Building the Health Insurance Marketplace


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NCSL EmblemUpdated  May 19, 2014  

The Affordable Care Act (ACA) requires that health insurance exchanges be established in every state by January 1, 2014. The central purpose of these new Marketplaces is to enable low and moderate income individuals, and small employers to obtain affordable health coverage. Individuals and small business will be able to purchase private health insurance through a variety of insurance Marketplace models throughout the United States. This document reflects information and guidance issued through statute, rule or communications from the federal government concerning the activities and options as they relate to the development of health insurance marketplaces.

The Latest News


2015 Insurance Market Standards and Reporting Requirements 

In a series of releases in 2014, the Department of Health and Human Services has provided a number of guidance documents which state marketplaces can use to prepare for the standards and changes that will be imposed in 2015. 


The Department of Health and Human Services (HHS) Awards Navigator Grants

On August 15, 2013, HHS released $67 million in grant awards to 105 navigator grant applicants in both federally-facilitated and state-partnership marketplaces. HHS also launched a 24-hour-a-day call center to answer questions in 150 languages. They have also enlisted 1200 community health centers across the country to help prepare individuals to enroll in coverage. For a list of Navigator awardees or more information about Navigators and other in-person assisters, please visit:

Government Accountability Office (GAO) Report- PATIENT PROTECTION AND AFFORDABLE CARE ACT: Status of CMS Efforts to Establish Federally Facilitated Health Insurance Exchanges

June 19, 2013-GAO released a report describing the federal government's role in establishing federally-facilitated Marketplaces (FFMs) for operation in 2014 and state participation in that effort. This report provides a status of federal and state actions taken and planned for FFMs and the data hub. GAO review regulations and guidances issued by the Center for Medicare and Medicaid Services (CMS) and documents indicating the activities that the federal government and states are expected to carry out for these changes. GAO also reviewed planning documents CMS used to track the implementation of federal and state activities, including documents describing the development and implementation of the data hub.

Program Integrity Proposed Rule: Exchanges, SHOP, Premium Stabilization Programs, and Market Standards: Safeguarding Federal Funds and Furthering Consumer Protection

On June 19, 2013, the Department of Health and Human Services (HHS) released a Notice of Proposed Rulemaking (NPRM) that proposes a number of policies related to the implementation of the ACA, including provisions regarding Affordable Insurance Exchanges, also known as Health Insurance Marketplaces. Much of the proposed rule focuses on program integrity regarding State Marketplaces, issuers offering coverage in the Federally-facilitated Marketplace, advance payments of the premium tax credit and cost-sharing reductions, and premium stabilization programs. The overarching goal of the proposed provisions is to safeguard federal funds and to protect consumers by ensuring that issuers, Marketplaces, and other entities comply with federal standards meant to ensure consumers have access to quality, affordable health insurance.

This rule also proposes establishing standards for HHS-approved enrollee satisfaction survey vendors, standards for the handling of consumer complaints by issuers in the Marketplace, and other provisions meant to ensure smooth operation of the Marketplaces, protect consumers, and give flexibility to states. Comments on the rule will be accepted until July 19, 2013.

Marketplace Options for States

State-Based Marketplace

State operates all marketplace
activities; however, state may use
federal government services for
the following activities:

  • Premium tax credit and cost
    sharing reduction
  • Exemptions
  • Risk adjustment program
  • Reinsurance program
State Partnership Marketplace

State operates activities for:

  • Plan Management
  • Consumer Assistance
  • Both




Federally-Facilitated Marketplace

HHS operates; however, state
may elect to perform or can use
federal government services for
the following activities:

  • Reinsurance program
  • Medicaid and CHIP eligibility:
    assessment or determination*


* Coordinate with Medicaid and CHIP Services (CMCS) on decisions and protocols 

SECTION 1—Health Insurance Marketplace Basics


Each state electing to establish a new health insurance Marketplace must adopt the federal standards in law and rule, and have in effect a state law or regulation that implements these standards. If a state elects not to establish a Marketplace, the ACA requires the Department of Health and Human Services (HHS) to establish and operate one in that state. This also applies in the event that HHS determines on review that state efforts to establish a Marketplace have not made sufficient progress to be fully operational by January 1, 2014. The ACA provides broad authority to the secretary to establish standards and regulations to implement the statutory requirements related to the Marketplace. The new Health Insurance Marketplaces are required to carry out a number of different functions

including determining eligibility and enrolling individuals in appropriate plans; conducting plan management activities; assisting consumers; ensuring plan accountability; and providing financial management.

Initial Guidance to States on Exchanges

On August 15, 2012, the Congressional Research Service (CRS) published a new report that outlines the required minimum functions of the Marketplace, and explains how Marketplaces are expected to be established and administered under the ACA entitled Health Insurance Exchanges Under the Patient Protection and Affordable Care Act (ACA).

Qualified Health Plans (QHPs)

Marketplaces should be designed to provide qualified individuals and small businesses with access to an insurers’ QHPs. QHPs are described in the ACA as a type of health plan that is subject to a specified list of requirements related to marketing, choice of providers, plan networks, essential benefits, and other features. QHP issuers will have to be licensed by each state in order to be eligible to provide coverage within their boundaries, and offer at least one QHP at the silver or gold level of coverage.

