What Is the Health Insurance Marketplace & How Does It Work?
As an employer, you may be searching for the best ways to provide affordable, comprehensive health insurance coverage for your employees. While many companies offer traditional benefits packages that include an employer-subsidized health plan, this is not the only way to make sure your employees are covered.
In addition to offering private group medical coverage, you should share information on the public health insurance options available to your employees. Helping them understand the differences between private vs. public health insurance and sharing information on what the health insurance marketplace is, can demonstrate your commitment to helping each employee find the best option for their unique situation. Keep in mind that applicable employers must provide written notice to new employees about the existence of the marketplace, potential eligibility for a premium tax credit, and that the employee may lose the employer contribution to a health benefits plan if the employee purchases a qualified health plan through the marketplace.
What Is the Health Insurance Marketplace?
The Health Insurance Marketplace is a government-run health insurance exchange established by The Affordable Care Act (ACA). It is located at HealthCare.gov and is often referred to by other names, such as the Health Insurance Exchange or simply the Marketplace. Using the Marketplace, individuals can shop for health insurance plans and easily compare various elements of the coverage across different plans, including:
- Benefits offerings
- Included coverages
- Cost-sharing percentages
- Required monthly premiums
What Is the Purpose of the Health Insurance Marketplace?
The Marketplace was created by the ACA to provide a way for all Americans to gain access to affordable health insurance. While many citizens get health insurance coverage through an employer, not everyone has this option. As more individuals are turning to gig work, freelancing, or other income sources outside of the traditional employer/employee arrangement, the Marketplace is increasingly important for helping more people get access to health insurance.
What Benefits Are Included in the Health Insurance Marketplace?
In addition to implementing the Health Insurance Marketplace, the Affordable Care Act instituted minimum requirements for all health policies sold within the Marketplace. Although the specific requirements vary by state, generally the requirements include:
- Coverage of pre-existing medical conditions for plan participants
- Licensing within the state where the coverage is provided
- Limitations to out-of-pocket costs, including co-pays and co-insurance
- Meeting the "affordable" standard for plan pricing
- No annual or lifetime maximums for the amount of benefits a covered participant can receive
- Coverage of the 10 essential health benefits
The 10 essential health benefits that must be covered for all Marketplace plans include:
- Traditional physician services
- Preventative and wellness treatment
- Emergency services
- Hospitalization for surgery or required overnight stays
- Pregnancy and women's care
- Mental and behavioral health services
- Prescription drugs
- Rehabilitation therapy, including device aids
- Laboratory services
- Pediatric services, including oral and vision care
While these are the essential services required to qualify as a Marketplace plan, many plans offer additional benefits, such as managed care support for chronic diseases or dental and vision coverage for adults (though dental and vision is required of all Exchange plans for children under 18).
What Is the Difference Between the Marketplace and Private Insurance?
Private insurance, sometimes referred to as a private health exchange, is similar to the Marketplace in that several plan options can be easily compared through an online portal. These coverage options are typically offered through an insurance broker or a single private insurance company that offers multiple plan options for employers or private individuals.
However, the plan options offered through a private exchange are not required to meet all of the standards set forth in the ACA. While many private health insurance plans do cover the 10 essential health benefits and meet other minimum standards of the ACA, there are also no government subsidies offered on plans issued through private health insurance exchanges.
What Is the Difference Between On-Exchange & Off-Exchange?
Once a plan meets the requirements set by the state where coverage will be provided, the plan is designated as a "Qualified Health Plan" (QHP), meaning it is qualified to be sold within the Health Insurance Marketplace. Since the Marketplace is also referred to as the Exchange, these QHPs are sold "on-exchange."
Health insurance plans sold to individuals or organizations outside of the government's public exchange are considered "off-exchange." Although these plans are not required to meet the same requirements as QHPs, they often do. In fact, many health insurance companies offer the same qualified health coverage off-exchange directly to employers through workplace benefits programs.
When Is Open Enrollment for the Health Insurance Marketplace?
Since the institution of the ACA and the creation of the Health Insurance Exchange, the standard open enrollment period has typically run from November 1 through December 15 each year to enroll in health insurance coverage effective January 1. Any state-run exchanges must meet the minimum open enrollment length, but they do have some flexibility to shift the start/end dates or even extend the length of the enrollment period for all state citizens, so be sure to check with your state-run exchange for the most accurate enrollment period dates.
Outside of the traditional open enrollment period, individuals can enroll in Marketplace plans if they experience certain qualifying life events. Losing spousal health coverage, getting married, or having a baby will qualify you for a special enrollment period — typically 60 days from the date of the qualifying event — in which to enroll in a new plan outside of open enrollment.
In addition to the special enrollment periods triggered by life events, Healthcare.gov has also temporarily implemented a new special enrollment period that is triggered by household income. Created as a temporary response measure to help families affected by the pandemic, households with income levels below the specified amounts may be eligible to enroll in a Marketplace plan, even if they have not experienced any qualifying life events.
How Do I Get Health Insurance on the Exchange?
Your employees can explore coverage options and get enrolled in a plan by following these simple steps:
- Visit healthcare.gov/get-coverage/ and select your state from the dropdown menu.
- If your state uses an independent, state-run exchange, click "Visit Your State Marketplace" to search plans in your state's exchange. If your state uses the federal Marketplace, click "Apply Now" to create an account and explore plan options.
- Choose one or more plan options to compare coverage levels, co-pays, premium costs, and more. Include information on family members if coverage is needed for others in the household.
- Once a plan has been selected, enroll all eligible family members and add a payment method for any associated premiums directly within the Marketplace portal.
What Information Do I Need To Sign Up?
To create an account on the Exchange, you (or your employees) will need some basic personal information, such as name, email address, mailing address, and date of birth. Once the account is created, you may also be asked for the following types of information:
- Ages and relationships of any qualifying household members who may also need coverage
- Tobacco usage for any adults
- Household income
- Any special coverage (i.e. dental for adults) you would like included in your plan
This additional information is used to help your employees find the best plan to match their needs, but also to help identify any subsidies they may qualify for to help lower the cost of insurance coverage.
Who Can Buy Health Insurance on the Exchange?
Anyone can buy health insurance on the Exchange, even if they have insurance available through an employer, as long as they meet these minimum requirements:
- They must live in the United States.
- They must be a U.S. citizen or have legal immigration status.
- They cannot be currently incarcerated.
- They must not currently have Medicare coverage.
Even if healthcare coverage is available through an employer, it may be beneficial to explore the coverage options available through the Exchange. Households between 100% - 400% of the federal poverty level generally qualify for a premium subsidy, so sharing this information with your employees can be another way to help them secure affordable medical coverage.
Provide the Best Health Benefit Options for Your Employees
Even if you offer a robust benefits package, there is no one-size-fits-all option that is perfect for every employee. You can provide the best options for your employees by sharing information on all of the enrollment options available to them, including the plans available through the public Health Insurance Marketplace. You can even make things easier for you and your employees by exploring employee benefits options available through Paychex.