The Affordable Care Act (ACA) created a competitive individual insurance market. Individuals can shop for coverage through the federal Health Insurance Marketplace, or HealthCare.gov. However, many people often wonder how the Marketplace works and who it serves.
The Marketplace is a comprehensive tool that allows families and individuals to purchase ACA-compliant health insurance. Eligible Americans who wouldn't otherwise have access to a health plan (or who have a stand-alone health reimbursement arrangement) can shop for affordable policies and enroll in coverage from the comfort of their homes, making the Marketplace a landmark achievement in the U.S. health insurance industry.
This article will go over everything you need to know about the Health Insurance Marketplace and the individual market so you can shop for coverage with ease.
In this blog post, you’ll learn:
Launched in 2013 as part of the ACA, the federal Health Insurance Marketplace, also known as “the Marketplace” or the “federal exchange,” helps individuals, families, and small businesses buy affordable health insurance coverage.
The Marketplace allows eligible individuals to compare health plans, apply to receive financial assistance through premium tax credits and cost-sharing reductions, and enroll in coverage through the HealthCare.gov website1. For the 2026 Open Enrollment Period, 22.8 million consumers bought individual coverage through the marketplaces, with roughly 15.6 million people purchasing a health plan on HealthCare.gov.2
In many cases, a state will have its own marketplace, also called a state-based exchange, that's separate from HealthCare.gov. Just like the federal Marketplace, consumers residing in the state can buy compliant health insurance. In other states, individuals use the federal Marketplace to buy coverage. There are also private exchanges available in every state. We’ll go into more detail about these options later on.
The ACA designed the Marketplace to provide health insurance for individuals and families who were previously uninsured. All U.S. citizens and lawful residents residing in the country who aren't incarcerated or enrolled in Medicare and who don’t have a state-based exchange are eligible to use the Health Insurance Marketplace.
According to KFF, 154 million people in the U.S. have an employer-sponsored plan, meaning they don't need to use the Marketplace3. If someone wants to decline their employer's coverage and choose a health plan instead on the individual market, they can do so. However, they won't be eligible for financial assistance unless the federal government doesn’t consider the group plan their employer offers affordable or determines it wouldn't provide minimum value.
Americans younger than age 65 who apply through the federal exchange may be assessed for Medicaid eligibility. If eligible, the Marketplace transfers their application to the state Medicaid agency for enrollment. Those who are 65 and older don't qualify for a Marketplace health plan because they're eligible to enroll in Medicare.
The annual Open Enrollment Period is the timeframe when people can enroll in or change their health coverage for the following year.
During this time, a wide range of health insurance plans are available for purchase, including:
The Open Enrollment Period in most states ran from November 1 through January 15. Individuals who select a plan by December 15 typically have coverage that starts on January 1. Some state-based marketplaces extended enrollment into January, and others ended earlier in December.
These timelines are changing for 2026 under a recent CMS final rule3. Beginning with the Open Enrollment Period beginning in November 2026 for 2027 coverage, enrollment for plans offered through the federal Health Insurance Marketplace will open nationwide on November 1 and close on December 15. The new rule also requires state-based marketplaces to shorten their enrollment periods to end by December 31.
For the 2027 plan year, individuals who enroll by December 15, 2026, and pay their first monthly premium will have coverage effective January 1, 2027.
Outside the Open Enrollment window, an individual must qualify for a special enrollment period (SEP) to enroll in or change a Marketplace plan. A qualifying life event triggers a special enrollment period, giving individuals 60 days from the event to select a new plan.
Depending on where you live, your state may have its own marketplace. A state-based marketplace is a health insurance exchange in which the state government manages health plan eligibility, enrollment, and other functions in the individual market, including customer support, outreach, and marketing.
The most significant difference between a state and federal exchange is the degree to which the state cooperates with the federal government. With state-based marketplaces, states list health insurance options, work with insurers, manage enrollment, and determine subsidy eligibility. With the Health Insurance Marketplace, the federal government controls these functions itself.
However, states can manage their own exchange and use the federal Marketplace website as their platform. States such as Arkansas and Oregon operate their own exchanges but use HealthCare.gov as the enrollment platform.
