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The California Individual Health Market Under PPACA (2014)

There seems to be quite a bit of confusion out there as regards the upcoming healthcare reform market for individuals and families in California.

There will be one pool of people in the overall market comprising one single risk pool.  In that overall single pool there will be two markets available for individuals and families in California to purchase qualifying health plans (QHP) which have not yet been developed by the carriers for the markets (deadline for the exchange is May 31, 2013).  QHPs must fall into a 'precious metals' tier of Platinum, Gold, Silver, Bronze and one Catastrophic Tier.  They must meet actuarial values  as determined by the PPACA.

The Exchange

California will operate a state health benefits exchange which will offer plans inside of the exchange to those who wish to purchase those plans and especially for those seeking premium subsidy assistance or credit (or both).  Subsidy for exchange plans will be based on financial qualification and will be set to the Silver Tier of plans.  Anyone seeking a subsidy MUST purchase their health insurance through the exchange to receive that subsidy.  Subsidy will not be available to those who purchase outside of the exchange who otherwise would qualify.

Insurance carriers will offer certain plans to the exchange and these plans will need to conform to exchange requirements.  They may offer plans at every tier level or only at certain tier levels. Some insurance carriers may not offer any plans to the exchange. 

Outside The Exchange (Copycats)

Insurance carriers must duplicate the plans they offer inside of the health benefits exchange outside of the exchange.  If a carrier offers four silver plans and one bronze plan inside of the exchange, that carrier must also offer the exact same plans outside of the exchange.

Outside The Exchange Only 

In addition to the copycat plans mirroring the exchange plans, insurance carriers can and will create other plans to be specifically sold only outside of the exchange.  These plans will also be guaranteed-issue and will not be available inside of the exchange for subsidy qualifiers or those wishing to purchase exchange level coverage.

Plans sold only outside of the exchange must meet a 'metal tier', have the correct actuarial value, and contain the required 'essential health benefits'.  Beyond that, carriers can and likely will create broader plans for this market segment with different provider networks (think larger), different plan options (HSAs), different co-pays, Rx benefits, drug formulary and so on.  

These plans will likely represent the primary coverage plan purchases by those who do not qualify for subsidy from the exchange.  

I will add a blog soon with information on general income guidance for subsidy qualification from the health benefits exchange.

Brokers and agents will be permitted to assist with enrollments inside or outside of the exchange with commission compensation (still unknown) to be paid by the insurance carriers directly.  Exchange enrollments will need to be done through the exchange portal or by paper application from the exchange.  Plans sold outside of the exchange will be carrier specific pretty much like it is now.



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