Health Insurance Providers and the Marketplace
Domain 2 covers who sells and delivers coverage and how the ACA Marketplaces operate. Questions mix carrier structure with Marketplace eligibility and subsidy arithmetic.
Carrier and delivery structures
- Stock insurers are owned by shareholders; mutual insurers are owned by policyholders and may pay dividends (never guaranteed).
- Fraternal benefit societies are nonprofit, lodge-based, and sell only to members; reciprocals (interinsurance exchanges) are unincorporated subscriber groups exchanging contracts through an attorney-in-fact; Lloyd's associations write through syndicates.
- HMOs often pay providers capitation and require in-network care with a PCP gatekeeper; PPOs pay negotiated fees and allow out-of-network care at higher cost; POS plans blend both; EPOs cover in-network care only.
- Many employers self-fund and hire a TPA; stop-loss insurance protects the employer against large claims.
The Marketplace
Marketplaces (state-based or federally facilitated) sell qualified health plans (QHPs) that must cover the 10 essential health benefits, guarantee issue regardless of health status, and limit waiting periods to 90 days. Metal tiers are bronze (60% actuarial value), silver (70%), gold (80%), platinum (90%); catastrophic plans are available to those under 21 or with hardship/affordability exemptions. Insurers may rate by age (3:1 maximum), geography, family size, and tobacco use (up to 1.5:1). Open enrollment runs November 1–January 15 in the federal exchange; special enrollment periods follow marriage, birth, adoption, loss of coverage, or a move. Premium tax credits apply to any metal tier; cost-sharing reductions apply only to silver plans. Insurers must meet an 80% (individual/small group) or 85% (large group) medical loss ratio or rebate the difference.
Worked example
A household of four at 180% of the federal poverty level enrolls in a silver plan. They qualify for both the premium tax credit and cost-sharing reductions; at 150–200% FPL the silver plan's actuarial value rises from 70% to about 87%, so the deductible and coinsurance drop sharply. Had they bought bronze, they would keep the premium credit but lose the cost-sharing reduction.
Traps
- Placing cost-sharing reductions on bronze or gold plans - silver only.
- Reversing the age-rating ratio so younger buyers pay more.
- Assuming the premium tax credit offsets the tobacco surcharge; it does not.
- Confusing a metal tier's actuarial value with the percentage the patient pays.