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How Medical Insurance Exchanges Will Work


Health care exchangesHealth care reform legislation states that each state setup an exchange by January 1, 2014 to help small businesses and individuals with purchasing medical insurance.  These exchanges will help to manage medical care costs, and offer transparency to the pricing and quality of health care plans.  In addition, these plans will offer access to medical insurance for many uninsured residents of the U.S., and small businesses that have had a difficult time affording medical benefits.  The exchanges promise to offer greater flexibility and choice for employees and their families as well as human resource personnel in charge of company health plans.

Because employers contribute a defined amount of money towards their employees' medical benefits, employees who purchase medical coverage using the exchange can select from a multitude of choices and have more flexibility when changing their plan at the end of the year.  Each state exchange must standardize their coverage options, making it easier for people to buy medical insurance.

There will be 4 tiers of benefits with altering out-of-pocket limits: the bronze tier, the silver tier, the gold tier, and the platinum tier.  Plans in the bronze tier will cover 60% or more of costs, plans in the silver tier will cover 70% or more, plans in the gold tier will cover 80% or more, and platinum plans will cover 80% or more.  There will be catastrophic plans available to people that are exempt from the mandate to purchase coverage because they are under 30 years old, or because there is no affordable plan available for them.

Each state that decides to begin their own exchange must make two different exchanges by January 1, 2014.  Individuals and people receiving a reduction in premiums and cost-sharing subsidies will be served by the American Health Benefit Exchange.  Small businesses will be served by the Small Business Health Options Program Exchange.  Small businesses with less than 50 employees will be able to buy coverage through this exchange, while businesses with less than 100 employees will be able to participate in this exchange starting in 2016.