Here’s Your Guide to Navigating the Health Insurance Exchanges

The Affordable Care Act’s health insurance exchanges are open for business, allowing consumers to shop online to buy and compare coverage on the spot.

The exchanges are the biggest provision of the president’s landmark legislation, and have faced a three-and-half-year battle to become a reality. They’ve been upheld in the country’s highest court, been threatened to be defunded on Capitol Hill and faced several technical glitches. Leading up to the launch, many officials warned that marketplaces will not be fully functional in some states, and experts recommend consumers give the exchanges some time to work out any kinks. On Tuesday, many users were unable to log on to healthcare.gov to evaluate and sign up for coverage on their state's exchange and received the following message: "“The system is down at the moment. We’re working to resolve the issue as soon as possible. Please try again later.”

“Don’t try and sign up on October 1,” says Margaret Flickinger, president of Keller Benefit Services. “There’s no big rush: You are guaranteed to get coverage so there is no need to put in your extra time while they are working out any potential issues. There will be some hiccups along the way, so give it time for those to be worked out.”

There are currently 48 million uninsured Americans and congressional agencies estimate about 7 million people will use the system to buy subsidized insurance by the end of the first open enrollment period. Sorting through the plans will require some leg work.  For example, New York’s exchange offers dozens of plans from more 16 insurers.

A recent survey from The Commonwealth Fund shows that despite the majority of Americans knowing about the mandate, a much smaller number understand how the exchanges operate and the resources available to them to sign up for coverage. Only 32% of respondents without health coverage during the last year were aware of the marketplaces, and 31% of those without coverage knew about available subsidies.

With that in mind, here’s a consumer’s guide on what you need to know about navigating the launch of the long-awaited exchanges:

What to Expect

Sixteen states plus the District of Columbia are offering their own exchanges and there will be federally-run exchanges debuting in 27 states. In seven states, state and federal offices are launching marketplaces together.

“Consumers can expect to see four different tiers of insurance options [on the exchanges], so there’s a bronze, silver, gold and platinum,” says Lauren Fifield, senior health policy advisor at Practice Fusion. The bronze plan is the least expensive.

“The nice thing is that insurers have been made to create plans with very clear language about what is being offered and at what expense to the consumer,” she adds.

Americans will pay an average premium of $328 monthly for a mid-tier health insurance plan. The average premium for a 27-year-old in 36 states, pre-subsidy, will start at $163 a month for the lowest-cost "bronze" plan; $203 for the "silver" plan, which adds more coverage; and $240 for the more-comprehensive "gold" plan.

Who’s Eligible, for What

For as much news that has surrounded the marketplaces’ launch, experts say most people probably won’t use them as they already have employer-sponsored health insurance.  The exchanges are likely to be most attractive to people who qualify for subsidized coverage and those who have been denied or are paying high costs because of pre-existing conditions.

“Regardless of your current or past health conditions, you will be able to obtain coverage from the private exchange marketplace or the government exchange marketplace,” says Mark Hatcher, CEO of EnginuityHR.

People living in the country illegally are not allowed to buy insurance on the exchanges.

Subsidies. Subsidies are only available through federal exchanges to consumers with an income less than 400% of the federal poverty level: about $46,000 for an individual and $94,200 for a family of four.

If you have insurance through your employer but make less than the 400% the federal poverty level and the plan covers less than 60% of allowed medical expenses or consumes more than 9.5% of your household income, you may also qualify for a financial support.

The application for a subsidy is lengthy and requires a lot of financial information, according to Flickinger, so she recommends being prepared with financial documents including an income tax return (if applicable), paycheck stubs, and W-2 forms.

“You want to take the time and fill out this information as accurately as possible. If you can, take less subsidy than offered because if it comes to light later that you received more aid than you should, you will be expected to pay it back and that can be a hard situation.”

How to Sign Up for Coverage

There are a number of ways consumers can sign up for coverage on the exchanges: online, on the phone or through insurance agents or brokers. But government officials recommend people go to Healthcare.gov to evaluate and buy insurance to avoid fraud. If there are any online technical glitches, call 1-800-318-2596.

Enrollment season continues through March 2014 and policies go into effect starting Jan. 1. The plans all provide the same essential benefits, including doctor visits and emergency services and hospitalization. As you move up the tiers, the plans expand to include benefits like physical therapy and more medication coverage options.

The annual out-of-pocket costs of a plan cannot exceed $6,350 for individuals and $12,700 for a family of two or more in 2014.

Tips for Navigating the Exchanges and Finding a Plan

Think Sick. Dr. Rusty Hofmann, co-founder of Grand Rounds, never imagined that his son would become sick with an illness that only impacts one in 10 million, but it happened.  He suggests evaluating plans based on if you will be able to afford long-term care.

“When you get sick, you want the best. You want the flexibility to choose your own doctor or specialist. You might not think that way when you are healthy and picking out a plan, but that will become your priority when you are sick."

Don’t Pick Based on Price. If you are under-insured, you will find yourself in the same situation as if you didn’t have coverage at all, warns Flickinger. She recommends thinking about how much of your budget can be allocated to paying premiums each month and trying to cut back in other non-essential spending areas to make sure you pick the plan with the most coverage.

For instance, a bronze plan will carry the lowest monthly premiums, but if you do get sick, you will face the highest out-of-pocket costs. On the other hand, platinum plans have the highest premiums, but they will cover more of your medical bills when you're sick.

“Cheap policies have very, very high deductibles, so if you go to the hospital and you end up in the ER and are discharged with a $1,500 charge but you only have a $4,000 deductible, for all intents and purposes, you don’t have coverage and will be leaving that hospital facing having to pay that tab,” says Flickinger.

Check Financial Viability. Hatcher says the biggest mistake consumers make is choosing a company that is not “A-rated financially.”

“The main insurance companies, Blue Cross, United Healthcare, Aetna, Cigna, Humana and a few other regional carriers should be the carriers to consider.  Smaller providers, although they may be less, could be put into a financial position of being unable to pay claims.”

Wait. The White House admitted it expected glitches as the system starts up, and was were right, and Flickinger says there’s no need to be the first in line to get coverage. After all, the plan doesn’t kick in until Jan. 1.

“These exchanges have been struggling to get open by the deadline and some aren’t going to have the complete functionality that they should have, so give it some time and wait until it’s clear they are fully working.”