health insurance marketplace

What is a health insurance marketplace?

A health insurance marketplace – also known as a health insurance exchange – is a place where consumers in the United States can purchase ACA-compliant individual/family health insurance plans and receive income-based subsidies to make coverage and care more affordable. As of early 2021, there were about 11.3 million Americans enrolled in marketplace plans throughout the country.

Each state has just one official marketplace, operated either by the state, the federal government, or both. In most states, HealthCare.gov serves as the enrollment platform and runs the customer service call center. But some states run their own platforms, such as Covered California, New York State of Health, Connect for Health Colorado, and MNsure.

In the early years of ACA implementation, there was a trend of states abandoning their own state-run enrollment platforms and switching to HealthCare.gov. But that has reversed in recent years: New Jersey and Pennsylvania began operating their own exchanges in the fall of 2020, and three more states followed suit in 2021: Maine, Kentucky, and New Mexico.

When were health marketplaces created?

Health insurance exchanges were created by the Affordable Care Act. The law was enacted in 2010, and they opened for business in the fall of 2013, offering individual and family health insurance for 2014.

How do the exchanges help consumers?

In each state, the marketplace allows consumers to select from among a variety of private health insurance companies that offer different qualified health plans. (In some areas of the United States, only one insurer offers medical plans for sale in the exchange, but there will still be a variety of plan options available.)

All qualified plans offered for sale in the marketplace must be ACA-compliant – meeting standards established and enforced by the federal government. So when a person shops in an ACA exchange, they can be sure that the participating insurers will not use medical underwriting or exclude pre-existing conditions. All of the available plans will cover the ACA’s essential health benefits without annual or lifetime benefit caps.

Income-based premium subsidies and cost-sharing reductions are only available through the marketplace, and are a key aspect of keeping health insurance premiums and out-of-pocket costs affordable for lower-income and middle-class Americans.

Who’s eligible to use the ACA marketplaces?

With the exception of people who are enrolled in Medicare coverage, virtually all Americans are eligible to use the health insurance marketplace.

But practically speaking, these enrollment platforms were designed to provide coverage for individuals and families who were either uninsured or already buying their own health insurance. This includes people who are self-employed, people who are employed by a small business that doesn’t offer health benefits, and people who have retired before age 65 and are thus too young to be covered by Medicare.

The majority of non-elderly Americans get their coverage from an employer, which means they don’t need to use the marketplace. They can choose to decline their employer’s coverage and select a plan in the marketplace instead, but they won’t be eligible for financial assistance unless the employer’s coverage wouldn’t be considered affordable and/or wouldn’t provide minimum value.

Most non-elderly Americans who are eligible for Medicaid can use an exchange to enroll in Medicaid, or at least to determine their eligibility for Medicaid. In some states, the Medicaid enrollment process is completed via the marketplace, while in other states, the exchange sends the consumer’s information to the state Medicaid agency to finalize the eligibility and/or enrollment process.

Do I have to buy health insurance through the marketplace?

You are not required to buy coverage through your state’s exchange. There is no longer a federal penalty for not having health coverage (although DC and five states have state-based penalties for people who choose to remain uninsured). And even when there was a federal penalty, people could choose to purchase their coverage off-exchange instead of buying a plan through the marketplace (with the exception of DC, where individual and small-group coverage is only available through the marketplace).

But if you don’t buy your coverage through the exchange, you cannot obtain premium tax credits or cost-sharing reductions, even if you’d otherwise be eligible for them. This is one of the primary reasons people shop in the exchanges, as full-price individual health insurance premiums would simply be too costly for most people.

What are the types of marketplaces?

A state’s exchange can be run by the state, by the federal government, or both. As of the 2021 plan year:

• DC and 14 states had fully state-run marketplaces, which means they oversee the marketplace and operate their own website and call center (examples are GetCoveredNJ, Pennie, Vermont Health Connect, Washington Healthplanfinder, etc.).
• Twenty-four states relied fully on the federal government for their marketplaces. They use the HealthCare.gov website and customer service call center.
• Six states have state-based marketplaces that use the federal platform (SBM-FP), which means they oversee their own marketplace but rely on HealthCare.gov for enrollment.
• Six states have state-federal partnership marketplaces, which are similar to the states that rely fully on the federally-run marketplace, but involve more state participation in oversight and management (all of these states use HealthCare.gov for enrollment).

You can find more information here about the types of marketplaces, how they work, and which model each state uses. As noted above, three states that currently have an SBM-FP model are planning to launch their own fully state-run exchanges in the fall of 2021.

When can consumers buy health insurance through their marketplace?

There is an open enrollment period each fall when people can enroll in coverage through their exchange or change their coverage for the coming year. (The same open enrollment window also applies to plans that are available outside the marketplace, purchased directly from the insurance companies.)

In most states, the open enrollment period is November 1 to January 15. Coverage purchased by December 15 will be effective January 1. 

Outside of the annual open enrollment period, a special enrollment period is necessary in order to enroll in a plan through the exchange (or outside the exchange, directly through an insurer) or change to a different plan. Special enrollment periods are triggered by a variety of qualifying life events, and will give you at least 60 days to select a new medical plan.