Health Insurance

What’s the Difference Between On Exchange and Off Exchange Health Plans?



Public, private, on or off — you can talk about the Exchanges lots of different ways, but do you know the difference between “On Exchange” and “Off Exchange” health plans? If you answered no, then have we got the blog post for you!



What are the Exchanges are why were they created?



The Affordable Care Act (ACA) created a mandate that every individual carry at least a minimum level of health insurance or face a tax penalty beginning in 2014. To facilitate this big task, Health Insurance Exchanges were set up as online portals to allow consumers to compare and shop for individual health insurance plans. These Exchanges make up the Health Insurance Marketplace.



Why are they called state-run Exchanges or federally-run Exchanges?



When the Exchanges were initially set up, each state was required to either create their own Exchange or default to the federal government’s Exchange. The source of the Marketplace may differ from state to state based on their local laws. There are 27 states that that utilize the Federally-facilitated Marketplace found at www.healthcare.gov including Ohio – 14 states have developed their own Marketplace such as Kentucky – and 7 states have created hybrid models that are known as State-Partnership Marketplaces.



So what’s the difference?



Within each Marketplace, consumers have two types of coverage to consider:



  1. On Exchange (a.k.a. the Public Exchange)
  2. Off Exchange (sometimes known as a Private Exchange)



The On Exchange option allows individuals who financially qualify for Advanced Premium Tax Credit (APTC) to off-set the cost of their health plan. The APTC is based on a sliding income scale for people who are 100 to 400% of the federal poverty level (FPL). In addition to the APTC, those who fall between 100 to 250% of the FPL receive an additional subsidy known as cost share reduction.


The Off Exchange option does not coordinate with any financial-based subsidies and generally is used by those who are over 400% of the FPL. These plans must still comply with the ACA guidelines as qualified health plans but enrollment is handled directly through a private insurance company.



On Exchange Plans and Off Exchange Plans have some things in common



Regardless of whether a consumer enrolls On Exchange or Off Exchange, there are three things that are the same:



  • All plans in the Marketplace are offered through private insurance companies
  • They must include the core services known as Essential Health Benefits
  • All plans are categorized into the metallic levels of care – Bronze, Silver, Gold, and Platinum



How to navigate the confusion



Insurance companies are working to simplify their processes and product offerings to reduce consumer confusion, but they have their work cut out for them given the ever-changing ACA guidelines.


Peter G Magada has an  understanding of the various Marketplace options and will help you find the right plan for your needs this year and each year going forward.


 


 With over 33  years of experience, Peter G. Magada, LUTCF knows the market and  will work for your good.


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