Health Insurance Exchanges Explained
Consumers can purchase standardized Affordable Care Act (ACA) health insurance plans from private insurance firms through a state or federal health insurance exchange, or marketplace. Individuals, families, and small companies can use the marketplace to compare coverage alternatives and select the company and plan that best meets their needs.
What is a health insurance exchange?
A health insurance exchange, often known as a health insurance marketplace, is a website where you can purchase Affordable Care Act (ACA) plans from private insurers.
Some states run their own health insurance exchanges, while others rely on the federal exchange, HealthCare.gov. It is considered "on-exchange" health insurance if you purchase a plan through your state's insurance exchange or through HealthCare.gov.
What states have their own health insurance exchanges?
At the moment, 17 states and the District of Columbia operate their own health insurance exchanges to assist people in shopping for ACA coverage. Despite the fact that the sites are operated by the state, health plans must still adhere to federal ACA standards.
If you live in a state that has its own insurance exchange but begin your search at HealthCare.gov, don't fret; the site will direct you to your state's insurance exchange based on your ZIP code.
- California
- Colorado
- Connecticut
- District of Columbia
- Idaho
- Kentucky
- Maine
- Maryland
- Massachusetts
- Minnesota
- Nevada
- New Jersey
- New Mexico
- New York
- Pennsylvania
- Rhode Island
- Vermont
- Washington
States that are not included here use HealthCare.gov, the federal health insurance exchange.
What types of plans are sold on the exchange?
Qualified health plans (QHPs) are the plans sold on the exchange. Doctor visits, medicines, hospitalizations, and emergencies are all covered by QHPs. These plans cover the ten essential health benefits mandated by the ACA and adhere to federal limits on how much you must pay for health care.
Plans marketed on health insurance exchanges are classified as bronze, silver, gold, or platinum. There is also a Catastrophic level, which offers low-cost coverage to consumers under the age of 30 or who qualify for a hardship exemption. Monthly rates start low for Catastrophic policies and rise with each level, with Platinum plans being the most expensive. Catastrophic plans, on the other hand, are not eligible for premium tax credits.
When can I enroll in coverage through an exchange?
During yearly open enrollment, which begins Nov. 1, you can enroll in an ACA plan through an exchange.
You can also enroll in an ACA plan outside of open enrollment if you have a qualifying event, such as relocating to a new area or losing your employer's health insurance.
How does the enrollment process work?
Rather than enrolling directly with an insurance company, we recommend enrolling in a plan through a state or federal health insurance market. When you enroll in an exchange, you will have access to cost-cutting programs that may save you money.
- When you initially enter an exchange, you'll provide your address, which narrows the choices to plans available in your area. Sites will also inquire about your salary and family size. Although it is optional, we strongly advise you to complete this step to discover if you are eligible for cost reductions. You can also enter your medical providers and prescriptions to see how other insurance plans cover them.
- Your plan selections will be displayed next. You can filter your search by insurance company, plan type, pricing, and other important aspects, depending on the site. You can reduce your options even further by selecting different designs for a side-by-side comparison.
- When you've decided on a plan, fill out the online application with personal information about yourself and any dependents. Then, keep an eye on your email or online account for updates and to see if there are any problems with your application. You must make your first monthly payment to complete your registration and begin using coverage. When your enrollment is complete, you will receive a packet containing plan information as well as your identity cards.
Why should I buy insurance on the exchange?
If you purchase insurance through the exchange, you and your family may be eligible for low- or middle-income household subsidies.
These subsidies are only available to consumers who purchase plans through the exchange; off-exchange plans do not qualify.
Individuals and families earning less than 400% of the federal poverty line are eligible for monthly insurance rate reductions. For example, in 2023, a person earning $17,130 per month could spend a maximum of $42 per month for health insurance.
People earning more than 400% of the federal poverty line may still be eligible for a rate cut, as the Inflation cut Act caps the amount you pay for insurance at 8.5% of household income, based on the cost of a benchmark plan. This new rate cap is in effect until 2025.
Those with household incomes less than 250% of the federal poverty line are eligible for further savings through cost-sharing reductions, which cut out-of-pocket medical expenditures such as deductibles and copays.