On July 15, 2011, the U.S. Department of Health and Human Services (HHS) issued a proposed rule implementing the new affordable insurance exchanges (Exchanges) mandated by the Affordable Care Act (ACA).

Expected to become operational by January 1, 2014, these Exchanges will provide competitive marketplaces for individuals and small employers to directly compare available private health insurance options on the basis of price, quality, and other factors. They are also intended to help enhance competition in the health insurance market, improve choice of affordable health insurance, and give small businesses the same purchasing clout as large businesses.

HHS states that its intent in the proposed rule is to afford states substantial discretion in the design and operation of an Exchange. Additional guidance on the establishment and operation of Exchanges will be provided in forthcoming rules.

 The proposed rule:

  • Sets forth the federal requirements that states must meet if they elect to establish and operate an Exchange
  • Outlines minimum requirements that health insurance issuers must meet to participate in an Exchange and offer qualified health plans (QHPs)
  • Provides basic standards that employers must meet to participate in the small business health options program (SHOP)

Each state electing to establish an Exchange must adopt the federal standards contained in the ACA and in the proposed rule, or have in effect a state law or regulation that implements these federal standards. Unless otherwise specified, the provisions in the proposed rule related to the establishment of minimum functions of an Exchange are based on the general authority of the HHS Secretary under section 1321(a)(1) of the ACA.

Download a summary of the proposed rule


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