Actuarial Value ChartLevels of Coverage

The ACA generally requires QHPs to provide coverage at one of the following levels: bronze, silver, gold, or platinum. Actuarial value (AV) is a measure of the percentage of expected health care costs a health plan will cover. Plans inside and outside the exchange in the individual and small group markets who offer non-grandfathered health plans must offer plans that meet distinct levels of coverage specified in the ACA matching up to one of these "metal tiers" (and premiums must be the same for QHPs inside and outside of the Marketplace). Excluding dental-only plans, health insurance issuers must offer a silver plan and a gold plan in the Marketplace. Each coverage level will be based on a specified share of the full actuarial value of the essential health benefits. A health insurance issuer that offers coverage in any of these four levels will be required to offer the same level of coverage in a plan specifically designed for individuals under age 21. 

Bronze Level

Silver Level

Gold Level

Platinum Level

Bronze plan benefit coverage is actuarially equivalent to 60% of the full actuarial value [percent expense paid by the insurer] of the benefit package

Silver plan benefit coverage is actuarially equivalent to 70% of the full actuarial value [percent expense paid by the insurer] of the benefit package.

Gold plan benefit coverage is actuarially equivalent to 80% of the full actuarial value [percent expense paid by the insurer] of the benefit package.

Platinum plan benefit coverage is actuarially equivalent to 90% of the full actuarial value [percent expense paid by the insurer] of the benefit package.

The Internal Revenue Service (IRS) maintains a list of qualified health plans by state that was last updates May 1, 2013.

Essential Health Benefits

The ACA does not explicitly list the benefits that comprise “essential health benefits (EHBs),”  but identifies 10 broad benefit categories which must be included, at a minimum. 

As defined in Section 1302 of the ACA, EHBs will include at least the following general categories :

  1. Ambulatory patient services.
  2. Emergency services.
  3. Hospitalization.
  4. Maternity and newborn care.
  5. Mental health and substance use disorder services, including behavioral health treatment.
  6. Prescription drugs.
  7. Rehabilitative and habilitative services and devices.
  8. Laboratory services.
  9. Preventive and wellness and chronic disease management.
  10. Pediatric services, including oral and vision care.

HHS proposed that EHBs be defined using a benchmark approach for at least 2014 and 2015. States were asked to select a benchmark plan as a model for plans in the Marketplace.  These benchmarks

are generally regulated by the state, and would be subject to state mandates applicable to the small group market. The mandates would be included in the state essential health benefits package if the state elected one of the three largest small group plans in that state as its benchmark.

Cost Assistance

To make exchange coverage more affordable, certain individuals will receive premium assistance in the form of federal tax credits. (As specified in the law, the Treasury Department will send
monthly payments to the insurance company which issues the health plan in which a credit recipient is enrolled, to cover all or part of that person’s monthly premium.) Moreover, some recipients of premium credits may also receive subsidies towards cost-sharing expenses. Exchanges have some responsibilities in regard to determining an individual’s eligibility for cost assistance and calculating the amount of cost assistance provided.

Premium Subsidies

New federal tax credits were authorized in ACA to help low-middle income individuals pay for exchange coverage, beginning in 2014. The premium credit will be an advanceable, refundable tax credit, meaning tax filers need not wait until the end of the tax year in order to benefit from the credit (advance payments will actually go directly to the issuer), and may claim the full credit amount even if they have little or no federal income tax liability. Subsidies or premium credits will be available for qualified individuals if they:

  • Are lawfully in a state in the United States, unless their presence in the US is only for a specified period.
  • Are not enrolled under a Marketplace plan as an employee or their dependent  (through an employer who purchases coverage through the Marketplace for their employees).
  • Have a modified adjusted gross income (MAGI) of less than 400% of the federal poverty level (FPL) ($43,000 for an individual or $88,000 for a family of four, 2010 HHS Poverty Guidelines).
  • Are not eligible for Medicaid.
  • Are not enrolled in an employer's qualified health benefit plan, a grandfathered plan (group or nongroup), Medicare, Medicaid, military or veterans' coverage or other coverage recognized by the commissioner.
  • Are not a full-time employee in a firm where the employer offers health insurance and makes the required contribution toward that coverage.

CRS Distribution Memorandum—Legal Analysis of Availability of Premium Tax Credits in State and Federally Created Exchanges Pursuant to the ACA—(July 23, 2012)
Cost-Sharing Subsidies
Certain individuals who are eligible for premium credits in the Marketplaces will also be eligible for subsidies towards service-related cost-sharing. An individual who qualifies for the premium credit and is enrolled in a silver plan through a Marketplace, will also be eligible for a costsharing subsidy. As discussed above, total cost-sharing in exchange plans will be limited according to amounts specified in the federal tax code. Given that most exchange plans will already be required to meet such limits, the cost-sharing subsidies will further reduce the total amount those individuals who qualify for the subsidies will pay for using health services. Exchanges are required to either determine an individual’s eligibility for cost-sharing subsidies or implement a determination made by HHS. To do this, an exchange is expected to collect and verify the information necessary to make the determination and share that information with HHS.


SECTION 2—Building a Marketplace: State Guidance from HHS


StateBased Marketplaces

Once a state makes the decision to form and operate a Marketplace, the Department of Health and Human Services (HHS) must approve the operation of that Marketplace and if it meets the following standards:

  • the Marketplace is able to carry out the required functions of the exchange as established in the law and regulation, which ubckude making QHPs available to quaiified individuals and qualified employers,
  • the Marketplace is capable of carrying out the information reporting requirements elated to sharing information with the federal government in order to determine an individual's eligibility for premium tax credit; and
  • either the entire geographic area of the state is covered in the Marketplace or the state has established multiple Maketplaces that cover the entire geographic area of the state.
A state is responsible for creating and implementing its structure and governing system according to the guidelines outlined in the statute and reglations. Once approved states must make decisions regarding operational structure and governance. A state must operate both an individual and Small Business Health Options Program or SHOP Marketplace, but a state can either merge the two and operate both under the same administrative and governance structures, or elect to create two spearate structures for each program.

