If you buy your health insurance on the individual marketplace, there are basically two kinds of polices you can consider for yourself and your family: on-exchange policies and off-exchange policies. Each option has its own unique benefits that should be considered the next time you are ready to shop. Read on to learn the differences between the two and discover which choice could be the right fit for the coverage you need.
A brief overview of health insurance exchanges
Before we dive too deep into the differences between on-exchange and off-change health insurance, a little background will be helpful.
The original health insurance marketplace started as the federal Health Insurance Marketplace - a website where individuals could shop for various health care plans available under the Affordable Care Act (ACA), often referred to in earlier years as Obamacare, beginning in 2010. Since that time, 14 states have developed their own individual health insurance exchanges, aka marketplaces. All medical insurance plans sold on the public marketplace must be ACA-compliant, meaning they must cover 10 essential health benefits for consumers.
Every state either has its own public health insurance marketplace, like Minnesota’s MNsure, or they rely on HealthCare.gov to support their state’s public online shopping experience. There is only one official exchange per state.
What is on-exchange health insurance?
As the name implies, if you buy your health insurance through the health insurance exchange in your state or HealthCare.gov then it’s considered an on-exchange plan.
Besides the convenience of being able to shop and compare many different plans from various providers, you may also qualify for financial help with any out-of-pocket costs in the form of subsidies. There are premium subsidies (premium tax credits) and cost-sharing reductions (cost-sharing subsidies).
You’ll need to apply directly with your health insurance exchange to find out if you qualify. It’s an easy process that only requires a little info such as your household income and number of people that live in your home.
Subsidies are only available for plans that are purchased on-exchange.
What is off-exchange health insurance?
Off-exchange health insurance is a plan that is purchased directly from an insurance provider, or through a broker. This is outside of your state's health insurance marketplace or outside of healthcare.gov, aka the exchange. Though these are considered private plans, they also fall all under ACA compliance, which ensures minimum coverage and essential health benefits.
A primary benefit of purchasing health insurance from an insurance provider is that you have a more first-hand expertise with the plans they offer and they can break down even more details and differences in their offerings. Sometimes, insurance providers may offer more options than their plans that are available on the exchange. Additionally, you can enjoy the simplicity of direct enrollment with an agent rather than a less direct online portal that connects with the insurance company.
A broker has the same value-add as an agent. They can also help you navigate various insurance providers and answer any questions, providing a more personalized customer experience.
Also, if you buy an individual health insurance policy off exchange, it will be fully compliant with the ACA and you will have the same essential health benefits as an on-exchange plan.
Are ACA subsidies available with off-exchange health insurance?
Unfortunately, no. As explained above, ACA financial help by way of premium subsidies are only available for plans purchased on-exchange and for those who qualify.
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