New York Health Benefit Exchange to make insurance more accessible

401(K) 2013/via Flickr
January 29, 2013

John Archie has owned the Full Belly Deli in Vestal for four years now. He has three employees that work at his store, and, like many New York small-business owners, he’s wondering exactly what the Affordable Care Act means for him and his restaurant.

“My biggest concern is just trying to find out what it exactly means for me in dollars and cents,” he says.

It just so happens that a major part of the law applying to small-businesses is set to take effect on January 1, 2014, which could change the way individuals and small businesses purchase insurance for themselves and employees. That’s when the state health benefit exchanges become operational. These are the marketplaces where health insurance will be available for online purchase. 

Last April Governor Cuomo created the New York Health Benefit Exchange through executive order. Since then, the Department of Health has been busy setting it up with the help of federal funding. 

But how will they work? Well, here it goes.

Federal government offers tax incentives

First, the federal government will provide tax credits for uninsured individuals who want to purchase insurance through the exchange. Those eligible will have incomes between the federal poverty line and four hundred percent of the federal poverty line. That means a family of four earning between twenty-three thousand and ninety two thousand dollars a year could be eligible for some sort of tax credit to contribute toward the purchase of insurance. The credits will be determined on a sliding scale—the higher the income, the lower the credit amount.

On the small business side, things are a little different. Employers with fifty employees or less are exempt from the federal requirement that large employers must provide insurance or pay a penalty. But they will be eligible for tax credits to purchase insurance. Some small businesses could qualify for as much as a fifty percent tax credit—enough to cover half the cost of employees’ premiums.

“Businesses of fifty or fewer employees, which is where our great insurance problem is in New York,” says Peter Newell, director of the Health Insurance Project at the United Hospital Fund. “It’s people that are working fulltime at a small business and don’t have coverage.”

“One-stop shopping”

Then, there’s the website, where there will be two separate exchanges. One for individuals, and the other will be known as the Small Business Health Options Program, or SHOP, exchange. The site will become operational in October. That’s when individuals and employers can determine their eligibility for certain government-sponsored health benefits and begin to enroll in health insurance plans.

“Medicaid, CHIP, advanced premium tax credits under the exchange, subsidies under the exchange,” says Newell. “One-stop shopping.”

Now, once eligibility for federal tax credits is determined, exchange customers will have the option to shop from several private insurance plans that have been approved by the exchange. Each plan will be designated by level of coverage.

“There are going to be four tiers of coverage, platinum, gold, silver, bronze,” says Newell. “And the difference between the high-value plan and the low-value plan, the bronze plan, is going to be cost sharing.”

Which means a bronze plan will have low premiums, but may require a much larger deductible or copay for a doctor’s visit and vice versa for the gold or platinum plan.

There will also be a wide range of customer advocates associated with the exchange, known as navigators. According to Newell, these individuals and organizations will help customers pick coverage that is right for them.

“There are supposed to be navigator groups that say in Binghamton help sign up kids for CHIP, or run a school health clinic, or the local Chamber of Commerce, or a local Association of Manufacturers,” he says.

In other words the navigators will represent a broad cross-section of people with a single mission in mind: getting people enrolled in affordable health care coverage.