The Affordable Care Act for Texas agents

Establishment and Operation of Health Benefit Exchanges

Initial planning and establishment grants under 42 U.S.C. §18031(a)(1) were to be awarded not later than one year after March 23, 2010; eligible grants could subsequently be renewed, but no grant under that subsection could be awarded after January 1, 2015. A state was mandated to use awarded planning and establishment funds strictly for activities related to establishing an American Health Benefit Exchange (42 U.S.C. §18031(a)(3)). The law imposed a firm cutoff on this funding source, establishing that no grant for establishing an Exchange could be awarded after January 1, 2015 (42 U.S.C. §18031(a)(4)(B)).

Each state was required to establish an American Health Benefit Exchange not later than January 1, 2014 (42 U.S.C. §18031(b)(1)). An Exchange must be organized as a governmental agency or a nonprofit entity established by a state (42 U.S.C. §18031(d)(1)). Its primary operational mandate is to facilitate the purchase of qualified health plans (42 U.S.C. §18031(b)(1)(A)). Under statutory structure guidelines, an Exchange may operate in more than one state if each involved state permits it and the Secretary of Health and Human Services approves (42 U.S.C. §18031(f)(1)). A state may also establish subsidiary Exchanges if each subsidiary serves a geographically distinct area that is at least as large as a rating area described in the Public Health Service Act (42 U.S.C. §18031(f)(2)).

An Exchange must also provide for the establishment of a Small Business Health Options Program, commonly known as SHOP, designed to assist qualified small employers in enrolling employees in qualified health plans (42 U.S.C. §18031(b)(1)(B)). The Secretary of Health and Human Services must provide technical assistance to states to facilitate the participation of qualified small businesses in SHOP Exchanges (42 U.S.C. §18031(a)(5)). If a state has adequate resources to assist both individuals and employers, it may elect to provide only one combined Exchange for both individual and SHOP services (42 U.S.C. §18031(b)(2)).

A state must ensure that its Exchange is completely self-sustaining beginning on January 1, 2015, and may charge assessments or user fees to participating issuers to generate revenue (42 U.S.C. §18031(d)(5)(A)). Federal law strictly restricts operational spending: an Exchange cannot use funds intended for administrative and operational expenses for staff retreats, promotional giveaways, or excessive executive compensation (42 U.S.C. §18031(d)(5)(B)). In addition, an Exchange must publish its average licensing costs, regulatory fees, administrative costs, and monies lost to waste, fraud, and abuse directly on an internet website (42 U.S.C. §18031(d)(7)). An Exchange cannot establish rules that conflict with or prevent the application of regulations issued by the Secretary (42 U.S.C. §18031(k)).