The Affordable Care Act (ACA) health insurance marketplace is an option if you can’t get an employer-sponsored health insurance plan.
ACA health plans, sometimes called Obamacare, offer comprehensive coverage. They’re also the only type of health insurance with premium tax credits that reduce the cost of health insurance, if you qualify.
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Types of Health Insurance Marketplaces
The ACA set up the marketplace, also called the exchanges, which lets people compare health plans offered by private health insurance companies. The health insurance marketplace is an easy way for people to find health insurance plans available in their area.
There are two types of health insurance marketplaces:
- The federal marketplace. This is run by the federal government at healthcare.gov. Most states use the federal marketplace to offer health insurance plans to their residents.
- State-run marketplaces. Over a dozen states have their own state-run marketplace. The website layouts may look different, but each state provides information about plans available and allows you to enter household income data to see if you qualify for a subsidy. You simply enter your ZIP code, household income and family size and the marketplace lets you compare plans available in your area. It also offers cost estimates for each available plan.
Who Qualifies for the Health Insurance Marketplace?
There aren’t strict eligibility requirements for ACA health insurance plans, which makes them unlike Medicare and Medicaid.
To qualify for a marketplace health insurance plan, you must meet these requirements:
- Live in the U.S.
- Be a U.S. citizen or national
- Not incarcerated
How Do You Qualify for Cheaper Marketplace Insurance?
You may qualify for cheaper health insurance based on household income and size. ACA marketplace plans are the only ones that offer premium tax credits to reduce health insurance premiums.
Households with incomes between 100% and 400% of the federal poverty level receive premium tax credits to lower health care costs. That can be key since unsubsidized marketplace plans typically cost more than group health insurance through employers.
Poverty Levels
| Family size | 100% of federal poverty level | 400% of federal poverty level |
|---|---|---|
| 1 | $14,580 | $58,320 |
| 2 | $19,720 | $78,880 |
| 3 | $24,860 | $99,440 |
| 4 | $30,000 | $120,000 |
| 5 | $35,150 | $140,560 |
Source: Health and Human Services.
If your household income is below 138% of the federal poverty level, you typically qualify for Medicaid, a federal/state health insurance program with low or no costs based on your income. Fewer than 10 states have less generous Medicaid coverage because they have so far declined to expand eligibility under a provision of the Affordable Care Act.
How Does Marketplace Insurance Work?
The marketplace offers health plan benefits similar to ones found in employer-sponsored health insurance plans, with many of the same comprehensive benefits like doctor visits, outpatient care, prescription drugs, emergency care and mental health services.
One difference is that the health insurance marketplace indicates a health plan’s costs by metal tier, so you can know whether the plan will have higher premiums vs. higher out-of-pocket costs. There are platinum, gold, silver and bronze health plans.
What’s Covered by Marketplace Plans?
The Affordable Care Act requires health plans in the marketplace to cover at a minimum the 10 essential health benefits:
- Ambulatory/outpatient care
- Emergency care
- Hospitalizations
- Laboratory services
- Mental health and substance use services
- Pediatric services
- Pregnancy, maternity and newborn care
- Prescription drugs
- Prevention and wellness services
- Rehab and habilitative services
Marketplace plans also have to cover birth control and breastfeeding services. Though not mandated, some insurance companies also offer vision and/or dental services and medical management programs for specific health problems, such as diabetes and back pain.
What Are Metal Tiers in the Marketplace?
The health insurance marketplace has four types of metal tiers: bronze, silver, gold and platinum. Their differences are:
- Premiums
- Out-of-pocket costs like deductibles, coinsurance and out-of-pocket maximums
Metal tier differences are solely based on premium and out-of-pocket costs. A metal tier doesn’t dictate coverage, such as whether you need to stay in-network or get referrals to see a specialist. For those details, look at the plan’s “benefit design.”
Bronze and silver plans have the lowest premiums but higher out-of-pocket costs compared to gold or platinum. Gold and platinum plans have higher premiums, but you pay less when you need care.
The average cost of health insurance through the marketplace is $469 a month for a 40-year-old individual.
Average Health Plan Cost by Metal Tier
| Metal tier | Average monthly cost for unsubsidized plan |
|---|---|
| Bronze | $401 |
| Silver | $526 |
| Gold | $578 |
Source: Healthcare.gov. Based on unsubsidized ACA plans. Average for 40-year-old individual coverage.
