If you buy your health insurance on the individual marketplace, there are two kinds of policies you can consider for yourself and your family: on-exchange policies and off-exchange policies. Read on to learn the differences between the two and discover which choice could be the right fit for the coverage you need.
A brief overview of health insurance exchanges
Before we dive too deeply into the differences between on-exchange and off-exchange health insurance, a little background will be helpful.
The original health insurance marketplace started as the federal Health Insurance Marketplace – a website where individuals could shop for various health care plans available under the Affordable Care Act (ACA). This was often referred to in earlier years as Obamacare, beginning in 2010. Since that time, 24 states have developed their own individual health insurance exchanges, also known as marketplaces. All medical insurance plans sold on the public marketplace must be ACA-compliant, meaning they must cover 10 essential health benefits for consumers.
Every state either has its own public health insurance marketplace, like Minnesota’s MNsure, or they rely on HealthCare.gov, used in WI, to support their state’s online public shopping experience. There is only one official exchange per state.
What is on-exchange health insurance?
If you buy your health insurance through your state’s health insurance exchange or HealthCare.gov, it’s considered an on-exchange plan.
Besides the convenience of being able to shop and compare many different plans from various providers, on-exchange plans may also qualify for financial help with any out-of-pocket costs in the form of subsidies. There are premium subsidies (premium tax credits) and cost-sharing reductions.
You’ll need to apply directly with your health insurance exchange to find out if you qualify for subsidies. This can be done with as little information as your household income and the number of people in your home.
What is off-exchange health insurance?
Off-exchange, also known as off-market, health insurance is a plan purchased directly from an insurance provider. These plans are outside of your state's health insurance marketplace or outside of HealthCare.gov, also known as an exchange. Though these are considered private plans, they are still qualified health plans that fall under ACA compliance.
A primary benefit of purchasing health insurance from an insurance provider is that you have access to more first-hand expertise with the available plans. The insurance provider can break down specific details and differences in their offerings to help you make the best choice for your needs. Sometimes, insurance providers may offer more options than their plans that are available on the exchange. Additionally, you can enjoy the simplicity of direct enrollment with an agent from the insurance company.
When off-exchange insurance is worth considering
For some people, off-exchange is a better choice than on-exchange, even without the subsidies available with on-exchange options. One of the most common reasons you might choose an off-exchange health insurance plan is because your income disqualifies you from taking advantage of the subsidies that you can only receive by enrolling into marketplace (on-exchange) plans, if eligible.
There are also other reasons you may enroll in an off-exchange plan. For instance, if your employer offers an Individual Coverage Health Reimbursement Arrangement (ICHRA) and helps pay for some of your premiums. These types of arrangements make you ineligible for subsidies offered on the marketplace.
How to buy off-exchange health insurance
Like on-exchange plans, most people can buy off-exchange health insurance during the open enrollment period. To purchase off exchange, you can go directly to an insurance company, like HealthPartners, or work through an insurance broker. The process is the same if you are shopping during a Special Enrollment Period (SEP) – just be sure to do it during your specified 60-day window.
How buying health insurance differs in Minnesota and Wisconsin
For off-exchange plans, the biggest difference between Minnesota and Wisconsin are the insurance companies that offer coverage in each state. For on-exchange programs, Minnesota has its own state exchange, MNsure, while Wisconsin uses the federal HealthCare.gov marketplace. The open enrollment period for both states is the same, Nov. 1 – Jan. 15.
Frequently asked questions
Are ACA subsidies available with off-exchange health insurance?
Unfortunately, no. ACA financial help by way of premium subsidies or cost-sharing reductions are only available for plans purchased on-exchange and for those who qualify.
Can anyone buy off-exchange health insurance?
Yes, off-exchange health insurance plans are available to everyone under 65. You just need to purchase your plan during open enrollment or a Special Enrollment Period, if you qualify.
Can I switch from an off-exchange plan to an on-exchange plan?
Absolutely. You can switch your insurance plan at any time during open enrollment. There are also events that could qualify you for a Special Enrollment Period, which will give you a 60-day window outside open enrollment to change your insurance plan to one of your choosing, including an on-exchange plan.