Anyone not receiving health insurance benefits from an employer may first look at government marketplaces. But what many might not realize is that a state exchange or the federal marketplace is not the only option for buying a healthcare plan. Plus, there could be extra benefits for shopping away from the government exchanges.
Marketplace exchange plans that are listed on a government-run exchange are also referred to as on-exchange health insurance plans. These plans are usually cross-listed on private websites like HealthCare.com. Here are some unique characteristics about on-exchange plans:
- Marketplace insurance offers the opportunity for individuals to apply for a tax subsidy if they qualify for financial help to pay a portion of their health insurance plan because their income falls between 100 and 400 percent of the national poverty level (138 percent in states with expanded Medicare coverage). This Obamacare tax subsidy calculator can help you determine if you qualify.
- Marketplace medical insurance includes essential health benefits (aka – what major medical health plans are now required to cover by law), which are:
- Ambulatory patient services—outpatient care without being admitted to a hospital
- Emergency Services
- Maternity and newborn care
- Mental health and substance use disorder services, including behavioral treatment, counseling, and psychotherapy
- Prescription drugs
- Rehabilitative and habilitative services and devices—services and devices to help people with injuries, disabilities, or chronic conditions gain or recover mental and physical skills
- Laboratory services
- Preventive and wellness services and chronic disease management
- Pediatric services—including dental and vision care
- Many on-exchange marketplace insurance plans have smaller doctor networks. One way health insurance carriers keep monthly rates low on the exchanges is by keeping the networks narrow. There are administrative costs associated with having health plans on the exchange, and small networks are a way to curb costs. So it’s important to always check and make sure your doctor or a hospital close-by is in-network before you buy a plan.
Private health insurance plans are sold directly by health insurance companies, agents or through an online website entity like HealthCare.com. These private, off-exchange plans are slightly different in structure. Some of the differences include:
- No private health insurance plan is eligible for any financial subsidy assistance.
- Since they are major medical insurance plans, they still must offer the same essential health benefits listed above.
- Private plans can be purchased online, through an insurance broker or directly through a health insurance company. It’s important to note that commissions for a medical insurance sale are paid by the health carrier and are not tacked on to your final bill.
- Networks can be broader because the health insurance carrier isn’t paying additional administrative fees for an off-exchange, private plan.
There are other types of off-exchange plans available as well, such as indemnity plans, critical illness plans, and short-term plans. While these are not qualified health plans (meaning they do not meet the Affordable Care Act requirement for having health coverage), they do have lower premiums and may be a good fit for some healthy people.
Bigger networks on a private plan can be a big draw for individuals who need specialty care. A government plan with a subsidy might save the consumer monthly, but if they need care from a facility or physician that isn’t covered in their cheaper, small network plan, they could wind up spending more money out of pocket during the year paying off out-of-network medical bills overall.
This also holds true for individuals right on the border of subsidy qualification. If you have an $8 a month subsidy reduction and a small network, you could get the same or similar plan with a larger network, in some cases, and have a much larger selection of medical teams to choose from.
Private health insurance vs. marketplace insurance – it boils down to cost efficiency and preference.