The Affordable Care Act (ACA) came with the creation of a competitive health insurance market called the Health Insurance Marketplace. But many wonder what exactly the Marketplace is and who it serves.
As part of the ACA, the Marketplace is a comprehensive tool that allows families and individuals to purchase their own private health insurance. Now, eligible people that wouldn’t otherwise have access to health insurance can find a policy that meets their budget and needs and enroll for coverage from the comfort of their own homes. In this blog, we’ll go over everything you need to know about the Health Insurance Marketplace to better understand how the individual market works.
Offering an HRA at your company? Read more about them in our guide
What is the Health Insurance Marketplace?
Launched in 2013 as part of the ACA, the Health Insurance Marketplace, also known as simply “the Marketplace” or the “federal exchange,” is designed to help individuals, families, and small businesses purchase affordable health insurance coverage.
The Marketplace allows eligible people to shop for health coverage, compare plans, receive financial subsidies, and enroll in healthcare through the Healthcare.gov website, call centers, and in-person assistance. Due to the recent ACA expansion1, 14.5 million Americans2 enrolled in a marketplace plan during the 2022 open enrollment period.
Each state has one Health Insurance Marketplace, either run by the state, the federal government, or a combination of the two. In most states, the federal government runs the Marketplace website—healthcare.gov3—or individuals and families. However, there are 18 states4 that run state-based exchanges on different websites.
Who’s eligible to use the Health Insurance Marketplace?
The Marketplace was designed to provide health insurance for individuals and families who were previously uninsured. Therefore, all U.S. citizens residing in the country that aren’t incarcerated or enrolled in Medicare are eligible to use the Health Insurance Marketplace.
Most people have coverage under an employer plan, meaning they don’t need to use the Marketplace. If someone wants to decline their employer’s coverage and choose a Marketplace plan instead, they won’t be eligible for financial assistance unless their coverage isn’t considered affordable and/or wouldn’t provide minimum value.
Americans under age 65 eligible for Medicaid can use the Marketplace to enroll in a Medicaid plan. Those 65 and over don’t qualify for a Marketplace health plan due to their eligibility to enroll in Medicare.
When can individuals buy health insurance through the Marketplace?
Open enrollment period is the time each year when people can enroll in health coverage or change their Marketplace coverage for the following year.
For most states, open enrollment runs from November 1 to December 15, with coverage effective January 1. On occasion, federal and state-run exchanges can offer extended enrollment windows into January.
Outside the annual open enrollment period, an individual must qualify for a special enrollment period to enroll or make changes to a Marketplace plan. A special enrollment period is triggered by a qualifying life event and allows 60 days from the time of the event to select a new plan.
What’s the difference between the federal Marketplace and a state Marketplace?
Depending upon where you live, your state may have its own Health Insurance Marketplace. A state-based marketplace is a health insurance exchange where the state government regulates a platform for health plan eligibility, enrollment, and other functions for the individual market, such as customer support, outreach, and marketing efforts.
The most significant difference between state and federal Marketplaces is the degree to which the state cooperates with the federal government. In state marketplaces, states establish health insurance options, work directly with health carriers, manage enrollment, and determine premium tax credit eligibility. With the he federal Marketplace, the federal government controls these functions itself.
However, states can choose to manage their own exchange and use the federal Marketplace website as their platform. In this situation, residents with a state-based exchange will go to healthcare.gov to be redirected to their appropriate state marketplace.
How does the Health Insurance marketplace work?
To search for and enroll in Marketplace coverage, you’ll need to create a free account on healthcare.gov. You’ll also need to fill out an application for health coverage where you’ll provide certain information such as your household income, family status, your state, and zip code.
After that, you can shop, compare, and enroll in a qualified health plan online or by phone with personalized help from a licensed agent through the website. These helpers aren’t associated with any particular plan or carrier, so they’ll provide you with unbiased assistance.
Remember that different people may pay different premium amounts for their Marketplace plans due to their state, household income, and family size. However, Marketplace plans and health insurance subsidies, if you qualify for any, will be the same no matter what site you’re on.
After you’ve enrolled, you’ll get your membership materials by mail, including your member ID card and your first bill from the health insurance company. Once you’ve paid your first month’s premium, your coverage will go into effect on the effective date, which is typically January 1.
How does the Health Insurance Marketplace help individuals?
When individuals shop on the Marketplace, all the available health plan options are ACA-compliant. This means they are won’t be subject to medical underwriting or exclusion due to a pre-existing condition. Also, all health insurance plans will cover the ten essential health benefits without annual or lifetime benefit caps.
Financial assistance programs, like premium tax credits and cost-sharing subsidies, are also available through the Marketplace. Your monthly premiums will be reduced if you qualify for any health insurance subsidies.
You can also see if your income level qualifies you for Medicaid or the Children’s Health Insurance Program5 (CHIP) to save on premiums.
The Marketplace helps you quickly and easily find health insurance that fits your budget and lifestyle. No matter where you live, you can purchase insurance with comprehensive benefits, including doctor visits, hospital stays, preventive care, and prescription drugs, for an affordable cost.
How does the Health Insurance marketplace help small businesses?
Small employers can have difficulty finding affordable health insurance coverage that meets the needs of their employees. But with the Marketplace, employers have more choice and control over their health benefit with the Small Business Health Options Program6 (SHOP).
The SHOP Marketplace helps small businesses provide their employees with affordable and convenient health coverage. Employers choose the level of coverage they want to offer and determine how much they want to contribute to their employees’ coverage. Employers can use their existing insurance broker to access the SHOP, or they can shop for plans independently.
The following are some advantages to using the SHOP Marketplace:
- SHOP insurance is generally available to employers with 1-50 full-time equivalent employees (FTEs).
- Employers can choose from high-quality private health plans that meet their business's and its employees' needs.
- Employers can choose to offer health coverage only, dental coverage only, or both health and dental coverage.
- If eligible, employers can start offering SHOP coverage to their employees any time of year—there’s no need to wait for open enrollment.
If you’re a business owner with fewer than 25 employees, you may qualify for a Small Business Health Care Tax Credit7 worth up to 50% of your premium costs (or up to 35% of your premiums costs if you’re a tax-exempt employer).
This tax credit is generally only available to those offering a SHOP plan and only to eligible employers for two consecutive taxable years. Employers can use the Small Business Health Care Tax Credit Estimator8 on the Marketplace to determine if they qualify.
If you’re considering offering a health reimbursement arrangement (HRA) at your organization, the Marketplace can still help you and your employees. With a qualified small employer HRA (QSEHRA) or an individual coverage HRA (ICHRA), you can save money by not offering a traditional group health plan and your employees can choose their own individual health plan on the Marketplace that best suits their needs.
Conclusion
While most people have health insurance through employers or spouses, many individuals and small business owners rely on the Health Insurance Marketplace to purchase an insurance policy that suits their needs.
The best place to get the latest Marketplace information is healthcare.gov. This resource is an easy way to review different plans, determine eligibility for subsidies, compare prices, and get answers to questions so you’ll be better informed before choosing a health insurance policy.
This article was originally published on February 11, 2013. It was last updated on August 19, 2022.
1https://www.healthcaredive.com/news/record-aca-signups-2022-biden-health-coverage/620956/
2https://www.healthaffairs.org/do/10.1377/forefront.20220131.636186/
5https://www.healthcare.gov/medicaid-chip/childrens-health-insurance-program/
