Explainer: All You Need To Know About Health Care Exchanges

To hear WNYC's Fred Mogul explain what to expect from the Affordable Care Act's online health exchanges click the audio link above.

"Health care exchanges" are a key part of President Barack Obama's health care reform plan. Here’s your guide to understanding what it all means:

1. What are these exchanges anyway?

The exchanges are the way that individuals who aren’t covered by their employer or a government program like Medicaid will be able to purchase insurance. They are online marketplaces where people can compare the cost and quality of different plans, as Travelocity does for airline tickets—or as eHealth does already for health insurance plans.

2. What if I still cannot afford to buy insurance?

The Affordable Care Act does include some exceptions for what’s called the “individual mandate”—the requirement that every individual be covered come Jan. 1, 2014: those whose incomes fall below the threshold needed to file a tax return, for example. In addition, in some states, including New York, Medicaid will be expanded to cover more people. What’s more, about 70 percent of the people in New York state who are without health insurance are expected to qualify for federal subsidies (in reality, credits on one’s taxes) in order to buy policies on exchanges. Or, failing that, one can always pay the penalty—which is $95 next year (but more in subsequent years). Those who would have to pay more than 8 percent of their income on insurance even after those subsidies also would be exempt from the mandate.

3. When will the exchanges be open for business?

They are scheduled to be open Oct. 1. That’s when people can start enrolling. That open enrollment period will last through March 2014, but in order to get covered by Jan. 1, 2014, you need to enroll by Dec. 15, 2013. The health insurance plans themselves will begin covering people Jan. 1, 2014, if you've enrolled by that December date.

New York already has its website up. Go to http://www.healthbenefitexchange.ny.gov/ to find out more information. Rate and subsidy information is here: http://www.nystateofhealth.ny.gov/PremiumEstimator

4. What do New York's exchanges look like? 

The Cuomo administration is claiming that rates will drop more than half compared to current plans available for purchase on the individual market. If you take a look at the rate chart for the exchange, you can see that the monthly cost of a “gold”-rated individual plan—the second highest of four tiers in terms of quality—will range from about $400 to about $800 in Manhattan. Avik Roy, a senior fellow at the Manhattan Institute, has pointed out that according to the Kaiser Family Foundation, the average cost of health plans in the state was just $357 in 2010. (Kaiser says that figure includes a lot of subsidized programs.)

5. What about New Jersey?

New Jersey is one of 36 states that opted out of creating its own exchanges; the federal government will implement the state’s health marketplace. The Department of Health and Human Services said in September that the state's plans will be more expensive than those of New York.  Why? Mostly because New Jersey has more insurance mandates — for example, it requires insurers to provide coverage for things like infertility treatments and bone marrow transplants. Enrollment there is also expected to begin Oct. 1. Read more about  the cost of New Jersey's plans.

6. What about the Obama administration’s decision in July to postpone the employer mandate?

That decision postponed the penalties employers would have faced in some circumstances if they failed to provide health coverage to their employees.

While the Affordable Care Act does not explicitly require employers to offer health coverage to their workers, the federal government will eventually fine businesses if they employ more than 50 workers more than 30 hours a week (plus a couple other guidelines) and don't provide health insurance. The deadline for that coverage was pushed back from the beginning of 2014 to Jan. 1, 2015.

But that decision did not relieve individuals of the requirement that they be covered as of next year.