The Affordable Care Act (ACA) requires each state to have a health insurance exchange (Exchange) to provide a competitive marketplace where individuals and small businesses will be able to purchase private health insurance coverage. The Exchanges are scheduled to be operational by Jan. 1, 2014, with enrollment expected to begin on Oct. 1, 2013.
Due to a number of factors, including the uncertainty surrounding the outcome of the Supreme Court’s ACA case and the 2012 presidential election, many states are behind schedule with their Exchange planning. Only approximately 14 states and the District of Columbia have enacted authority to establish a state-based Exchange.
States have asked the Department of Health and Human Services (HHS) for additional time to develop their Exchanges. In response, HHS issued a series of frequently asked questions (FAQs) on Nov. 9, 2012, to extend the deadline for states to submit their Exchange plans to HHS for approval.
States have three options with respect to their Exchanges. A state may:
- Establish its own state-based Exchange;
- Have HHS operate a federally facilitated Exchange (FFE) for its residents; or
- Partner with HHS so that some FFE Exchange functions can be performed by the state.
States face a tight deadline for implementing their Exchanges. ACA provides that a state’s plan to operate an Exchange must be approved by HHS no later than Jan. 1, 2013. HHS final regulations allow for conditional approval if a state is advanced in its preparation but cannot demonstrate complete readiness by Jan. 1, 2013.
To receive HHS approval, states that intend to pursue a state-based Exchange or a state partnership Exchange must submit a short declaration letter and an Exchange blueprint to HHS. Under guidance released by HHS in May 2012, the deadline for submitting these documents to HHS was Nov. 16, 2012.
To provide states with additional time to work on their Exchanges, HHS revised its deadline as follows:
- State-based Exchange: If a state intends to establish its own Exchange, it must provide a declaration letter to HHS by Nov. 16, 2012. States that are setting up their own Exchanges now have until Dec. 14, 2012, to file a blueprint with HHS describing how the Exchange will operate. HHS will approve, or conditionally approve, the state-based Exchanges for 2014 by ACA’s deadline of Jan. 1, 2013.
- State Partnership Exchange: States that would like to partner with HHS must submit a declaration letter and blueprint to HHS by Feb. 15, 2013. HHS will make approval determinations on state partnership Exchanges on a rolling basis.
According to HHS, states will be able to apply to run Exchanges in subsequent years. If a state has a state partnership Exchange in 2014, it can move to a state-based Exchange in 2015 by submitting a state-based Exchange declaration letter and blueprint. Also, if a state applies to establish a state-based Exchange for plan year 2014 and later decides it is more prepared to operate as a state partner, it can move into a state partnership Exchange. If a state does not establish its own Exchange or select the partnership model, HHS will operate the FFE in the state.
Business Benefits Group will continue to monitor health care reform developments and will provide updated information as it becomes available.