Definition:
An American Health Benefit Exchange is a resource for Americans seeking health insurance. Under the Patient Protection and Affordable Care Act of 2010, each state is required to create an Exchange. Individual insurance buyers can select any of a variety of plans within the Exchange including HMOs, PPOs and fee-for-service plans, all of which are administered by private insurance companies.
Individuals are not required to purchase a plan that is included in the Exchange, but these plans carry strong consumer protections including mental health parity. They are also less expensive than comparable plans outside the Exchange due to the concept of shared risk. All states must offer an Exchange by 2014.
Examples:
Andy is a member of the Federal Employee Health Benefits system, the model for the American Health Benefit Exchange. Each year during open season, Andy can select any of a variety of health plans from private insurers. Even though he now has chronic health conditions and is retired on disability, he pays only the standard premiums for health insurance. His insurance company cannot drop his coverage, raise his rates, or prevent him from changing plans.
