State Exchanges

Marketplaces are now known as the “exchanges” under the Affordable Care Act and are required as part of the Act. Each state is required to establish an exchange. Should a state decide not to set up an exchange, the federal government set up a federally-facilitated or federally-operated exchange in those states. In many states, while there is an exchange, it is a federal exchange as opposed to a state-based exchange.

Purpose of the Exchange

Exchanges were created for individuals or small employers to purchase or gain access to health care financing options through a program administered by state and/or federal government. In the individual exchange, the financing options include subsidy, advance premium tax credits, or premium tax credits, along with cost-sharing subsidies to qualified individuals.

The small group exchange, also known as the SHOP exchange, is where a small employer who is eligible for the small business tax credit would be able to receive the credit. The credit is a subsidy available to qualifying small employers.

New hires are sent an email on the date of hire with state exchange options as a part of the ACA.

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