On July 15, 2011, the Department of Health and Human Services (HHS) published a proposed rule to implement the ACA’s "Affordable Insurance Exchanges" (“Exchanges”), which are state-based health insurance markets for individuals and small employers that are scheduled to become operational by January 1, 2014. Specifically, the proposed rule: (1) sets forth the federal requirements that states must meet if they elect to establish and operate an Exchange; (2) outlines minimum requirements that health insurance issuers must meet to participate in an Exchange and offer qualified health plans; and (3) provides basic standards that employers must meet to participate in the “Small Business Health Options Program.” A second proposed rule would implement standards for states related to reinsurance and risk adjustment, and for health insurance issuers related to reinsurance, risk corridors, and risk adjustment under the ACA. These standards are intended to mitigate the impact of potential adverse selection and stabilize premiums in the individual and small group markets as insurance reforms and the Exchanges are implemented. Comments on both proposed rules will be accepted until September 28, 2011. Note that the regulations do not address all of ACA Exchange provisions; additional guidance on the establishment and operation of Exchanges will be provided in forthcoming proposed rules.