A major component of the Affordable Care Act (ACA) is the creation of state-based health insurance exchanges—online marketplaces where consumers and businesses can compare and purchase coverage. According to the law, exchanges must be operational in each state by 2014. Individuals with low-tomoderate incomes will receive advanceable tax credits (also referred to as subsidies) to help them afford coverage, and tax credits will be available to small businesses to help them provide insurance to employees. Depending on the criteria established, individuals and small businesses not eligible for financial assistance may still be able to purchase insurance through an exchange. 

The ACA outlines some structural and functional requirements for the exchanges, but states have considerable flexibility in how they are set up and run. Several states–Massachusetts and Utah–set up their own exchanges before the ACA became law. Lessons from these existing state-based exchanges and from eligibility and enrollment with other programs can guide and inform states through their development process.

• The structure of each state-based health insurance exchange will be tailored to the individual state and likely based on its existing insurance market, as well as its administrative capacity, long-term policy goals and the needs of its residents.
• Eligibility requirements and enrollment procedures for individuals, families and small businesses could impact participation in the exchanges. 
• Each exchange should encourage the participation of both consumers and insurers.