Generally, a state exchange must have a governing board that meets certain requirements; the board must

  • be administered under a publicly adopted operating charter or by-laws;
  • hold regular meetings that are open to the public and announced in advance;
  • ensure that the board’s membership includes at least one voting member who is a consumer representative and is not made up of a majority of voting representatives with conflicts of interest (e.g., representatives of issuers); and
  • ensure that a majority of the voting members on its governing board have relevant experience in the health care field (e.g., in health benefits administration, or in public health).

In addition, a state exchange is required to have in place and make publicly available a set of governance principles that include ethics, conflict of interest standards, transparency and accounting standards, and standards related to disclosure of financial interests. A state exchange must also implement procedures as to how members of the governing board will disclose any financial interests. The state exchange’s governance principles are subject to periodic review by HHS.

Federally—Facilitated Marketplaces

In states that elect not to establish a Marketplace, the ACA requires HHS to establish and operate a "federally-facilitated Marketplace" (FFM) in that state. This would also apply in the event HHS determines that despite state efforts to establish a Marketplace, the Marketplace has not made sufficient progress to become fully operational by January 1, 2014. An FFM can be implemented by HHS alone, or a state can enter into a “partnership” with the FFM, combining state-designed and operated functions with federally designed and operated functions. Partnerships are considered a subset of the FFM, indicating that HHS has authority over partnerships in the FFM.

The final rule on the establishment of exchanges does not include provisions specific to FFMs, however, the final rule does indicate that federally-facilitated exchanges are required to carry out many of the same functions as state exchanges. Additionally, FFMs and state-based marketplaces must adhere to many of the same standards outlined in ACA and the final rule. For example, state exchanges and federally-facilitated exchanges are both required to offer the same tools to help consumers access an exchange and assess their plan options through an exchange.

HHS has published some guidance that generally describes how a non-partnership FFM will operate within the framework established by ACA and the final rule. The guidance generally describes how a non-partnership FFM will determine which plans will be offered through an exchange, how it will conduct eligibility and enrollment activities, and how it will operate the SHOP exchange.

HHS Guidance on the State Partnership Models
To enter into a partnership Marketplace, a state must either manage activities related to plan management or consumer assistance or both.
  • If a state elects to administer plan management activities, the state will be responsible for recommending plans for certification to be offered through an exchange and managing day-to-day administration and oversight of exchange plans.
  • If a state elects to perform consumer assistance activities in a partnership exchange, then the state will be responsible for providing in-person assistance to individuals applying for or enrolled in coverage offered through the exchange and can choose to be responsible for outreach and educational activities.
  • If a state elects to administer both the plan management and consumer assistance activities within the partnership, then the state will carry out all of the activities described above.
Letter to Issuers on Federally-facilitated State Partnership Exchanges

Key Elements in the Approval Process

Final Exchange Blueprint States opting to run their own Marketplace must demonstrate how they will operate through submission of a blueprint document. The blueprint is also being used as an application for states seeking to enter into a partnership Marketplace with the Federal government. The Blueprint outlines:
  1. Functions that will be performed by exchanges run by the states, or state-based exchanges;
  2. Functions performed by exchanges operated as partnerships between the federal government and states; and
  3. Functions that states can perform in “federally facilitated” Marketplaces that HHS will set up in states that do not operate either of the other two types of exchanges.

States seeking to operate a State-based Marketplace (SBM) or electing to participate in a SPM must submit a completed Exchange Blueprint for approval by HHS.

Final Exchange Blueprint

The Declaration Letter

A state seeking to operate a SBM or participate in a SPM in plan year 2014 will declare the type of Marketplace model it intends to pursue through an exchange declaration letter as part of its Marketplace blueprint. The HHS guidance requires the state letter to be signed by the state's governor, and include a designation of the individual (s) who will serve as the primary point of contact. If a declaration letter is not received by November 16, 2012, HHS will plan to implement an FFM for the state.

Application Instructions

In addition to a declaration letter, a complete Marketplace blueprint requires submission of a Marketplace application which HHS provided in their guidance. The application should be used to document a state's completion or progress towards completion of all Marketplace requirements, either as a SBM or SPM.
Application Instructions

Federally Facilitated Marketplaces

In an FFM, states may pursue a SPM, where a state may administer and operate exchange activities associated with plan management and/or consumer assistance. The blueprint also sets forth the application process for states seeking to enter into a Partnership Exchange. In addition, they released guidance describing how they will consult with stakeholders to implement an FFM, where necessary, how states can partner with HHS to implement selected functions in an FFM, and key policies organized by Marketplace function. NCSL is developing a web page to provide FFM information as it becomes available.

HHS General Guidance on Federally-facilitated Marketplaces.

