States have until 2014 to implement Exchanges for the purchase of health insurance coverage. The Department of Health and Human Services, one of the three agencies responsible for the implementation of health care reform, recently issued new guidance on health insurance exchanges.
HHS reiterates in its regulations that a state-based Exchange must be approved or conditionally approved by January 1, 2013 and conduct an open enrollment period by October 1, 2013. The initial 2014 open enrollment period may extend through March 31, 2014. Health coverage offered through an Exchange must meet federally-established minimum requirements to be considered qualified health plan coverage (QHP).
While Exchanges are generally aimed at providing health coverage in the individual health care market, small employers will also have an opportunity to purchase health coverage for their employees through an Exchange. This coverage for small employers is referred to as the Small Business Health Options Program, or "SHOP."
Beginning 2014, Exchanges must operate a SHOP to provide small employers with a vehicle to use to offer employees health coverage and access to tax credits and subsidies. Until 2016, states are permitted to set the small employer size for SHOP participation at either 1 to 50 or 1 to 100 employees. Participation limitations gradually increase until 2017 when states have the option to allow businesses with more than 100 employees in the SHOP. The recent HHS regulations expand upon the standards a state must have in place to establish and maintain a SHOP, and also provide minimum standards for employer participants.
The future of the Exchanges will depend, in part, on the Supreme Court's decision about the constitutionality of health care reform. However, some states are embracing the establishment of Exchanges and formulating plans for a new health care marketplace.
