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Explainer: Getting Down to Business With NJ's Health Insurance Marketplace

Online marketplaces may have biggest impact as Affordable Care Act reshapes healthcare in America

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While the 2010 Affordable Care Act is reshaping American healthcare in many ways, the most significant may be the creation of health insurance marketplaces.

What it is

Health insurance marketplaces -- originally known as "exchanges" until the feds changed the name -- will make it possible for individuals and small businesses to compare and purchase health insurance online. Individuals will also be able to learn through the marketplace website if they are eligible for insurance subsidies.

The marketplace is scheduled to launch October 1, with New Jersey residents eligible to buy coverage starting January 1, 2014. The Rutgers Center for State Health Policy estimated that 362,000 more residents would purchase individual health coverage as a result of the Affordable Care Act, including roughly 200,000 who would receive marketplace subsidies.

How people will use it

The marketplace will be located online at healthcare.gov and will be operated by the federal government. While the state had the option of designing and operating its own marketplace, Gov. Chris Christie decided to leave it to the feds.

When visiting the secure marketplace website, residents will be asked to enter personal information, including income, age, and family size to determine the plans that they're eligible for. A summary of benefits and costs, including premiums, copayments and deductibles will be available. Federal officials have said the sites will use simple language that will allow people to make informed comparisons.

Nonprofit organizations known as “navigators” are expected to help residents sign up for insurance.

Who can get subsidies

Residents with incomes between 100 percent and 400 percent of the poverty line will be eligible for subsidies, although those with incomes below 138 percent are expected to enroll in Medicaid. Currently, the incomes of people who will qualify for subsidies range between $15,856 and $45,960 for single residents and between $32,499 and $94,200 for a family of four.

The plans

The insurance coverage offered through the marketplace must meet a set of essential health benefits defined by the ACA.

Since the sold through the marketplace are expected to be similar, healthcare experts believe that they'll primarily compete on price.

There are four categories of plans:

  • low-premium platinum plans, which will cover 90 percent of healthcare costs for the average person;

  • gold plans, which will cover 80 percent of costs;

  • silver plans covering 70 percent of costs; and

  • high-premium bronze plans covering 60 percent of costs.

The subsidies will be based on silver-level plans. The ACA also caps total out-of-pocket healthcare costs, with the current maximum set at $6,250 for individuals and $12,500 for families. Information about premiums isn't yet available, but is online before the marketplace’s October launch.

The mandates

Under the ACA’s health insurance mandate, residents who don’t purchase coverage through the marketplace and who aren’t insured through their employer will have to pay a penalty. It will be either $95 or 1 percent of income in 2014 (whichever is greater), rising to $695 or 2.5 percent of income in 2016.

The ACA also mandated that employers with 50 or more workers provide coverage by 2014, but federal officials have delayed enforcement of that mandate until 2015. They have said the extension is intended to allow employers more time to prepare. Starting in 2015, if a company doesn’t offer insurance and has at least one worker who receives a federal subsidy, it will have to pay a penalty of $2,000 for each of its employees, minus an allowance of 30 employees.

Federal-state relations

State officials are expected to work with the federal government to ensure that the plans offered through the marketplace comply with state regulations. Christie has said officials with the state Department of Banking and Insurance, Department of Health and Department of Human Services’ Medicaid program will work with federal officials.

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