PPACA Requirements for Offering Health Insurance Inside Versus Outside an Exchange

Chris L. Peterson
Acting Section Research Manager

Bernadette Fernandez
Analyst in Health Care Financing

The Patient Protection and Affordable Care Act (PPACA, P.L. 111-148, as amended) establishes new federal private health insurance standards, many of which are not required to be implemented until 2014. In addition, by 2014, states are to establish "American Health Benefit Exchanges." These exchanges cannot be insurers, but will provide eligible individuals and small businesses with access to insurers' plans in a comparable way, and will have criteria for permitting plans' participation in the exchange. 

By 2014 (or earlier, in some cases), many new federal standards will apply to all insurers offering new coverage in the nongroup (also called individual) and small group markets—regardless of whether that coverage is available inside or outside an exchange. However, insurers who offer coverage through an exchange will be subject to additional requirements. Although these additional requirements, in isolation, could make plans less willing to offer coverage through an exchange, individuals who are eligible for premium tax credits and cost-sharing subsidies can only receive these subsidies through an exchange plan. For example, of the roughly 35 million individuals that CBO projects will be enrolled in nongroup coverage (including grandfathered coverage) in 2019, 24 million are anticipated to have that coverage through an exchange—of whom nearly 20 million will receive premium credits. In addition, exchanges will be required to handle some administrative functions currently handled by insurers, which may reduce insurers' administrative expenses for the nongroup and small group markets. 

This report lists PPACA's private health insurance market reforms that must be in effect by 2014 for new plans in the nongroup and small group markets—with a focus on distinguishing between those that apply inside versus outside an exchange. As such, this report does not go into great detail in describing the specific provisions that apply.1 Moreover, this report only discusses the impact on new plans—not on grandfathered plans, which cannot be offered through an exchange.2 The legislative references are to sections of PPACA as amended by Title X of P.L. 111-148 and by P.L. 111-152, generally without the additional references to Title X or P.L. 111-152.


Date of Report: June 10, 2010
Number of Pages: 10
Order Number: R41269
Price: $29.95

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