Conditionally Approved State-based and Partnership Health Insurance Marketplaces


Guidance for Exchange and Medicaid Information Technology (IT) Systems

CCIIO and the CMS released guidance concerning the design, development, implementation, and operation of technology and systems projects as they relate to the establishment of Health Insurance Marketplaces. The guidance  is the first in a series that establishes a framework for developing IT systems that are the subject of the “Early Innovators” grants released October 29, 2010. This guidance was organized to provide information in the following categories:

— Governance (within the federal government)
—Business Architecture (defines goals for Marketplaces, Medicaid, CHIP, and state subsidy programs) 
—Cost Allocation (describes the mechanisms and considerations for funding and coordinating between sources of funding or responsibilities shared among Marketplaces and Medicaid)
—Technical Architecture (identifies initial standards and high-level architectural guidance for use in implementing provisions of the ACA relating to Marketplacesexchanges, Medicaid, and CHIP)

States receiving funding under a Cooperative Agreement for Marketplace development or under an Advanced Planning Document (APD) under Medicaid for eligibility system development are advised to pay close attention to this guidance. The guidance document should be considered a critical source of information for states and will be used by OCIIO and CMS in reviewing state applications for funding under exchange grants and federal match under Medicaid.
Systems Interoperability to Facilitate Program Enrollment

Section 1561 of the ACA directed that interoperable and secure standards and protocols be developed to facilitate enrollment of individuals in federal and state health and human services programs. Initial recommendations were approved August 30, 2010 and they were adopted by HHS on September 17, 2010. The core of these recommendations is the belief that consumers will be best served by a health and human services eligibility and enrollment process that is transparent, accommodates a wide range of user skills, integrates private and public insurance options, connects consumers with multiple health and human services, and provides strong privacy and security protections. State Marketplaces will be responsible for screening enrollees for eligibility in health and human services programs requiring a transfer of a great deal of data for verification and screening. Definitions of data elements must be in agreement to make the transfer possible and enrollment data collected for the exchanges must provide the elements necessary to make screening for health and human services programs complete.

States will need to fully evaluate their systems capabilities to determine whether upgrades are required or if systems need to be replaced in order to handle this massive amount of information exchange. Legislators must consider the cost of these system changes not only for the purchase of new technology, but also the personnel required to carry out these changes.

The Office of the National Coordinator (ONC) has developed new web tools on the following web pages:

  • Standards and Interoperability (S&I) Framework to aide healthcare stakeholders in establishing standards, specifications and other implementation guidance that facilitate effective healthcare information exchange, and
  • CONNECT is an open source software solution that supports health information exchange – both locally and at the national level.
Health IT Supporting Resource--National Information Exchange Model (NIEM)

SECTION 3Essential Health Benefits


On December 16, 2011, HHS issued a bulletin outlining proposed policies that will give states more flexibility and freedom to implement the ACA. The bulletin describes a proposal that HHS intends to pursue in rulemaking to define essential health benefits and requested comments by January 31, 2012. NCSL submitted comments in a memorandum to CMS Acting Administrator Marilyn Tavenner

Defining Essential Health Benefits (EHBs)

The ACA ensures access to quality, affordable health insurance. To achieve this goal, the law ensures health plans offered in the individual and small group markets, both inside and outside of the  Exchanges, offer a comprehensive package of items and services, known as “essential health benefits.” EHBs must include items and services within at least the following ten categories:

  1. Ambulatory patient services
  2. Emergency services
  3. Hospitalization
  4. Maternity and newborn care
  5. Mental health and substance use disorder services, including behavioral health treatment
  6. Prescription drugs
  7. Rehabilitative and habilitative services and devices
  8. Laboratory services
  9. Preventive and wellness services and chronic disease management, and
  10. Pediatric services, including oral and vision care


EHB Coverage

EHBs must include coverage of services and items in all 10 statutory categories. Based on HHS research, it is believed that these benchmarks will cover most of the EHBs outlined by the ACA.
These categories include preventive care, emergency services, maternity care, hospital and physician services, and prescription drugs. If a state selects a benchmark plan that does not cover all 10 categories of care, the state will have the option to examine other insurance plans, including the Federal Employee Health Benefits Plan, to determine the type of benefits that must be included in the EHB package.

Allowing Plans Flexibility to Innovate and Consumers Greater Choice

To meet the EHB coverage standard, HHS requires that a health plan offer benefits that are “substantially equal” to the benchmark plan selected by the state, and modified as necessary to reflect the 10 coverage categories. Health plans also have flexibility to adjust benefits, including both the specific services covered and any quantitative limits, provided they continue to offer coverage for all 10 statutory EHB categories and the coverage has the same value. Permitting flexibility will provide greater choice to consumers, promoting plan innovation through coverage and design options, while ensuring that plans providing EHBs offer a certain level of benefits.

Updating the Approach

The department proposes that benchmarks will be updated in the future, and that state mandates outside the definition of EHBs may not be included in future years. The Bulletin also notes that updating the benchmark will allow benefits to reflect the most up-to-date medical and market practices.

How We Got Here: The Process?

While the law calls on the department to provide details regarding EHBs, this has been a team effort. As required by the ACA, in April, the Department of Labor (DOL) provided a report to HHS on employer-sponsored health insurance coverage. This report (PDF - 362 KB) detailed the benefits typically covered by employers’ detailed the benefits typically covered by employers. At the request of HHS, the Institute of Medicine (IOM) provided its recommendations on a process for defining and updating the benefits that should be included in the EHB package.

It is important to note that the ACA distinguishes between a health plan’s covered services, and the plan’s “cost-sharing features”, such as deductibles, copayments, and coinsurance. The cost-sharing features will be addressed in separate rules and will determine the actuarial value of the plan, expressed as a “metal level” as specified in statute: bronze at 60 percent actuarial value, silver at 70 percent actuarial value, gold at 80 percent actuarial value, and platinum at 90 percent actuarial value.

