Demystifying Obamacare Exchanges in 5 Easy Steps

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Don't know much about the Obamacare health-insurance exchanges? If so, you're in good company.

According to the Kaiser Family Foundation's June survey, only 22% of Americans have heard "some" information or a "lot" of information about the exchanges that are a key part of the Affordable Care Act, commonly known as Obamacare. If you're among the more than three-quarters of those who have heard little to nothing about these exchanges, here are five easy steps to get up to speed.

1. Learn what the Obamacare exchanges are
The health-insurance exchanges are also called health-insurance marketplaces, which actually is a more descriptive term. Picture a virtual mall where you can buy health insurance from different insurers who have negotiated with the mall to set up shop.

While individuals will be able to purchase insurance over the phone and by submitting paper applications, most will probably use the online health-insurance exchanges. The process for buying insurance through these exchanges will typically involve entering personal information on the exchange website (including age and income), determining eligibility for government programs such as Medicaid or CHIP, learning about your eligibility for federal subsidies, and then comparing benefit plans to determine which best meets your needs.

2. Know who should use the exchanges
There are two major types of exchanges -- one for individuals, and another for employees of small businesses called SHOP -- the Small Business Health Options Program. If your employer has 50 of fewer full-time employees, check with the appropriate person at your organization to determine whether you should use a SHOP exchange. Small employers aren't required to use the exchange and face no penalty if they don't offer health insurance.

If you don't have health-insurance coverage through an employer and aren't already covered by a government health program, the individual exchanges are for you. However, if you already have health insurance, you won't have to switch to another plan bought through an exchange -- at least not for 2014.

3. Be aware of the time frames for the exchanges
When do the exchanges begin operations? Open enrollment is scheduled to start on Oct. 1. Health insurance purchased through the exchanges will be effective by Jan. 1 at the earliest. The open enrollment period will extend through next March 31.

Beginning next April until the next open enrollment period starts, you will be able to buy health insurance that meets the minimum requirements specified in Obamacare only if you have a "qualifying life event," which can include moving to a new state, getting married, having a baby, getting divorced, or experiencing some significant changes in income.  

4. Find out how to access the exchange in your state
Some states are operating their own health-insurance exchanges, while others will use a federally operated exchange. It's easy to find out what option your state is taking. Just go to and click on the "what is the Marketplace in my state" link.

The website allows you to specify in which state you live. If your state is operating its own exchange, you'll see a link to the appropriate website. If your state is using the federally operated exchange, you'll use the site. Remember, though, that the exchanges themselves won't be up and running until Oct. 1.

5. Understand why these exchanges are causing such a stir
Of all of our easy steps to take, this one is the most important. If you meet income requirements, the exchanges could be important to you because they can help you obtain health insurance with federal subsidies. If you don't obtain coverage, you could have to pay a financial penalty when you file your 2014 taxes.

At The Motley Fool, we focus on the investing angle. The Obamacare exchanges are a really big deal from that perspective, too.

If the Obamacare exchanges are successful in enrolling millions of previously uninsured Americans, hospitals could benefit significantly. It isn't surprising, therefore, that investment firms like the prospects for several large hospital chains.

For example, of the 23 analysts surveyed by Thomson Reuters that cover Community Health Systems (NYSE: CYH  ) , 12 rate the stock as a buy or strong buy. None of them recommend selling Community Health. The average one-year price target for the stock is more than 30% higher than the current price.

Analysts are also quite bullish about HCA Holdings (NYSE: HCA  ) , the nation's largest hospital chain. Twenty-two of 27 analysts polled by Thomson Reuters list the stock as a buy or strong buy. The analysts' average one-year price target is 18% above HCA's current level.

On the other hand, if far fewer Americans sign up for insurance through the exchanges than projected, hospital stocks could suffer. However, health insurers who opted to largely take a pass at participating in the exchanges could be rewarded by investors for their prudence if this scenario plays out.

UnitedHealth Group (NYSE: UNH  ) , for example, decided not to jump head-first into the various state exchanges. CEO Stephen Hemsley said his company was approaching the exchanges "with some degree of caution" because of concerns that the first wave of enrollees would run up big medical bills. This cautious stance could allow UnitedHealth to avoid losses if these concerns are on target, but it doesn't preclude the big insurer from joining exchanges in the future if things work out well.

