A Marketplace (on-exchange) health insurance plan is an individual health insurance plan purchased through the federal or state Health Insurance Marketplace established under the Affordable Care Act (ACA).
What is a Marketplace health insurance plan?
A Marketplace plan is an individual health insurance policy purchased through a government-operated health insurance exchange.
Depending on where you live, enrollment may occur through:
HealthCare.gov
A state-operated Marketplace
Marketplace plans must comply with ACA requirements, including:
Coverage for essential health benefits
Protections for pre-existing conditions
Limits on annual out-of-pocket costs
What does "on-exchange" mean?
"On-exchange" means the health insurance plan was purchased through the Health Insurance Marketplace.
An on-exchange plan:
Is enrolled through a federal or state Marketplace
May qualify for Premium Tax Credits (PTCs)
May qualify for cost-sharing reductions, if eligible
The insurance company offering the plan may also sell plans outside the Marketplace.
The term "on-exchange" refers to where the plan was purchased, not necessarily the insurance carrier.
What is an off-exchange plan?
An off-exchange plan is an individual health insurance policy purchased outside the Marketplace.
These plans are commonly purchased:
Directly from an insurance carrier
Through a licensed insurance broker
Through a private enrollment platform
Many off-exchange plans are ACA-compliant individual health insurance plans.
What is the difference between on-exchange and off-exchange plans?
The primary difference is where the plan is purchased.
Marketplace (On-Exchange) | Off-Exchange |
Purchased through a government Marketplace | Purchased outside the Marketplace |
May qualify for Premium Tax Credits | Does not qualify for Premium Tax Credits |
May qualify for cost-sharing reductions | Does not qualify for cost-sharing reductions |
ACA-compliant plans available | ACA-compliant plans may also be available |
Not every Marketplace plan is available off-exchange, and not every off-exchange plan is available through the Marketplace.
What are the advantages of a Marketplace plan?
Marketplace plans may provide access to financial assistance programs, including:
Premium Tax Credits (PTCs)
Cost-sharing reductions (for eligible individuals)
These programs are only available through the Health Insurance Marketplace.
For eligible households, financial assistance may significantly reduce monthly premium costs.
What are the advantages of an off-exchange plan?
Depending on your location and carrier availability, off-exchange plans may offer:
Additional carrier options
Additional network options
Alternative plan designs
Plans not available through the Marketplace
Availability varies by state and insurance carrier.
Are Marketplace plans eligible for ICHRA reimbursement?
Yes. ACA-compliant Marketplace plans generally qualify for reimbursement under an ICHRA.
Employees participating in an ICHRA may typically receive reimbursement for:
Eligible Marketplace premiums
Qualified medical expenses, if allowed by the employer's plan design
Employees must maintain qualifying individual health coverage to receive tax-free reimbursements.
Are Marketplace plans eligible for QSEHRA reimbursement?
Yes. Marketplace plans generally qualify for reimbursement under a QSEHRA.
Employees may typically receive reimbursement for:
Eligible health insurance premiums
Qualified medical expenses
Reimbursements remain subject to the employer's plan rules and available allowance amounts.
How do Premium Tax Credits interact with HRAs?
Participation in an HRA may affect eligibility for Premium Tax Credits.
Depending on the type of HRA and the employee's circumstances:
Premium Tax Credits may be reduced
Premium Tax Credits may no longer be available
Employees may need to choose between certain tax credit benefits and HRA participation
Employees should carefully review their Marketplace eligibility and HRA offer before enrolling.
Should I choose an on-exchange or off-exchange plan?
The best option depends on your circumstances.
A Marketplace plan may be beneficial if you qualify for Premium Tax Credits or cost-sharing reductions.
An off-exchange plan may be beneficial if it offers preferred networks, carriers, or plan designs that are not available through the Marketplace.
Employees should compare available options before enrolling in coverage.