Obamacare’s exchanges are now open for business.
Sixteen states, the District of Columbia and the federal government on Tuesday launched new online health insurance marketplaces, a cornerstone of the health care reform law, where individuals and employers can shop for plans from a number of insurers and apply for federal subsidies to help them pay for coverage.
More than three years in the making, the exchanges are meant to help drive down the cost of health care for individual consumers, families and small business owners across the country. However, the latest polls suggest that many still have no idea what the health care overhaul means for them or how the exchanges will work.
Here is what small business owners need to know:
What exactly are the small business exchanges?
Think of them like Priceline or Expedia, but for health insurance, rather than travel bookings. In every state, there are two separate portals — one for individuals shopping for themselves and another for small business owners shopping for their companies.
On their respective sites, individuals and employers can compare rates offered by various private insurance companies, apply for federal tax credits, choose a plan and pay their premiums, all online.
Here, you can walk through one of the exchanges step-by-step.
Who operates the exchanges?
It depends where you call home (or, more accurately, where your business calls home). Sixteen states and the District of Columbia elected to build their own exchanges, one for individuals and one for small business owners, while the remaining states opted to use marketplaces built and operated by the federal government.
Where do I find my state’s exchange?
Head to Healthcare.gov and enter your information; the site will direct you to your state’s exchange.
Which companies can buy plans on the exchanges?
During at least the first year, the exchanges in every state are available to companies with no more than 50 full-time employees or equivalents. By 2016, every exchange must raise the cap to 100 workers.
Note that there are a number of different small business size limits for different provisions of the health law. Check out some of the most important ones here.
What are full-time equivalents?
In determining size status for various provisions of the health care law, employers are required to tally all hours worked by part-time employees using a specific (and somewhat complicated) formula to determine their number of full-time equivalents, which is then added to their number of full-time workers to get the total number of employees.
Here is a primer on how to perform those calculations.
Do I have to sign up for coverage?
No. The exchanges are only for firms with fewer than 50 workers, which are all exempt from what is known as the employer mandate portion of the law, which requires companies to provide a minimum level of coverage to employees.
Meanwhile, those firms with more than 50 workers (which are therefore subject to the mandate) will not be penalized for not providing health plans during the first year.
If I want to sign up, do I have to right now?
No. Tuesday is the first day the exchanges are open for business, but there is no immediate urgency to enroll. In fact, small business owners can sign their firms up for coverage at any point during the year (this is not true for individual consumers, who have a limited window in which to purchase insurance on the exchanges).
When will coverage start?
Coverage secured through the exchange will take effect on Jan. 1 at the earliest, and in most states, small business owners have until early December to sign up for those plans.
How much will plans cost?
It is going to vary widely, based on your state, your insurance company, your company’s size, and what type of plan you want.
For starters, there are four plan levels on the exchanges — bronze, silver, gold and platinum, which cover 60 percent, 70 percent, 80 percent and 90 percent of the cost of medical expenses, respectively.
So, bronze plans will have the lowest premiums but will cover the least amount of out-of-pocket costs. On the other end of the spectrum, platinum plans carry the highest premiums but will cost less when you or your employees, say, visit the doctor or buy prescriptions.
Costs will also vary across the country. A typical silver plan in Maryland will cost between $209 and $435, while the same plan in Colorado will cost between $386 and $706, according to data released by the states.
Over the past three years, elected officials and political groups have been sparring over the likely cost of coverage on the new exchanges, but the truth is, it will take some time to sort out whether the marketplaces drive down rates as intended in the law. The final answer may not be the same in every state.
Which firms are eligible for tax breaks?
Obamacare included a number of federal subsidies to help employers afford coverage, including tax breaks equaling up to 35 percent of the cost of care for firms with 10 or fewer workers. Smaller credits are available to firms with as many as 25 employees.
Next year, the maximum credit jumps up to 50 percent of the cost of health insurance— but there is a catch: The subsidies will now only be accessible through the new health exchanges.
How do I know if the plans meet the new minimum-coverage requirements?
Every plan sold on the exchanges will offer a set of “essential benefits,” including coverage for in-patient hospital care, emergency, maternity and pediatric care and prescription drug costs.
Do I have to select one plan or can I give my employees options?
This, too, depends on your state. Originally, all the exchanges were supposed to allow employers to select various plans and give each worker a choice between several options.
However, the Department of Health and Human Services this spring announced it would delay that option on the federal exchange for one year, giving employers only the option to choose a single plan to cover all their workers in 2014.
HHS officials allowed states to push that feature back, too; however, most were already building it into their software and elected to move forward with that option. Consequently, employers in states running their own exchanges will have that multiple-plan option this year, while those using the federal exchange will have to choose one plan.
How do I get those tax breaks?
When employers enter their company’s information, including the number of employees, exchanges will automatically calculate the subsidies a company can collect from the federal government.
So, everything is now up and running?
Well, not necessarily. Though every state launched a new exchange on Tuesday, fewer than a dozen have full functionality. Due to computer problems, some are still unable to display prices, determine tax credit eligibility or process enrollments online.
Here is a look at what works and what doesn’t in every state.
Do you have more questions about the exchanges? Please e-mail your inquiries to jd.harrison@washpost and we will do our best to find answers.