Health Insurance Marketplace Overview

The Health Insurance Marketplace will help you find affordable health care insurance.

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What Is the Health Insurance Marketplace?

The Health Insurance Marketplace, which used to be called the “health insurance exchange,” is simply a website where individuals can browse various health care plans, compare them, and purchase health insurance. The health insurance plans are offered by private employers but are all required to offer all essential health benefits, such as hospital care, outpatient services, emergency services, maternity care, mental health and substance abuse treatment, prescription drug coverage, lab services, and rehabilitative services.

What If My State Isn't Offering Medicaid Expansion or a Marketplace?

If your state isn't expanding Medicaid or offering it own Marketplace, you can use the federal Health Insurance Marketplace. The federal government’s Marketplace will be the place to go for about half of the states, while about a third of the states will run their own. The rest of the states will run marketplaces in conjunction with the federal government. (For more information, see Nolo's article on which states will operate a health insurance marketplace.)

When Does the Health Insurance Marketplace Start?

Health care coverage starts January 1, 2014 if you sign up before then. Applications can be submitted on healthcare.gov starting October 1, 2013. Open enrollment ends March 31, 2014. You can also sign up by mail or in person.

When you apply, the website will also tell you if you are eligible for Medicaid or if your children are eligible for the Children’s Health Insurance Program (CHIP).

Are All Health Care Plans From the Marketplace Inexpensive?

There are plans with low premiums and high out-of-pocket costs, and plans with high premiums and low out-of-pocket costs. Depending on your health, you can choose the type of plan that will save you money. The various types of plans are discussed below.

Most people without group health insurance from work will be able to save money, but that's thanks to a premium tax credit that's available to those with medium to low incomes. This tax credit lowers the cost of premiums. Here's what makes many of the plans affordable – the tax credit is paid in advance, so that your premium is lowered at the same time you pay it.

To qualify for a reduced premium, your family’s income needs to be less than 400% of the federal poverty level. That’s $62,040 for a couple or $94,200 for a family of four. (See Nolo’s federal poverty guidelines for the figures for other family sizes.)

Those with lower incomes (250% of the federal poverty level) can also qualify for lower out-of-pocket costs. This is available for couples who make less than $38,772 per year or families of four who make less than $58,872 per year. Out-of-pocket savings include lower deductibles, coinsurance and copayments. These out-of-pocket savings are available only through one type of Health Insurance Marketplace plan, the “Silver” plan. (This plan is not for seniors; the plans names are Platinum, Gold, Silver, and Bronze.) However, no plan is allowed to charge you more than $6,250 per year in out-of-pocket costs, or $12,500 for families (though this number will be adjusted for inflation).

The amount of the tax credit and subsidies depend on your income. The lower the income, the lower your premium and costs will turn out to be. Your age and whether you smoke will also be taken into account when you apply for a Marketplace policy. To get an estimate of the subsidy you can receive (and the cost of insurance), use the Kaiser Family Foundation calculator.

Note that those with incomes under the federal poverty level ($11,490 for an individual and $23,550 for a family of four) are not eligible for the lower premiums or the out-of-pocket subsidies. The authors of the health care reform law had intended for these folks to be covered by Medicaid, but now that some states have opted out of the Medicaid expansion, some of these folks may not qualify for reduced premiums through the Marketplace or Medicaid (in states without expanded Medicaid). However, these folks are exempt from paying the penalty fee for not having insurance (read about the individual mandate fee here). 

Who Can Buy Insurance Through the Health Care Marketplace?

Most people who live in the United States lawfully can buy a plan through the Health Care Insurance Marketplace. Individuals without group health insurance can always be covered by insurance through the Health Insurance Marketplace. Not everyone, however, is eligible for lower premiums and lower out-of-pocket costs for Marketplace plans. To qualify for lower premiums for a Marketplace plan, your household income must be between 100% of the federal poverty level and 400% of the federal poverty level. 

If you are offered health coverage through your employer, you can always purchase a policy through the Health Care Marketplace, but you are eligible for subsidies only if your employer-provided insurance isn’t affordable – that is, if you have to contribute more than 9.5% of your income toward it. If you don't qualify for your employer's insurance because you work part-time, you can get health coverage through the Health Insurance Marketplace. (Read more about these situations in Nolo's Marketplace FAQ.)

Note that those with incomes under the federal poverty level ($11,490 for an individual and $23,550 for a family of four) are not eligible for the lower premiums or the out-of-pocket subsidies. The authors of the health care reform law had intended for these folks to be covered by Medicaid, but now that some states have opted out of the Medicaid expansion, some of these folks may not qualify for reduced premiums through the Marketplace or Medicaid (in states without expanded Medicaid). However, these folks are exempt from paying the penalty fee for not having insurance (read about the individual mandate fee here). 

Are There Different Plans Available Through the Health Insurance Marketplace?

There are four different categories of insurance plans available through the Marketplace: Platinum, Gold, Silver, and Bronze. All of the categories’ plans provide the same essential health benefits.

The quality of care provided, or the access to doctors, does not vary between plan types. The various categories differ by the types and amount of costs you’ll pay.

A Platinum plan’s premium is the highest, but you’ll have lower out-of-pocket costs, like copays for visiting the doctor and for prescription drugs. A Bronze plan’s premiums are lowest, but you’ll have higher out-of-pocket costs. The Gold and Silver plans are in between. If you need a lot of care and medications, the Platinum plan may make sense. If you don’t expect to need much care, a Silver or Bronze plan may save you money. If you have a chronic or disabling condition, a Platinum or Gold plan may make more sense.

Are There Any High-Deductible Plans Available for the Young and Healthy?

Young people under 30 can opt for catastrophic plans rather than your typical health care plan. These plans have a high deductible but low premiums. For the most part, these plans cover you only if you are very injured or sick, but they also provide three primary care visits per year at no cost as well as free preventative health screenings and vaccinations required by all health plans. Some low income folks who qualify for a hardship exemption so they don’t need to purchase regular health care insurance may be eligible to buy a catastrophic plan. 

For more answers to frequently asked questions, see Nolo’s Health Insurance Marketplace FAQ.

by: , J.D.

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