EHB Resources

Document Title and Link
Center for Consumer Information and Insurance Oversight (CCIIO)

Additional Information on Proposed State Essential Health Benefits Benchmark Plans

 Beginning in 2014, the ACA requires health plans to cover EHBs, and proposed rule released Nov. 26 requests public comment on proposed state EHB-benchmark plans.  To aid commenters with their review, HHS is providing information on the proposed EHB-benchmark plans for each of the 50 states and the District of Columbia on this CCIIO web page.  Two documents are provided for each proposed EHB-benchmark plan:  (1) a summary of the specific benefits and limits, and prescription drug categories and classes covered by the EHB-benchmark plans; and (2) state-required benefits.

HHS is also providing a detailed guide to facilitate commenters’ review of the summaries of proposed EHB benefits and limits and prescription drug coverage.  Because HHS is proposing that EHB-benchmark plan benefits be based on 2012 plan designs, and include other state required benefits if they were enacted before Dec. 31, 2011, some of the proposed benchmark plans described on this page may not include all benefit requirements for plan years starting after 2014.  Commenters are strongly advised to read this document before reviewing the proposed EHB-benchmark plan materials: Guide to Reviewing Proposed State EHB Benchmark Plans .

Essential Health Benefits Bulletin—This bulletin provides information and seeks comments on the regulatory approach that HHS plans to propose to define essential health benefits (EHB) under the ACA. Provides an overview of the ACA provisions and backgroun information. Only relates to covered services.

Essential Health Benefits Fact Sheet

HHS Informational Bulletin Fact Sheet

FAQs Essential Health Benefits Bulletin
CCIIO Releases Frequently Asked Questions (FAQs) on the Essential Health Benefits Bulletin—CCIIO released FAQs to provide additional guidance on the Essential Health Benefits Bulletin released Dec. 16, 2011, which outlined the proposed policies to give states more flexibility to create an EHB package for their exchanges. HHS intends to define the EHB packages through a benchmark approach. The FAQs provide further information about the process of selecting and updating a benchmark and more information on the disposition of state mandated benefits.
Assistant Secretary of Planning and Evaluation (ASPE)

Essential Health Benefits: Comparing Benefits in Small Group Products and State and Federal Employee Plans — This paper examines benefit coverage in employer-sponsored insurance in the small group market and State and Federal employee plans.


ASPE Issue Brief: Essential Health Benefits: Individual Market Coverage,

Letter to Governors

Letter from HHS Secretary Kathleen Sebelius to the 50 Governors announcing the release of the Essential Health Benefits Bulletin 


SECTION 4—Regulation and Plan Management of Qualified Health Plans (QHPs)

Accreditation of QHPs

The ACA directs that a health plan to "be accredited with respect to local performance on clinical quality measures***by any entity recognized by the secretary for the accreditation of health insurance issuers or plans (so long as any such entity has transparent and rigorous methodological and scoring criteria)." In requiring that QHPs be accreditate, the ACA is ensuring that quality strategies are implemented in an effort to improve the quality of health care.  Accreditation is a tool for regulators and purchasers that does not serve as a replacement for regulatory oversight, but is a complement to state review. Accreditation is the responsibility of a QHP issuer. If the issuer does not become accredited within the specific time frame and remain accredited, the QHP will not be certified.

HHS proposed rules governing the process June 5, 2012. To implement the accreditation provisions from the ACA relating to QHPs, HHS is proposing the first of a two-phased approach for recognizing accrediting entities. In phase-two, HHS plans to recognition process including an application procedurem, standards for recognition , a criteria-based review of applications, public participation, and public notice of recognition. On an interim basis, HHS is recognizing those entities that best meet the requirements from the ACA. At this time only two entities that accredit health plans meet or plan to meet the statutory requirements in 2012. HHS has recognized NCSL Foundation members the National Committee for Quality Assurance (NCQA) and URAC  for the purpose of accrediting QHPs. Marketplaces may include the accreditation process as early as 2013 certification, for the 2014 plan year.

NCQA and URAC have published white papers for policy makers addressing accreditation and the Marketplaces.

Final Rules

CMS released final rules May 31, 2013 governing the establishment of Exchanges (or "Marketplaces"), QHPs, and SHOPs. The rule amends an earlier SHOP rule permitting employees of small employers access to plan choice. The amendment recognizes that in 2014 the FFM will not be prepared to offer plan choice.  FFMs will only allow employers to choose and to offer their employees one plan. Because employers will only be able to offer a single plan for 2014, the federal Marketplace will not be aggregating premiums for multiple insurers. It will, however, offer an employer a single composite premium for all employees if required by state law or requested by the employer. State Marketplaces are also not required to allow employee plan choice or to aggregate premiums, although they are permitted to do so.  As of 2015, the federal SHOP will offer employee choice and aggregate premiums, and state SHOPs will be required to do so as well.

Additional Materials on Exchange Plan Management Functions

The National Association of Insurance Commissioners (NAIC) has drafted several white papers addressing key components in the plan management process. The NAIC Health Insurance and Managed Care (B) Committee adopted draft versions of the documents June 27, 2012 which include the:

  1. Network Adequacy White Paper,
  2. Form Review White Paper,
  3. Rate Review White Paper,
  4. Accreditation & Quality White Paper, and
  5. the Marketing & Consumer Information White Paper.
Some revision of the language is expected before final adoption of all of the darfts at the August 12 national meeting.

