. The state works with the insurers to agree on the price and benefits that will be offered.
  2. Federally run model 
    States can choose not to create a marketplace and let the U.S. Department of Health and Human Services run it. Like a state-run facilitator model, health insurers compete in an open market.

Four levels of coverage on the marketplace

Plans offered though the marketplace come in four tiers – bronze, silver, gold and platinum. Each tier will have several plans to choose from. The platinum tier will have the highest monthly premium but cost shares will be the lowest. The bronze tier will have the lowest monthly premiums but cost shares will be the highest. 

Platinum

  • Highest monthly premium
  • Plan pays 90% of medical expenses

Gold

  • Second highest monthly premium
  • Plan pays 80% of medical expenses 

Silver

  • Third highest monthly premium
  • Plan pays 70% of medical expenses

Bronze

  • Lowest monthly premium
  • Plan pays 60% of medical expenses 

Services offered by the marketplace  

  • Consumer assistance. Marketplace staff will manage the marketplace website and call centers. “Navigators” are staff members who will help people understand how to use the marketplace.
  • Plan management . Consumers will be able to choose health plans sold on the marketplace and see important data online, including cost, deductibles and coinsurance, for each plan.
  • Eligibility. When people apply for coverage on the marketplace, some basic information will be collected from them to make sure they can buy a plan on the marketplace. (Most people are eligible. Undocumented residents and people serving time in prison are not eligible.) The information will also help decide if they can get tax credits or subsidies.
  • Enrollment .  Marketplace staff helps consumers enroll in plans. The staff also relays information between the state and health plans on premium tax credits and cost-sharing reductions. This is required by Health and Human Services.

Marketplace timeline

If all goes as planned, Americans can begin enrolling in plans offered through the marketplace on October 1, 2013. Coverage effective dates will begin on January 1, 2014.

For more information on the Health Care Marketplace, visit our producer/employer health care reform website or Health Care Reform 4 You for members.  

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