December 28, 2014

Understanding Health Insurance Marketplaces: Fast Facts

health insurance marketplace

We’ve been talking about it for months and it’s finally here. October 1 has come and gone, making it open enrollment season, and your employees are officially able to enroll in the Health Insurance Marketplace if that is the direction you decided to take your benefits.

Although you might be done with the preparatory messaging and employee outreach, you’re still in the midst of answering questions as your employees work to determine if they want to obtain coverage through the marketplace. We’re willing to bet they have a lot of questions.

According to the 2013 Aflac WorkForces Report, three out of four (76 percent) are not very/not at all knowledgeable about federal and state health care marketplace. That’s why we have compiled a list of key details business leaders need to understand about health insurance marketplaces and the impact they will have on employer-sponsored benefits in 2014.

Fast Facts About Health Insurance Marketplaces

Health Insurance Marketplaces are a Web Portal to Buy and Sell Benefits

Health insurance marketplaces (also known as an exchange) are a Web portal where individuals and businesses can shop for and buy health insurance. The two marketplaces that will impact employee benefits are:

  • Public marketplaces: Run by state- and/or federal governments.
  • Private marketplaces: Run by private industry stakeholders.

The Health Insurance Marketplace Opened for Small Businesses and Individuals on Oct. 1

The Marketplace coverage will go into effect on Jan. 1, 2014.

Most anyone can use the Health Insurance Marketplace operating in their state to explore health insurance options, even if they already have insurance. Individuals must be U.S. residents, U.S. citizens (or lawfully present), and not currently incarcerated.

Small businesses with 100 or fewer full-time equivalent employees can also use the marketplaces. However, states can choose to keep the limit to those with 50 or fewer full-time equivalent employees through 2016.

Private Health Insurance Marketplaces Generally Provide Cost-Controlling Options for Businesses of all Sizes

Private health insurance marketplaces offer health coverage options to multiple workforce sizes. Additionally, they can sell all products and services, including voluntary insurance. Many private health insurance marketplaces can help employers to move toward a defined contribution model that can help control health care costs, while still providing employees robust benefits (PDF) options through a defined contribution.

Tax Subsidies Are Available Through the Health Insurance Marketplace

Individuals or small businesses may be eligible (PDF) for tax credits or subsidies through the state or federal public health insurance marketplaces. The purpose of this is to help offset the cost of coverage and defray some costs associated with using health care services.

“Silver” or 70/30 Coverage is the Health Insurance Marketplace Benchmark

What does this mean?

These plans pay approximately 70 percent of covered medical expenses or actuarial value. “Silver” is one of four levels of coverage offered in the marketplace. Each level varies depending on the proportion of medical expenses the insurance plan is expected to cover:

  • Bronze: Pays 60 percent of actuarial value.
  • Silver: Pays 70 percent of actuarial value.
  • Gold: Pays 80 percent of actuarial value.
  • Platinum: Pays 90 percent of actuarial value.

Silver is the benchmark for calculating subsidies, though individuals can “buy-up” to other plan levels, as well as dental coverage.

Health Insurance Marketplaces Affirm the Importance of Employee Education

Since employees are able to purchase health insurance coverage directly through the health insurance marketplaces, it is important for them to understand their coverage options and health risks.

The Affordable Care Act required businesses to tell employees about the Health Insurance Marketplace and potential eligibility for tax credits or subsidies. But, ultimately, employees are responsible for deciding how to spend their health care dollars.

Use this open enrollment season as an opportunity to further educate your workforce about the marketplace and other health care-related changes.

Healthcare Photo via Shutterstock

This material is intended to provide general information about an evolving topic and does not constitute legal, tax or accounting advice regarding any specific situation. Aflac cannot anticipate all the facts that a particular employer or individual will have to consider in their benefits decision-making process. We strongly encourage readers to discuss their HCR situations with their advisors to determine the actions they need to take or to visit HealthCare.gov (which may also be contacted at 1-800-318-2596) for additional information.

3 Comments ▼

Michael Zuna


Michael Zuna Michael W. Zuna is Executive Vice President and Chief Marketing Officer of Aflac U.S. Michael is responsible for leading the company’s integrated product and marketing strategies.

3 Reactions

  1. Michael,

    This is a very useful post, especially in the midst of confusion with regard to new health care policies. This post must be shared in business briefings and meetings so that employees can make a well-informed decision.

    • You’re right. I don’t even know that there is a marketplace for health insurance. Oh well, I could use a post on how to choose the right health insurance for my employees from here.

  2. All of this is very confusing. The different levels and if you qualify. I checked the website out the other day and it’s definitely no walk in the park.

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