Section 5Consumer Support

Starting October 1, 2013, consumers in all states will be able to choose new affordable health insurance options through a new Health Insurance Marketplace.  No matter what state they live in, or the form the Marketplace takes in their state, consumers can get help as they apply for and choose new insurance options.  
A CMS PowerPoint presentation has been posted on their web site to summarize information on these programs.  What are the different types of consumer assistance? The Center for Consumer Information and Insurance Oversight (CCIIO) has also posted a fact sheet entitled Assistance Role to Help Consumers Apply & Enroll in Health Coverage Through the Marketplace outlining the different roles each position will play in enrolling individuals in coverage through the different marketplaces.


The ACA requires Marketplaces to establish a Navigator program to help consumers understand new coverage options and find the most affordable coverage that meets their health care needs.  Navigators will conduct public education to target Marketplace-eligible populations, assist qualified consumers in a fair and impartial manner with the selection of QHPs and information on tax credits and cost-sharing reductions, and refer consumers to any consumer assistance or ombudsman programs that may exist in the state.  Navigators must provide this information in a manner that is culturally and linguistically appropriate and accessible by persons with disabilities.  Navigators will engage in locally-focused work.  Each Navigator must be trained to:
  • Maintain expertise in eligibility, enrollment, and program specifications and conduct public education activities,
  • Distribute fair, accurate, and impartial information about enrollment in Qualified Health Plans (QHP) and other, health programs such as Medicaid and CHIP,
  • Facilitate selection of a QHP,
  • Refer consumers to Consumer Assistance Programs (CAPs) or other ombudsmen programs,
  • Provide information in a manner that is culturally and linguistically appropriate and accessible for people with disabilities,

The ACA prohibits Marketplaces from using Exchange Establishment grant funds to fund Navigator grants, although grant funds may be used to cover the Marketplace’s cost of administering the Navigator program.  States building their own Marketplace are required to have a Navigator program and a certified application counselor program, but may choose whether to build a non-Navigator (in-person) assistance program.

The ACA required HHS to establish operational standards for Navigator programs, including provisions to ensure that any entity selected as a Navigator is qualified, and licensed if appropriate, to engage in the Navigator activities required by the law and to avoid conflicts of interest. A final rule was published July 17, 2013 creating conflict-of-interest, training and certification, and meaningful access standards applicable to Navigators and non-Navigator assistance personnel in FFMs and SPM, and to non-Navigator assistance personnel in SBMs that are funded through Federal Exchange Establishment grants.

On August 15, 2013, HHS released $67 million in grant awards to 105 navigator grant applicants in both federally-facilitated and state-partnership marketplaces. HHS also launched a 24-hour-a-day call center to answer questions in 150 languages. They have also enlisted 1200 community health centers across the country to help prepare individuals to enroll in coverage. For a list of Navigator awardees or more information about Navigators and other in-person assisters, please visit:

Additional Information
National Association of Insurance Commissioners (NAIC), White Paper Georgetown University Health Policy Institute, Issue Briefs 

In-Person Assistance Personnel

In-person assistance personnel (also known as non-Navigator assistance personnel) will perform generally the same functions as Navigators.  In an SBM, in-person assistance personnel will serve as a part of an optional, transitional program that the state can set up before its Marketplace is economically self sustaining, and before its Navigator program is fully functional.  Though they perform the same functions as Navigators, in-person assistance personnel will be funded through separate grants or contracts administered by a state.  In-person assistance personnel must also complete 30 hours of comprehensive training.

Certified Application Counselors

Certified application counselors are a third type of consumer assistance, described in a proposed rule from HHS.  Under the proposal, they would be certified by the Marketplace to perform many of the same functions as Navigators and in-person assistance personnel—including educating consumers and helping them complete an application for coverage.  They would not receive new federal grant money through the Marketplace.  They could, however, get federal funding through other grant programs or Medicaid to help support their consumer assistance and enrollment activities.  Examples of possible application counselors include staff at community health centers or hospitals or consumer non-profit organizations.  Certified application counselors would also be required to complete comprehensive training.

On July 12, 2013 CCIIO released guidance on the Certified Application Counselor Program for the federally-facilitated marketplace and state-partnership marketplaces.  CMS established certified application counselors as a type of assistance personnel available to provide information to consumers and to help facilitate consumer enrollment in QHPs and insurance affordability programs.

Marketplace Consumer Application Forms:

Agents and Brokers

To the extent permitted by a state, licensed agents and brokers may enroll consumers in coverage through the Marketplace.  Agents and brokers will be compensated by the issuer under state law.  Federal and state training and certification will apply.

CCIIO Guidance—Role of Agents, Brokers, and Web-brokers in Health Insurance Marketplaces.

