The Health Insurance Exchange: Navigating on-exchange vs. off-exchange health plans

What is the health insurance exchange marketplace?

Originally referred to by many as the Obamacare Exchange, the Health Insurance Exchange is a centralized platform for individuals and families to shop for and compare plans from different insurers and enroll in coverage that fits their budget and unique healthcare needs. Under the ACA, states can choose to operate their own marketplaces, offering state exchange health insurance to residents. All Exchange health insurance plans — whether offered through a state-run exchange or the federal exchange — must meet ACA standards for accessibility and quality of coverage.

The Marketplace also offers financial help to those who qualify. Healthcare subsidies help lower or eliminate a plan’s premium and reduce out-of-pocket costs for care. This helps make health insurance more affordable for low- and moderate-income individuals and families.

On-exchange health insurance plans are categorized into four “metal” levels (Bronze, Silver, Gold, and Platinum) based on how healthcare costs are shared between the plan member and the insurer. Bronze plans have the lowest monthly premium but highest out-of-pocket costs for care, while Platinum plans have the highest monthly premium but lowest out-of-pocket costs for care. Wellpoint offers Bronze, Silver, and Gold plans on the Marketplace.

Choose a health insurance plan 

On-exchange vs. off-exchange health insurance

On-exchange health insurance is coverage that you purchase through the Health Insurance Marketplace or your state-run exchange. An off-exchange health insurance plan is one that you purchase directly from an insurer. Many insurers like Wellpoint often offer both on-exchange and off-exchange health plans. 

There are some key differences that you should consider when shopping for insurance.

On-Exchange Health Insurance Plans

• Financial Help: One of the most significant and unique advantages of on-exchange health insurance is the availability of financial help based on eligibility factors, such as your income and household size. There are two types of health insurance subsidies available to qualified individuals and families who enroll in coverage through the Marketplace:
  
  • Advanced Premium Tax Credits, which can lower or eliminate your monthly premium.
    
    
  • Cost-Sharing Reductions (CSRs), which are special savings that can help lower out-of-pocket costs for care. This includes your deductible, copays, coinsurance, and out-of-pocket maximum. CSRs are only available for those who enroll in a Silver plan and qualify.
• Coverage for essential benefits: On-exchange plans must meet ACA requirements, ensuring they cover essential health benefits such as preventive care, emergency services, maternity care, mental health services, and prescription drugs. This guarantees comprehensive coverage across all plans. Coverage across off-exchange plans may vary depending on the insurer and plan you choose.

   

• Consumer Protections: The Affordable Care Act Health Insurance Exchange offers consumer protections, such as coverage for pre-existing conditions and limits on out-of-pocket costs. These safeguards help ensure individuals receive the care they need without facing financial hardship.

   

Off-Exchange Health Insurance Plans

While off-exchange plans often provide similar coverage to ACA-compliant plans available on the exchange, consumers enrolling in off-exchange plans are not eligible for subsidies. Individuals and families purchasing off-exchange plans must pay the full premium cost without financial help from advanced premium tax credits or cost-sharing reductions. However, off-exchange plans may be an option for certain circumstances or needs. 

• More Plan Options: Off-exchange plans may offer a broader range of options, including plans with different networks and pricing that might not be available on the Exchange.
  
  
• No Income Restrictions: Since off-exchange plans are not tied to income-based subsidies, they might be a better fit for individuals or families who do not qualify for financial help through the Exchange.
  
  
• Flexibility: Off-exchange plans may offer more flexibility in terms of plan customization and coverage options. Consumers might find plans that better match their personal health needs and preferences outside the plan offerings on the exchange.

Enrolling in an on- or off-exchange health insurance plan

The primary time to enroll in on-exchange and off-exchange health insurance plans is during the annual Open Enrollment Period (OEP). During this time, you can sign up for a new plan, renew your current plan, or make changes to your coverage. OEP generally starts November 1 and ends January 15, but specific dates may vary by state. 

You may be able to enroll in a plan outside of OEP during a Special Enrollment Period if you experience a qualifying life event — such as getting married or divorced, having or adopting a child, moving to a new ZIP code or state, or losing existing coverage. 

To enroll in an on- or off-Exchange health insurance plan in most states, you: 

• Must live in the United States.
• Must be a U.S. citizen or a legal resident.
• Cannot be currently incarcerated (in jail or prison).
• Cannot be enrolled in public health coverage through Medicaid, Medicare, or the Children’s Health Insurance Program (CHIP).

When buying health insurance on the Exchange, you must apply through the Marketplace or your state’s exchange website. If you decide to enroll in an off-Exchange plan, you would apply directly through the insurer’s website or by calling them for assistance. Once you’ve enrolled in a plan, you must pay your first monthly premium to activate your coverage.