What is Marketplace Insurance?

Who is Eligible for Marketplace Insurance?

Nearly everyone must have health insurance or pay a fee as part of the individual shared responsibility provision in the ACA. However, there are some exemptions. Individuals who are eligible to purchase health insurance through the marketplace include:

U.S. citizens, nationals, or lawful residents
Those who are not incarcerated
Those who do not have access to affordable coverage through a job
Those whose incomes are too high to qualify for Medicaid but may qualify for subsidies to help pay premium costs

In general, to qualify for a marketplace plan a person must:

Live in the U.S.
Not be currently incarcerated
Not be eligible for or enrolled in other minimum essential coverage like Medicaid, Medicare, employer-sponsored insurance, etc.

Some key points on eligibility – Income cutoffs vary by location but generally individuals earning between 100-400% of the federal poverty level qualify. Undocumented immigrants are not eligible. Those who have access to affordable employer coverage or are eligible for public programs like Medicaid cannot use the marketplace.

Plan Options on the Marketplace

Health plans sold through the marketplace must meet certain criteria to be certified. The ACA established four metal tiers of coverage – bronze, silver, gold, and platinum. The categories refer to how much of healthcare costs on average the plans will cover:

Costs and Subsidies

Premium costs for marketplace plans vary based on age, location, household size, and income as well as the specific coverage tier selected. Subsidies in the form of premium tax credits are available on a sliding scale for individuals and families with incomes between 100-400% of the federal poverty level to help reduce monthly costs.

Subsidies are paid directly to insurance companies. Consumers select a plan, enter their income information, and the marketplace calculates their estimated premium and any available savings upfront. Those eligible do not pay full premiums.

For 2023, the maximum a household would need to contribute is 8.5% of their income towards the monthly premium. Anything above that is covered by the premium subsidy. For example, a family of four making $104,800 or 400% of the federal poverty level would pay no more than $8,908 per year in premiums for a benchmark silver plan through the marketplace.

In addition to premium subsidies, plans purchased through the marketplace come with out-of-pocket maximum protections. This limits how much an individual pays per year in deductibles, copays, and coinsurance before the insurance company covers 100% of costs.

The ACA also provides cost-sharing subsidies to further reduce these out-of-pocket costs for those earning less than 250% of poverty. This makes obtaining healthcare more affordable for vulnerable populations.

Enrollment Process and Timeline

Eligible individuals can enroll in marketplace coverage during open enrollment periods or if experiencing a qualifying life event like job loss, relocation, or birth of a child.

The general open enrollment runs each year from November 1 through January 15. Coverage obtained during this period begins on January 1 of the following year. This allows people time to research options, compare plans, and select one before the new year.

Outside of open enrollment, people have 60 days from certain life events to enroll, such as losing job-based insurance or moving to another state. Losing Medicaid coverage also triggers a special enrollment period. The coverage effective date is usually the first of the following month after plan selection.

To enroll, individuals visit their state or federal marketplace website and create a secure account. They provide basic information to verify identity and citizenship status. Then they enter household income details to calculate eligibility for subsidies. After reviewing plans available in the area, consumers select one and pay the first monthly premium. The remainder is paid directly to the insurer.

Help is available every step of the way through customer support centers, brokers, certified navigators, or application assisters affiliated with organizations like healthcare.gov. Those having trouble with the online application or without internet access can enroll over the phone instead. Paper applications are also an option in some states.

Relation to Medicaid and Medicare

Medicaid eligibility differs by state but generally covers low-income individuals, children, pregnant women, the elderly, and the disabled. The ACA expanded Medicaid to all individuals with incomes under 138% of poverty. Those who qualify are not able to receive premium subsidies through the marketplace.

Medicare, on the other hand, is a federal health insurance program for Americans aged 65 or older as well as younger people with disabilities. Those eligible remain so regardless of income. The marketplace is not an option once someone enrolls in Medicare. However, marketplace plans provide an alternative to traditional Medicare for those still working past 65 who do not have job-based coverage.

Importance of the Individual Mandate

The individual mandate provision of the ACA also referred to as the individual shared responsibility payment, required that all Americans have qualifying health insurance coverage or pay a tax penalty. This helped ensure premiums remained stable by balancing the risk pool with both healthy and sick individuals enrolled. It also aimed to achieve its goal of universal health coverage.

However, as part of the Tax Cuts and Jobs Act passed in 2017, Republicans zeroed out the penalty amount beginning in 2019, effectively eliminating the individual mandate. This led some healthy individuals to choose to forego coverage, raising premiums slightly as risk pools become less balanced. It remains unclear long term how ending the mandate will impact enrollment and costs. Some may voluntarily maintain coverage despite the lack of penalty. State marketplaces have since adjusted operations to account for the change.

Alternatives to the Marketplace

While the marketplace represents a key access point for individual health insurance, it is not the only option. Individuals may purchase non-compliant plans outside of open enrollment if willing to forgo subsidies and pre-existing condition protections.

Associations also offer uninsured individuals the ability to tap group plans not subject to all ACA regulations. Short-term limited-duration plans can provide temporary coverage but exclude pre-existing conditions. COBRA allows continuing job-based coverage post-employment for up to 18 months by personally funding premiums.

Recent Legislation Impacting the Marketplace

The ACA marketplace structure has remained relatively stable but underwent changes as new laws and administrations took effect over the past decade. This includes:

Congressional relief bills allocating funds to reduce insurer losses and stabilize premium increases.
Expanded subsidy eligibility and amounts under the American Rescue Plan Act of 2021 to make coverage even more affordable through 2022.
States have the option to adopt Medicaid buy-in programs or reinsurance waivers to further reduce premiums and shore up individual markets.
Trump administration ended cost-sharing subsidy reimbursements to insurers and relaxed enrollment/outreach efforts.
Biden has re-opened enrollment periods, bolstered marketing, and rolled back obstacles to help boost Exchange participation nationwide.
Future proposals could impact the individual mandate penalty, subsidies, or public option availability depending on the next election outcomes and initiatives.

Conclusion

In summary, the Affordable Care Act created online marketplaces as an organized way for individuals without job-based or public coverage to compare and purchase qualified plans meeting certain standards. Subsidies are available to reduce out-of-pocket costs for lower-income households. While not a perfect solution, the Exchange system has enabled millions of previously uninsured Americans to gain health insurance that must cover pre-existing conditions without lifetime or annual limits. Ongoing legislative changes shape both coverage affordability and sustainability moving forward at both state and federal levels. Marketplace insurance plays a key role in expanding access to healthcare nationwide per the ACA’s original intent.