Additional CCIIO Resources for Agents and Brokers


 SECTION 6—Key Dates in the Implementation of the Health Insurance Marketplaces

 Key Dates in the Implementation of the Health Insurance Marketplaces

  • Renewable planning & establishment grants released 9/30/10
  • NAIC releases the American Health Benefit Exchange Model Act 9/27/10
  • HHS to develop interoperability secure standards and protocols that facilitate enrollment of individuals in federal and state programs October 2010
  • HHS to determine the date of the initial open enrollment period 7/1/12
  • Exchange Blueprint, Declaration Letter, and Application Due Nov. 16, 2012.
  • HHS to determine if states have complied with the provisions to establish a Marketplace and if intervention will be required 1/1/13
  • HHS to award grants and loans for the CO-OP program no later than 7/1/13
  • Marketplace become operational 1/1/14
  • Required standards must be in effect 1/1/14
  • Marketplace must be self-sustaining by 1/1/15

Additional Information

Federal Rules and Guidance for the Establishment of Health Insurance Marketplaces and Qualified Health Plans


Marketplace Implementation
Guidance: Initial Guidance to States on Exchanges This guidance document was the first in a series of documents that HHS published to provide information to states and the territories seeking to establish an Exchange.
State Exchange Implementation Questions and Answers (11/29/2011) State Exchange implementation questions and answers addressing: cost to states; use of data services HUB; Basic Health Program funding; FFM and state department of insurance responsibilities; eligibility under an FFM or an SBM; IRS elements to which states will have access; Multi-State Plans; Risk Adjustment Data Collection; Quality Certification Requirements; Advance Payments of the Premium Tax Credit in the FFM; and Program Integrity.
Exchanges, Market Reforms and Medicaid Frequently Asked Questions (12/10/2012) Guidance Addresses: State-Based and State Partnership Marketplaces—Federal funding, State Partnership Marketplace approval process; Federally-Facilitated Marketplaces—Coordination with States, FFM and State Laws, Impact on State Regulators; Market Reforms; Multi-State Plans; Bridge Plans; Consumer Outreach; Consumer Eligibility and Enrollment; Medicaid Expansion; State Flexibility in Medicaid; Modified Adjusted Gross Income (MAGI); Disproportionate Share Hospital(DSH); and Coordination of Marketplaces and Other Programs.
State Partnership Marketplaces
Guidance on State Partnership Exchanges (01/03/13) This guidance provides a framework and basic roadmap for states considering a State Partnership Exchange. This guidance also describes how HHS will work with states independent of State Partnership Exchange.
Federally-facilitated Marketplaces
General Guidance on Federally-facilitated Exchanges
This document outlines HHS' approach to implementing an FFM in any state where a state-based Marketplace is not operating. In addition to describing HHS' high-level operational approach, they discuss:
  1. How states can partner with HHS to implement selected functions in an FFM,
  2.  Key policies organized by Exchange function, and
  3.  How HHS will consult with a variety of stakeholders to implement an FFM
Small Business Health Options Program (SHOP)
Small Business Health Options Program (SHOP)-Only Marketplace (05/10/13) FAQs on the SHOP-only Marketplace.
Essential Health Benefits
Essential Health Benefits Bulletin (12/16/2011) The purpose of this bulletin was to provide information and solicit comments on the regulatory approach that HHS plans to propose to define EHBs under the ACA. This bulletin begins with an overview of the relevant statutory provisions and other background information, reviews research on health care services covered by employers today, and then describes the approach HHS plans to propose. This bulletin only relates to covered services. Plan cost sharing and the calculation of actuarial value are not addressed in this bulletin.
Frequently Asked Questions on the EHBs (02/17/2012) This document is intended to provide additional guidance on HHS’s intended approach to defining EHB.
Information Technology Systems Requirements
Guidance: Exchange and Medicaid Information Technology (IT)
This guidance seeks to help states achieve the necessary degree of interoperability between IT components in the federal and state entities that work together to provide health insurance coverage through the Marketplace, Medicaid or CHIP programs.
Guidance: Guidance for Exchange and Medicaid Information Technology (IT) Systems: Version 2.0 CMS published this guidance to help states achieve interoperability between IT components in the federal and state entities that work together to provide health insurance coverage through the Marketplace, Medicaid or CHIP programs. IT systems should be simple and seamless in identifying people who qualify for coverage through the Marketplace, tax credits, cost-sharing reductions, Medicaid, and CHIP.
Cost Sharing
Actuarial Value and Cost-Sharing Reductions Bulletin (02/24/2012) The purpose of this bulletin was to provide information and solicit comments on the regulatory approach that HHS plans to propose to define actuarial value (AV) for QHPs and other non-grandfathered coverage in the individual and small group markets under the ACA as well as to implement cost-sharing reductions. AV is a measure of the percentage of expected health care costs a health plan will cover. AV is calculated based on the cost-sharing provisions for a set of benefits.

 NCSL Comments on Key ACA Regulations

NCSL submitted comments Dec. 26 to the Department of Health and Human Services (HHS) on a proposed rule (NPRM) detailing the Affordable Care Act (ACA) standards for coverage of essential health benefits (EHBs), actuarial value, and accreditation of qualified health plans (QHPs). The NPRM also proposes a timeline within which QHPs must be accredited to participate in an FFM. HHS published the  proposed rules Nov. 26.

Comments Regarding 45 CFR Parts 147, 155, and 156, Standards Related to Essential Health Benefits, Actuarial Value, and Accreditation; Proposed Rule.

NCSL also submitted comments on Friday, Jan. 4 to the Office of Personnel Management (OPM) regarding a proposed rule to implement the Multi-state Plan Program (MSPP). The ACA created the MSPP to foster competition among plans competing in the individual and small group health insurance marketplaces on the basis of price, quality, and benefit delivery. The ACA directs that OPM contract with private health insurance issuers to offer at least two multi-State plans (MSPs) in each of the Marketplace in the 50 States and the District of Columbia.

