Healthcare Reform

Health Care Exchanges Explained

Starting in 2014, one-stop marketplaces called Exchanges will be operational, enabling consumers and small businesses to choose a quality, affordable private health insurance plan that fits their health needs. Exchanges will offer health insurance options that meet consumer-friendly standards; facilitate consumer assistance, shopping for and enrollment in a private health insurance plan; and coordinate eligibility for premium tax credits and other affordability programs that ensure health insurance is affordable for all Americans. Through Exchanges, the public will have the same kinds of insurance choices as members of Congress.

Exchanges will offer Americans competition, choice, and clout. Insurance companies will compete for business on a level playing field, driving down costs.  

The rule includes standards for:

  • The establishment and operation of an Exchange
  • Health insurance plans that participate in an Exchange
  • Determinations of an individual’s eligibility to enroll in Exchange health plans and in insurance affordability programs
  • Enrollment in health plans through Exchanges
  • Employer eligibility for and participation in the Small Business Health Options Program (SHOP)

The exchanges will perform a variety of functions including:

  • Certifying health plans as “qualified health plans” to be offered in the Exchange
  • Operating a website to facilitate comparisons among qualified health plans for consumers
  • Operating a toll-free hotline for consumer support, providing grant funding to entities called “Navigators” for consumer assistance, and conducting outreach and education to consumers regarding Exchanges
  • Determining eligibility of consumers for enrollment in qualified health plans and for insurance affordability programs (premium tax credits, Medicaid, CHIP and the Basic Health Plan)
  • Facilitating enrollment of consumers in qualified health plans

Beginning in 2014, Exchanges will operate a Small Business Health Options Program (SHOP). The SHOP will provide small employers with new ways to offer employee health coverage, better information, easier administration, and access to tax credits that make coverage more affordable. 

Exchanges will decide how a SHOP is structured. Specifically, the final rule provides flexibility with regard to:

  • Size of small businesses that can participate in SHOP:  States can set the size of the small group market at either 1 to 50 or 1 to 100 employees until 2016. In 2016, employers with between 1 and 100 employees can participate in a SHOP. And, starting in 2017, states have the option to let businesses with more than 100 employees buy large group coverage through the SHOP.   
  • Structure of choices for small businesses:  Exchanges can choose to offer employers additional ways to provide coverage, including allowing their employees to choose any plan in all levels of coverage or a traditional “employer choice” offer of a single plan. 

Starting in 2014, small business employers purchasing coverage through SHOP may be eligible for a tax credit of up to 50% of their premium payments if they have 25 or fewer employees, pay employees an average annual wage of less than $50,000, offer all full time employees coverage, and pay at least 50% of the premium. 


Chronology of Health Reform 2010 - 2015: A Summary


Health Reform's Effect on Small Businesses: A Summary