Confused about On-Exchange and Off-Exchange Plans?


Part of the Affordable Care Act’s mission was to create more health insurance options available to more Americans. Several changes were made to what must be covered in all plans, how premiums are calculated and the ways you can shop for a health insurance plan. More choices mean more decisions to make, including where to shop for coverage. Learn how two of those options, on-exchange and off-exchange, compare, and how the differences might affect you and your household.

What Do On-Exchange and Off-Exchange Mean?

The ACA created the Health Insurance Marketplace, also known as the Affordable Insurance Exchange or Obamacare Exchange. This Marketplace, operated by the federal government, is a place where people without insurance can learn about and even purchase health insurance plans, as well as check their eligibility for different financial assistance to help with the costs of coverage. The health insurance plans purchased through the Marketplace, either the federal or a state-based one, are known as “on-exchange” plans.  HealthSherpa is an alternative to and provides Marketplace plan education and enrollment support!

You also can shop for and buy health coverage outside of the Marketplace. Alternatives include going directly to the insurance company selling the plan, through an insurance agent or broker, or through an online health insurance seller. Plans purchased outside of the Marketplace are referred to as “off-exchange” plans.

Similarities Between On-Exchange and Off-Exchange Plans

Some overlap is found in the on-exchange and off-exchange plans. Some insurance providers offer the same or similar plan options both in the public Marketplace and on the private market. Also there are 10 categories of essential health benefits that the ACA requires of all insurance plans no matter where they are sold. So for example, to be in compliance with the ACA, health insurance plans sold both on exchange and off exchange must provide preventive services and prescription drug coverage.

Differences Between On-Exchange and Off-Exchange Plans

Though you will find more off-exchange plans available, there are a few reasons why buying an on-exchange plan might be a better choice for you and your household.

  • All on-exchange plans are Qualified Health Plans guaranteed to have minimum essential coverage.
  • If you purchase an on-exchange plan, you will avoid the individual shared responsibility payment, also known as the individual mandate fine or ACA penalty. Under the ACA’s individual mandate, most Americans are required to have minimum essential coverage throughout the year unless they qualify for one of the exceptions to the requirement. Failure to have either a valid exception or health insurance coverage that meets the minimum requirements results in the IRS calculating a penalty when you file your federal tax return.
  • And for many, this is the most important difference: Only through the Marketplace can you get savings on your monthly premiums and other financial assistance. If your income qualifies for Premium Tax Credit Assistance or for cost savings on other health care expenses, then you must buy an on-exchange plan to get these benefits. Keep in mind that if you enroll in an off-exchange plan during open enrollment because your income is too high for the discounted premiums, you will not be allowed to get those discounts later in the year if your income falls within the limits and even if you buy an on-exchange plan.

Confused or unsure? Contact HealthSherpa to set up an appointment with one of our customer advocates who can answer any questions and help you decide which plan is right for you.

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