Comments Regarding 45 CFR Part 800, Establishment of the Multi-State Plan Program for the Affordable Insurance Exchanges

42 CFR Parts 431, 435, and 457—Medicaid Program; Eligibility Changes under the ACA

The ACA contained several provisions affecting Medicaid eligibility, enrollment and coordination with the Marketplace, CHIP, and other insurance affordability programs. CMS published final rules and interim final rules implementing statutory provisions changing the minimum Medicaid income eligibility level to 133 percent of the Federal Poverty Level (FPL), eliminating some eligibility categories, modernizing eligibility verification rules, and ensuring coordination across Medicaid, CHIP, and the Marketplace. Submission of comments were due May 7, and NCSL provided remarks focusing on timeliness and performance standards, FFMs, and Medicaid coverage of incarcerated individuals.

NCSL Comments

42 CFR Parts 155, 156, and 157—Patient Protection and Affordable Care Act; Establishment of Exchanges and Qualified Health Plans; Exchange Standards for Employers

The ACA provides states with an opportunity to establish an Marketplace through which individuals can purchase affordbale insurance coverage.The Marketplaces will provide a competitive forum where  individuals and small employers may directly compare available private health insurance options on the basis of price, quality, and other factors. The Marketplaces will become operational by January 1, 2014, and will help enhance competition in the health insurance market, improve choice of affordable health insurance, and give small business the same purchasing clout as large business. The final rule incorporates two proposed rules, the July 15, 2011 rule titled “Establishment of Exchanges and Qualified Health Plans” (Marketplace establishment proposed rule), and the August 17, 2011 rule titled “Exchange Functions in the Individual Market: Eligibility Determinations and Exchange Standards for Employers” (Marketplace eligibility proposed rule). While originally published as separate rulemaking, the provisions contained in these proposed rules are integrally linked, and together encompass the key functions of Marketplace related to eligibility, enrollment, and plan participation and management. In addition, several sections in this final rule are being issued as interim final rules and HHS is are soliciting comment on those sections.

The final rule:

(1) Sets forth the minimum federal standards that states must meet if they elect to establish and operate a Marketplace , including the standards related to individual and employer eligibility for and enrollment in the Marketplace and insurance affordability programs;
(2) Outlines minimum standards that health insurance issuers must meet to participate in a Marketplace  and offer QHPs; and
(3) Provides basic standards that employers must meet to participate in the SHOP.

NCSL comments submitted May 11continue to advocate for state flexibility in structuring Marketplace governing boards and urges HHS to give that same flexibility to states in forming their navigator programs. It raises concern over the issue of deeming multi-state plans as certified by the states and exempts them from complyance with state laws. Interim final rule comments address agents and brokers, the eligibility process, and verification of eligibility process.

National Association of Insurance Commissioners

NAIC White Papers—Adopted July 27, 2012.
  • Exchanges Plan Management Function: Accreditation and Quality White PaperThis paper is intended to be a resource to help the states understand the obligations of the Marketplace with regard to accreditation and quality. The paper also addresses situations where the states have options, including situations where options may exist but federal guidance on specifics is not yet available.
  • NAIC Form Review White PaperThis paper discusses those requirements, while focusing in large part on considerations for state departments of insurance (DOIs) that plan to handle or participate in QHP certification for either an SBM or an FFM.
  • Marketing and Consumer Information White Paper: Navigators, Agents and Brokers, Marketing and Summary of Benefits and CoverageThis paper is intended to explore the issues and options for implementation of certain provisions of the law and regulations issued to date. These provisions include the management of marketing; the summary of benefits and coverage required to accompany each policy beginning in September 2012; and how agents, brokers and Navigators will be regulated and managed in regard to the ACA. This paper will not address issues concerning consumer outreach in general, nor will it address the many facets of issues surrounding agents, brokers and Navigators that do not directly involve how state DOIs will manage these individuals. Those issues may be addressed at a later date when more information has been released by HHS.
  • Plan Management Function: Network Adequacy White PaperThe purpose of this white paper is to provide a framework for the states to consider for ensuring compliance with the network adequacy requirements (both statutory and regulatory) for both inside an exchange for QHPs—whether a state is implementing an SBM, FFM or partnership Marketplace—and outside an Marketplace for managed care plans.
  • Rate Review White Paper—The purpose of this white paper is to assist state policymakers with the implementation of the ACA provisions related to health insurance rating, rate filing and rate review. The focus of the paper is the rate review requirements related to the certification of QHPs in the Marketplace, but many of the ACA provisions impacting rate review apply to all plans in the individual and small group markets.
NAIC Exchange Model Act
The ACA directed that HHS work in cooperation with the NAIC and other stakeholder organizations to develop standards for the Marketplace. On Nov. 22, 2010, NAIC adopted a final version of the American Health Benefit Exchange Model Act for this purpose. The model act contains definitions and guidance for general requirements, and duties of the Marketplace. It does not include specific options for governance however. States will be responsible for implementing what will ultimately become the final set of standards along with the insurance market reforms established in the ACA by 2014. If the HHS determines before 2013 that a state will not have an operational Marketplace model by 2014, or will not be able to implement the required set of standards, HHS is required to establish and operate a Marketplace within the state. States operating an Marketplace before 2010 will be presumed to meet the standards, unless they are found to be out of compliance.
NAIC Resources


Federal Government Information and Resources

The Department of Health and Human Services


The Department of Labor

The Department of the Treasury

The National Committee for Quality Assurance (NCQA) White Paper Building State Exchanges to Get Better Value