Health Insurance

Health Insurance Exchanges Explained

Health Insurance Exchanges Explained

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Consumers can use a state or federal health insurance exchange, or marketplace, to purchase standardized Affordable Care Act (ACA) health insurance plans sold by private insurance companies. Individuals, families and small businesses can review coverage options on the marketplace and choose a company and plan to best suit their needs.

What is a health insurance exchange?

A health insurance exchange, also called a health insurance marketplace, is an online site where you buy Affordable Care Act (ACA) plans sold by private insurers.

Some states manage their own health insurance marketplaces, while others use the federal marketplace, HealthCare.gov. Whether you buy a plan through the insurance exchange in your state or on HealthCare.gov, it’s considered "on-exchange" health insurance.

What states have their own health insurance exchanges?

Currently, 17 states and the District of Columbia run their own health insurance exchanges to help people shop for ACA coverage. Though the sites are state-run, health plans still follow federal ACA requirements.

If you live in a state with its own insurance exchange but start your insurance search at HealthCare.gov, not to worry — the site provides a link to your state insurance exchange based on your ZIP code.

States not listed here use the federal health insurance exchange, HealthCare.gov.

What types of plans are sold on the exchange?

Plans sold on the exchange are called qualified health plans (QHPs). QHPs cover health care needs such as doctor visits, prescriptions, hospitalizations and emergencies. These plans provide the 10 essential health benefits required by the ACA and follow federal limits on how much you're required to pay toward your health care.

Plans sold on health insurance exchanges are separated by metal levels or tiers: Bronze, Silver, Gold and Platinum. There also is a Catastrophic level, which provides cheap plans for consumers under age 30 or who qualify for a hardship exemption. Generally speaking, monthly rates are cheapest for Catastrophic plans and increase with each level, with Platinum plans being the most expensive. However, Catastrophic plans are not eligible for premium tax credits.

When can I enroll in coverage through an exchange?

You can enroll in an ACA plan through an exchange during annual open enrollment, which begins Nov. 1.

You also can enroll in an ACA plan outside of open enrollment if you have an event that qualifies you for a special enrollment period, such as moving to a new location or losing employer health insurance.

How does the enrollment process work?

We recommend enrolling in a plan through a state or federal health insurance exchange, rather than directly with an insurance company. When you enroll through an exchange, you can access cost-cutting programs that might save you money.

  1. When you first enter an exchange, you'll input information about where you live, which narrows the list down to plans available in your area. Sites also ask for information about your income and family size. Although it's optional, we strongly suggest completing this step to see if you qualify for cost savings. You also can enter your medical providers and prescriptions to see how various plans cover them.
  2. Your plan options appear next. Depending on the site, you can narrow your search by insurance company, plan type, cost and other key factors. To help narrow your choices even further, you can select multiple plans for a side-by-side comparison.
  3. When you decide on a plan, complete the application online by adding personal information about yourself and any dependents. Then watch your mail or your online account for updates and to find out if there are any issues with your application. To complete your enrollment and start using coverage, you must make your first monthly payment. ? Once your enrollment is processed, you'll receive a packet with plan details and your identification cards.

Why should I buy insurance on the exchange?

If you buy insurance on the exchange, you and your family may qualify for subsidies for low- or middle-income households.

Only consumers who purchase plans on the exchange are eligible for these subsidies — off-exchange plans don't count.

Individuals and families making under 400% of the federal poverty level are eligible for subsidies that reduce monthly insurance rates. For example, an individual earning $17,130 in 2022 might pay a maximum of $42 per month for health insurance in 2023.

People earning more than 400% of the federal poverty level might still qualify for a rate reduction, as the Inflation Reduction Act caps how much you pay for insurance at 8.5% of household income, based on the cost of a benchmark plan. This added rate cap is available through 2025.

Those with household incomes under 250% of the federal poverty level are eligible for further savings through cost-sharing reductions that reduce out-of-pocket medical costs like deductibles and copays.

Frequently asked questions

How do I know if I qualify for health insurance subsidies?

Enter your income and family size on the exchange website when you apply for coverage, and the site will estimate potential cost savings for you. You also can use our subsidy calculator to see if you might qualify for help .

What are the primary goals of health insurance exchanges?

One primary goal of health exchanges is to make insurance more accessible to consumers. The exchanges also prompt more competition in the market, which means better-quality, standardized plan choices for shoppers.

What does "off-exchange" health insurance mean?

Off-exchange health insurance plans are policies you buy through an insurance broker, through an agent or directly from an insurance company's website, rather than on a state or federal exchange. Off-exchange plans, which don't include Medicare, Medicaid or employer insurance, are still bound by ACA rules, meaning they must provide minimum coverage and the 10 essential health benefits. You can buy off-exchange plans at any time of year, but you'll lose your chance for cost-saving programs with off-exchange plans.

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