Demystifying some of the logistical details about Obamacare exchanges is relatively easy. Predicting with any degree of confidence exactly how things will unfold with the exchanges is a different matter altogether. Regardless of what happens, though, one thing isn't a mystery: The U.S. health-care scene is about to get even more interesting.

Obamacare is rewriting the rules for the health-care industry, and in the process of doing so, it's creating massive opportunities for investors to get ridiculously rich. How? By investing in a handful of specific health-care stocks. In this free report, our analysts walk you through these opportunities and the companies that are positioned to exploit them. The informational edge contained in it is invaluable, but it can be exploited profitably only while the rest of the market remains in the dark. To access this free report instantly, simply click here now.

Read/Post Comments (16) | Recommend This Article (11)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On September 15, 2013, at 2:13 PM, greyhound44 wrote:

    One easy step: Avoid Obamamama NON CARE!

    ret expat MD: NBME; ABIM; ABNM; ABR w/spec comp NR

  • Report this Comment On September 15, 2013, at 4:00 PM, Funonline wrote:

    I have gone to the coveredcalifornia website and learned everything they had to say. I still do not know where I am going to get the $300 a month to pay the premium for the right to have a $5000 dollar deductable plan.

    Can anybody tell me where I will get the money?

  • Report this Comment On September 15, 2013, at 4:00 PM, antidemocrat1967 wrote:

    I keep finding one thing everyone leaves out when talking about obamacare. That is that by the end of 2017 EVERYONE will be required by the "LAW" of obamacare will have to have a RFID chip in their right hand or forehead. Right now there are 2.5 million americans that have this. There is ONE way to keep from having this chip and that is to request to have a credit card made which is $800. Now you will have to pay a $10 per month fee one either the chip or the card and this is how the government will make money off of everyone in the world. India is going to have all their people with this chip done by the end of 2014. If any of you know anything about the BIBLE in Revelation it says the MARK of the BEAST is IN the right hand or forehead. Think about this people.

  • Report this Comment On September 15, 2013, at 4:05 PM, redmanrt wrote:

    "The process for buying insurance through these exchanges will typically involve entering personal information on the exchange website (including age and income), etc, etc,

    Also determining if your particular interest group has been exempted from the mandate or not.

    Don't depend on the GOP.

    Join the MILLION GRAINS OF SAND campaign!

    Refuse to pay the premium. Flood the emergency rooms and make sure a photographer is there to capture the moment when the National Guard hauls you out, along with crying old ladies and screaming children. Make sure you are holding a baby.

  • Report this Comment On September 15, 2013, at 4:26 PM, sabebrush6 wrote:

    #6. Leave your check book at home and bring your Visa or Mastercard. You'll need it.

  • Report this Comment On September 15, 2013, at 4:38 PM, lyndagroom wrote:

    As you can see there is nothing to fear but fear itself. The exchanges in some states, like California, are miles ahead of others. A little cooperation goes a very long way.

  • Report this Comment On September 15, 2013, at 4:49 PM, thatsonlyme wrote:

    If this goes through as expected, the only beneficiaries are going to be insurance companies. Millions of people will literally give them their hard earned money while insurance companies won't give anything in return, considering that most people who are supposed to benefit from this bill will, like Funonline rightfully asked, struggle to pay their premiums and won't have any money left to pay deductibles.

    What happens if you can't pay your deductible?

    a) insurance will refuse to pay their part = you will go bankrupt

    b) insurance will pay their part = you will still go bankrupt because you can't afford deductible

    bottom line is, either way, if you have no money you're screwed while insurance companies will get your money no matter what.

    I think it's obvious who lobbied for this bill...

