Health Benefit Exchanges


The Patient Protection and Affordable Care Act (PPACA) requires each state to establish an American Health Benefit Exchange (including a Small business Health Options Program (SHOP) exchange), by Jan. 1, 2014.

In 2014-2016, only individuals and small group employers are eligible to participate in the Exchange; beginning in 2017, states may permit employers in the large group market to participate. States may also form regional Exchanges.

A Health Benefit Exchange is a competitive marketplace for Americans shopping for health insurance. Individuals can choose from a variety of plans that are administered by private insurance companies, which may include HMO or PPO type plans. Individuals are not required to purchase a plan that is included in the Exchange.

The health plans offered in an Exchange must meet standard requirements for affordability,Essential Health Benefits, and consumer protections. The Act defines four coverage levels:

  • Bronze Plan: covers 60% of the actuarial value of the covered benefits
  • Silver Plan: covers 70% of the actuarial value of the covered benefits
  • Gold Plan: covers 80% of the actuarial value of the covered benefits
  • Platinum Plan: covers 90% of the actuarial value of the covered benefits

These Exchanges must include:

  • Adjusted community rating rules with rates only varying by age, tobacco use, geography, and family status
  • Essential benefit requirements
  • Limits on individual cost-sharing
  • Subsidies up to 400% of federal poverty level
  • Penalties for individuals who don't obtain coverage, and for employers with more than 50 employees who don't offer the minimum level of coverage

In addition, the Exchanges must provide specific support services including:

  • Certification of plans qualified for the Exchange
  • Support for calculation of subsidies
  • Health plan rating system and rate review
  • Standardized format and definitions for plan options and coverage
  • Enrollment facilitation
  • Website and toll-free hotline

Model Notice Available for Employers to Share with Employees on Exchanges

On May 8, 2013, the Department of Labor (DOL) issued Technical Release 2013-02 which provides temporary guidance for employers regarding the requirement to notify employees of coverage options available through Exchanges, also called Health Insurance Marketplaces. This Model Notice to Employees of Coverage Options is available for employers to use today if they wish. Employers must provide notice to current employees by Oct. 1, 2013. See related article

  • Model Notice for employers who offer a health plan
  • Model Notice for employers who do not offer a health plan