Many Americans get their health insurance from their employer. If you’re one of them, you probably have a choice of a few different plans you can sign up for during open enrollment each year, and your employer may subsidize some of your premium costs.
But if you aren’t covered through an employer, you’ll need to buy health insurance on the individual market to avoid the penalty.
The individual health insurance market has changed a lot in recent years thanks to the passage of the Affordable Care Act (ACA), which is more popularly known as ObamaCare. In fact, many people who get insurance on the individual market now buy coverage through state exchanges or through federal exchanges.
What to Know About Federal Exchange Healthcare Plans
State and federal exchanges were created as part of ObamaCare to essentially provide a one-stop shop where would-be policyholders could purchase ACA compliant plans and, if eligible, could sign up to receive tax credits to help cover the premiums of their chosen plan.
Healthcare.gov is the federal exchange, which serves the majority of states. California, Colorado, Connecticut, Washington D.C., Idaho, Maryland, Massachusetts, Minnesota, New York, Rhode Island, Vermont, and Washington each have their own health insurance exchanges.
Buying coverage on the exchanges can make sense for many reasons, but it’s not the only option for people who need an individual health insurance policy. You could also buy a policy from an off-exchange market.
Before you do, you should understand how off-exchange insurance works, why you might want to buy it, what the pros and cons are, and how it compares to the average cost of health insurance.
What Are Off-Exchange Health Insurance Plans?
Off-exchange health insurance plans are insurance policies sold from sources other than Healthcare.gov or your state’s exchange. Typically, these off-exchange policies are sold directly by health insurance companies or insurance agents to the individuals and families who wish to buy them.
They Must Meet ACA Guidelines
If off-exchange plans are major medical plans — and most are — these plans must comply with ACA guidelines. There’s a limited number of insurance products that aren’t major medical plans, such as short-term health insurance coverage or plans sold through associations, that don’t have to follow ObamaCare’s mandates. These aren’t classified as major medical off-exchange plans.
Because major medical plans sold on off-exchange markets are required to conform to ObamaCare’s mandates, the plans must not have lifetime limits on coverage.
They Must Not Discriminate Against Policyholders with Pre-Existing Conditions
They must not discriminate against policyholders with pre-existing conditions, and they must provide 10 essential health benefits that all ACA plans are required to cover. This includes coverage for maternity care and mental health treatment.
Since off-exchange plans have to conform to these guidelines, you won’t have to worry that you’re buying skimpy coverage if you decide to shop off-exchange. You’ll still get a comprehensive policy.
They Still Count as a Qualifying Health Plan
The policy can still count as a qualifying health plan for purposes of avoiding ObamaCare’s penalty for not having insurance coverage (the penalty remains in effect through 2019, although it was repealed after that).
They Are Different Than On-Exchange Plans
This isn’t to say that off-exchange plans are exactly the same as on-exchange plans. Insurance carriers can sell off-exchange plans that are different from the ones available on ACA exchanges. The plans may have broader or narrower provider networks, premiums may be priced differently, and coverage can be either more or less comprehensive.
But, one thing all off-exchange plans have in common is that you cannot get premium tax credits to purchase them — even if you would be eligible for premium subsidies had you purchased health insurance on the health insurance marketplace.
Read full article here: Buying Off-Exchange Health Insurance