What Are the Health Plan Types Offered in the Marketplace?
Health insurance companies offer multiple types of benefit designs in the marketplace, including health maintenance organization (HMO), exclusive provider organization (EPO), preferred provider organization (PPO) and point of service (POS) health plans.
Employer benefits packages also have these types of plans, so they likely sound familiar.
- Health maintenance organization (HMO): HMO insurance has strict provider networks and only covers care received by in-network providers—unless it’s an emergency. HMOs also require members to get primary care provider referrals to see specialists. These plans are generally more affordable than other types of plans.
- Exclusive provider organization (EPO): EPO insurance plans are similar to HMOs. You have to stay within a plan’s network to get care covered. But you don’t need a referral from your primary care doctor to see a specialist if you have an EPO.
- Preferred provider organization (PPO): PPO insurance plans offer the most flexibility of the plan types. You don’t need to stay in the network, though out-of-network care generally costs more than in-network care. You also don’t need referrals if you want to see a specialist. PPOs cost more than HMOs and PPOs.
- Point of service (POS): POS health insurance plans are a hybrid plan combining aspects of HMOs and PPOs. POS plans cover out-of-network care, which makes them similar to a PPO but requires you to name a primary care provider to oversee your care and mandates referrals to see specialists, which makes it like an HMO. POS health plans comprise only a small percentage of health plans, so this plan type might not be available in your area.
Plan design plays a considerable role in costs. Our analysis of ACA marketplace costs found a more than $100 monthly average cost difference between some types of plans.
Average Cost by Health Plan Type
| Type of plan | Average monthly cost for an unsubsidized plan |
|---|---|
| HMO | $438 |
| EPO | $490 |
| PPO | $516 |
| POS | $568 |
Source: Healthcare.gov. Based on unsubsidized ACA plans. Averages are for a 40-year-old with individual coverage.
When Can Individuals Buy Health Insurance Through the Marketplace?
You can get health insurance through the marketplace during the annual open enrollment period, which is Nov. 1 to Jan. 15 in most states. States with their own marketplaces may have slightly different dates for open enrollment.
You can buy coverage at other times of the year if you qualify for a special enrollment period. You’ll need to have a qualifying life event. Qualifying life events that spark a special enrollment period of 60 days during any time of the year include:
- Losing your health insurance coverage.
- Having a baby or adopting a child.
- Getting married.
- Getting divorced or separated.
- Death of a spouse or dependent.
- Moving to a new ZIP code.
- Income changes that make you eligible for ACA marketplace premium tax credits.
- Losing Medicaid eligibility.
- Aging out of your parent’s health insurance when you turn 26.
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Health Insurance Marketplace Frequently Asked Questions (FAQs)
Do I have to buy health insurance through the marketplace?
You don’t have to buy health insurance through the Affordable Care Act (ACA) marketplace. Most pre-retirement-age Americans get coverage through their employers, which is often more affordable than a marketplace plan.
Or you could get health insurance directly from the insurance company rather than buying through the marketplace. These plans may be the same as plans found on the marketplace or an insurance company may offer coverage not found on the marketplace. Individual health insurance plans sold directly from the insurance company don’t qualify for income-based premium tax credits found in the marketplace.
How does the health insurance marketplace help me?
The ACA marketplace helps you find health insurance coverage available in your area and shows the costs for premiums, deductibles and copayments.
The health insurance marketplace can also help you get more affordable health insurance if you qualify for premium tax credits. These tax credits, found only on the marketplace, can reduce your cost of health insurance based on your household income.
The cost-saving measure is available for people with household incomes between 100% and 400% of the federal poverty level. One exception is California, which has wider eligibility for subsidies.
What is the difference between a federal and a state-based insurance marketplace?
The federal marketplace is operated by the federal government, while a state marketplace is provided by a state. Each state decides whether to use the federal framework or its own state-run marketplace.
The 17 states (and the District of Columbia) with their own marketplaces may have slightly different open enrollment periods at the end of the year. Open enrollment is the time of year when you can sign up for a marketplace plan or change coverage. One exception is if you qualify for a special enrollment period at another time of the year because you lost other health insurance or you have another reason that makes you eligible for a special enrollment period.