  • Report this Comment On September 15, 2013, at 5:08 PM, Pestcontrol2 wrote:

    This plan has nothing to do with healthcare and everything to do with control. The cost of my insurance has increased by 34% so far, and the cost of co-pays up by 50%. I do not use allopathic medicine (except in the case of triage) because it makes people sicker- but now I have to pay for "care" I don't want or use and will be unable to pay for the "unapproved" holistic care I do want and use. This plan pays off large hospital systems and crushes independent practitioners - it is heinous. This country has become a horrible place to live and work. Unfortunately, I am too old to expatriate and wouldn't know where to go to get away from statists anyway.

  • Report this Comment On September 15, 2013, at 5:14 PM, Pestcontrol2 wrote:

    Lyndagroom appears unaware that California is bankrupt. Nothing to fear but fear itself? Those are the words of someone who is not self-supporting, or has a government job. Those are not the words of someone trying to run a business independent of the government dole.

  • Report this Comment On September 15, 2013, at 6:55 PM, lokabrenna wrote:

    Well there is no point in signing up you do that you are willingly giving your freedom away... I have already made the conscious decision not to get Obama care... yes I will go to prison but they have already made the point that they want to take my freedom away with this health care act so the way I see it is at least throwing me in prison will at the very least make them work for the theft of my freedom (no I won't go down without a fight) and I won't be paying them to do so...

    I will make the government rue the day it messed with my freedom, this is not a threat it is a promise. I may not win but I will not roll over and quit fighting and this is something that every God loving American should do.

  • Report this Comment On September 15, 2013, at 8:31 PM, sagehopper wrote:

    Over 20,000 pages "demystifying" in 5 steps? Right. Gotcha. Defunding it will totally demystify it.

  • Report this Comment On September 15, 2013, at 9:11 PM, vet212 wrote:

    the ACA is a typical program devised without debate or discussion by the Democratic party and as such is so ill conceived it cant work all it is intended to do is further bankrupt the nation and destroy the finest healthcare system on earth after all why should we be the only country that can actually help people

  • Report this Comment On September 15, 2013, at 11:20 PM, lyndagroom wrote:

    Also BTW pestcontrol2 I worked for over 45 years in the private sector in California. Never took a direct dime from those non self-supporting or government workers that you are so afraid of. Care to explain what problem you have with working Californians? I did not run a business, however I was in management for over half of my working life. I was involved in the servicing of health care plans and all other areas involving business planning, budgeting and etc. Get it?

  • Report this Comment On September 16, 2013, at 12:40 AM, entitled wrote:

    1. Learn what the Obamacare exchanges are

    Not to worry- it's the same as apply for your food stamps

    2. Know who should use the exchanges

    It's simple. If you have a 'Bama phone then you need to be here....

    3. Be aware of the time frames for the exchanges

    Yes, make sure you apply whilst the liberals are in power else you might have the (shudder to think) provide identification and prove you're a U.S. resident (legal)

    4. Find out how to access the exchange in your state

    Once again, use your 'Bama phone....

    5. Understand why these exchanges are causing such a stir

    Well, this is because my HC is going to pay for yours and I WORKED FOR MINE but the liberals believe it's theirs to give away....

    Controversial, eh?

  • Report this Comment On September 16, 2013, at 2:00 AM, Dadw5boys wrote:

    Why do Americans pay 300 % more for a Hospital Bed ? Why pay 700% to 1200 % more for the same operations in other countries with the same results ? Why do we pay 900 % more for the same drugs ?

    Why are Businesses even allowed to mess around with Medical Care ? Our Medical Care or access to it is not something to be used as a weapon against Americans !!!!!

    Everyone pays some kind of tax espically sales taxes that support hospitals.

    Why are you afriad of steamlining the operations just like you would in any business ? You gather information just like Computers have been doing for years then you devolp the best prastice for that and steamline cutting out waste !!!!

    Why does common sense fail when it comes to cutting out the Middle Men who do not even provide a Bandaide but want 30% of the Medical Care Dollars ? They have not even earned 10 % !!

  • Report this Comment On September 16, 2013, at 2:14 AM, slanciano wrote:

    I would be more concerned with initial sign up. The FIRST people to sign are going be the SICK with pre-existing conditions, and the POOR. So you are going to have a gigantic financial burden right from the start that could collapse the system.

    So be sure to sign up for your free Obozocare paid for by the white working person.

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