The following 20 states have their own exchange, including:
Residents with a state-based exchange can visit their state’s website directly or go to HealthCare.gov. The site will redirect you to the appropriate state Marketplace. During the 2026 enrollment period, 7.2 million consumers in the above states purchased an individual health plan on their state-based exchange2.
To search for and enroll in marketplace coverage, you must create a free account on HealthCare.gov or your state exchange. You'll also need to fill out an application for health coverage. Here, you'll provide details such as your household information, income, state, and ZIP code.
Afterward, you can shop, compare, and sign up for a qualified health plan online or by phone with personalized help from a certified agent through the website. These customer service workers aren't associated with any particular exchange plan or carrier, so they'll provide you with unbiased assistance.
Remember that different people may pay different premiums for their Marketplace plans based on their state, household income, and family composition. However, if you qualify for marketplace plans and federal subsidies, they'll be the same no matter which site you're on.
After enrolling, you'll get your membership materials by mail, including your member ID card and first bill from the health insurance company. Once you've paid your first month's premium, your coverage will start on the effective date, which is typically January 1 if you enroll by December 15.
The Marketplace helps you quickly and easily find health insurance that fits your budget and lifestyle.
Regardless of your location, you can purchase affordable coverage with a wide range of comprehensive benefits, including:
When individuals shop on the Marketplace, all the available health insurance plans presented to them are ACA-compliant. This means they aren’t subject to medical underwriting or exclusion due to a pre-existing condition. Also, all exchange plans will cover the ten essential health benefits without annual or lifetime benefit caps.
Financial assistance plans and programs, like eligibility for catastrophic plans, premium tax credits, and cost-sharing subsidies, are also available through the Marketplace. These federal subsidies can reduce your monthly premiums if you qualify.
You can also see if your income level qualifies you for Medicaid or the Children's Health Insurance Program (CHIP) to save on monthly premiums4.
The Health Insurance Marketplace isn’t just for individuals. If you’re a small employer, the Small Business Health Options Program (SHOP) can help you take better control over your finances and health benefit options.
The SHOP Marketplace helps small businesses provide their employees with affordable health coverage5. Much like traditional large group health insurance, small employers choose the type of plan they want to offer their staff and determine how much they will contribute toward the premium, which they typically split with their enrolled employees.
The following are some advantages of using the SHOP Marketplace:
Additionally, you may be able to receive the small business health care tax credit to help you save money on your premium costs. Eligible for-profit employers who qualify for the tax credit can receive up to a 50% discount on their employees' premiums. Nonprofit employers can receive up to a 35% discount.
A small business owner who employs fewer than 25 FTEs may qualify for the credit if they pay an average annual salary of less than $65,000 and contribute at least 50% toward their employees’ plan premiums. Additionally, the credit is available only to employers offering a SHOP plan and only for two consecutive taxable years. You can use the Small Business Health Care Tax Credit Estimator on the Marketplace to determine if you qualify6.
However, SHOP plans may offer limited plan options, require a minimum participation rate of 70%, and be expensive for small employers on a budget. If this is the case for you, a health reimbursement arrangement (HRA) is a great solution. With an HRA, you choose a monthly allowance that your employees can spend on health coverage and qualified medical costs. After they buy an eligible item or service, you reimburse them tax-free up to their allowance amount.
The following HRAs can support small employers:
If you’re looking to buy individual health insurance, a state-based exchange or the federal Health Insurance Marketplace aren’t your only options. You can also shop for a health plan using private exchanges, which are run by insurance companies or brokers. When you buy an individual health plan this way, it’s often called an off-exchange plan.
Unlike public exchanges, which sell only ACA-compliant plans, private exchanges may offer both ACA-compliant and non-ACA-compliant plans. If you buy an ACA-compliant plan through a private exchange, it must include the same essential health benefits, and the cost of coverage will be similar to public exchange plans. However, you can only qualify for premium tax credits or cost-sharing reductions if you buy your plan through a public exchange.
While most people have health insurance through an employer or a spouse, many individuals rely on the federal Health Insurance Marketplace to purchase a policy that suits their needs.
The best place to get the latest Marketplace information is HealthCare.gov, especially if you’re preparing for the annual Open Enrollment Period. The website provides extensive details on health plans, eligibility for federal subsidies, and insurance providers, so you'll be better informed and can select the coverage that best meets your needs.
This article was originally published on February 11, 2013. It was last updated on January 30, 2026.