Public vs. Private Health Insurance Exchange – Which is Better?
A public health insurance exchange is one run by the government.Healthcare.gov is considered a public health insurance exchange because it operates under the ACA (Affordable Care Act). But people are also allowed to buy themselves insurance through private exchanges as well. To know the differences and similarities between the two, read the Public vs. Private Exchange thoroughly below.
What is a Health Insurance Exchange?
In a simple term, a health insurance exchange can be considered a shop that sells health insurance policies to its customers. To know the health insurance exchange components in this day and age, you need to read the information given below.
- Choose from two or more health insurance plans
- Summarized benefits of choosing a certain health insurance option
- Advice on deciding to get the best health insurance plan according to your needs
- Payment plan or premiums according to the chosen health insurance option
- And continuous support for the chosen health insurance plan
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Public vs. Private Exchanges
The main difference between public and private exchanges is the entity that operates the exchange and administrates the requirements for the plans offered on those exchanges.
What is a Public Health Insurance Exchange?
A health insurance exchange operated by a government entity (or a government contractor) is known as Public Health Insurance Exchange. In the United States, Healthcare.gov and other state-based exchanges are public health insurance exchanges. Plans that are traded on a public exchange are occasionally referred to as “on-exchange.”
All plans sold on these exchanges must be “eligible” to meet the Affordable Care Act requirements for minimum basic coverage, which are as follows:
- You need to have at least 60% Actuarial Value. It means the plan should cover 60% of costs, with the remaining percentage covered by the insured person or dependant.
- Cover the following 10 basic health benefits:
- Prescription Drugs
- Pediatric Services
- Preventive and Wellness Services and Chronic Disease Management.
- Emergency Services
- Mental Health and Addiction Services
- Pregnancy, Maternity, and Newborn Care
- Ambulatory Patient Services
- Laboratory Services
- Rehabilitative and Habilitative Services and Devices
Plans that meet the public exchange requirements can offer additional advantages as well. Such as:
- Public Exchange may calculate and apply premium tax credits that support the cost of incentives and expenses for employees with lower income. Plans at Healthcare.gov offer financial benefits to those who represent up to 400% of the Federal Poverty Line (FPL). Some government exchanges extend support to a greater extent.
- A public exchange can assist people who benefit from HRA (Health Reimbursement Arrangement), such as QSEHRA or ICHRA. While private exchanges generally offer HRA-eligible plans, a public exchange may have more experience operating with HRA.
What is a Private Health Insurance Exchange?
A health insurance exchange operated by a private company is known as a Private Health Insurance Exchange. Usually, an insurance company or broker provides you with the Private Health Insurance Exchange. Plans sold on a private exchange are occasionally called “off-exchange.”
Below are some differences between the public and private exchanges:
- Private plans offer more choices and competitive prices than public exchanges because they are not required to meet the MEC requirements.
- Private plans sell both individual and group exchanges, whereas public exchange only offers individual plans. Furthermore, you can have traditional group plans for employers with a minimum assistance requirement with a private exchange. But you may face restrictions on individual plans due to your income in a private exchange.
- A private exchange can assist people who benefit from HRA (Health Reimbursement Arrangement), such as QSEHRA or ICHRA. As private plans are typically more affordable than public plans, so to save more on your HRA, a qualified private exchange is a way to go. Especially if it is not an eligible PTC or tax credit, but you have been offered an ICHRA allowance that is considered “affordable” under the rules. It means that you will not be able to use the PTC for any term, even if you choose not to participate in the employer’s ICHRA.
So that is the difference between Public vs. Private Exchanges. Although both the exchanges have their pros and cons, choosing which one you want is totally on you to decide. For any further questions or suggestions, make sure to share them with us via the website’s comment section.