Exchanges 101: New insurance marketplaces will help link over 300,000 Oklahomans with affordable coverage

ExchangeThe primary intention of the Affordable Care Act (ACA) is to ensure that all Americans have access to affordable health insurance options. The law seeks to help millions of Americans who aren’t provided health insurance through their jobs or a public program to gain access to affordable coverage in the individual market.

Beginning in four months, individuals and small businesses will be able to purchase insurance on the newly created health insurance marketplaces, also known as exchanges. Many individuals and families will receive premium tax credits to help pay for the insurance.

The exchanges are intended to “help consumers and small businesses shop for coverage in a way that permits easy comparison of available plan options based on price, benefits and services, and quality.” Open enrollment starts October 1, 2013 and the health insurance plans will be operational starting January 1, 2014.

An indication that the exchanges will promote competition among health plans to keep prices affordable has been unveiled.  In California, health insurers provided a preview of health plans consumers could expect to purchase through the marketplace. These plans were considerably cheaper than anticipated, calming fears that the health plans offered through the health insurance marketplaces would still be unaffordable to consumers.  

To ensure individuals will be able to afford health insurance plans sold through the marketplaces, the federal government will provide premium tax credits to individuals with incomes between 100 percent and 400 percent of the Federal Poverty Level. According to the chart below, as an example, a family of four with an income up to $94,200 will be eligible to receive premium tax credits. The Kaiser Family Foundation has created an interactive tool that will calculate expected premium tax credits at

In announcing the decision not to expand the Medicaid program, Gov. Fallin also announced that Oklahoma would not be setting up a state operated health insurance exchange either. As a result of the decision, Oklahoma will have a federally facilitated exchange (FFE), operated directly by the federal government.

Nearly 337,000 Oklahomans will be eligible to receive a premium tax credit through the exchange, according to a report released by Families USA. These tax credits will be pivotal in assisting working families in Oklahoma to get access to affordable health insurance. The report indicated that young adults would be the likeliest age group to be eligible for the premium tax credits.

The premium tax credits will only apply to health insurance plans purchased through the health insurance marketplace and to consumers without access to affordable health insurance through a different mechanism. The tax credit will be calculated by taking the cost of the health insurance plan and subtracting the expected premium contribution. The expected premium contribution is the amount the health insurance consumer will be required to pay and is calculated based on a sliding scale. Expected contributions will range from two percent of an income less than or equal to 133 percent of the poverty level up to 9.5 percent of an income 400 percent of the poverty level.

The premium tax credits available through the marketplaces will be distributed in one of two ways. The first option is for a consumer eligible for a premium tax credit to take the credit in advance. The tax credit will flow directly to the health plan to offset the amount of the premium payments. This will effectively lower the consumer’s monthly contribution to their health plan. Alternatively, the consumer can choose to wait and claim the tax credit as a part of their annual tax refund.

Consumers Union has created an informative brochure explaining who will be eligible for the premium tax credits and how the credits will be applied.

To assist health insurance consumers in determining their eligibility for premium tax credits and maneuvering through the different health options, the federal government will employ navigators. 

There will be a least two types of navigators in FFE states. At least one navigator will be a community and consumer focused non-profit and the other navigator may include a variety of other entities. However, entities such as a health plan issuer or any organization that will directly or indirectly benefit from the sale of qualified health plans sold in the marketplaces may not serve as a navigator. Navigators in FFE states should be announced by the end of August.

While Oklahomans with incomes between 100 and 400 percent of the poverty level will have access to subsidies to purchase affordable coverage in the new marketplaces, it looks like those with lower incomes will be left without any assistance to access health insurance. The preliminary report from a contracted health care consultant has recommended covering this population by using federal dollars to provide premium assistance for private insurance beginning in 2015. The Oklahoma legislature adjourned without developing any plans to cover working Oklahomans with incomes lower than 100 percent of the poverty level.

Since Oklahoma will have a federally facilitated exchange, Oklahoma officials are not involved in the implementation of the exchange. However state officials believe the federal government will stick to its timeline of an Oct. 1st start date. As this date nears, it’s important that Oklahomans who will qualify for premium tax credits are aware of the assistance available to them and start making arrangements to learn what their options will be when the exchanges open.

For more coverage of the Affordable Care Act, click here.



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