The ACA marketplace is the place most Americans use to buy private health insurance when they do not get it through a job, Medicare, Medicaid, or another program. It exists because of the Affordable Care Act, and its job is to put plans side by side so you can compare them and see whether you qualify for help paying.
I want to keep this article practical, not legal. So here is how I think about it.
Who actually uses the marketplace
Five groups end up here most often.
People without a job offer of coverage. If your employer does not offer a plan, or you are self-employed, freelance, or between jobs, the marketplace is the main option.
People whose employer plan is too expensive. There is an affordability test the IRS publishes each year. If the employee-only share of the employer lowest-cost plan is above that threshold for your household income, you may qualify for marketplace subsidies even though you have a job offer.
People losing other coverage. If you are aging off a parent plan, getting divorced, losing Medicaid, or ending COBRA, the marketplace is usually where you land next.
Early retirees. People who retire before age 65 and are not yet on Medicare often use a marketplace plan to bridge the gap.
People who used to have short-term plans. Short-term medical insurance has narrow coverage. If a short-term plan stops paying for something important, people often switch to a marketplace plan during a Special Enrollment Period.
What every marketplace plan must cover
Every marketplace plan covers what the ACA calls essential health benefits. That is ten categories, and HealthCare.gov spells each one out. The short list is:
- Outpatient care
- Emergency services
- Hospitalization
- Pregnancy, maternity, and newborn care
- Mental health and substance use treatment
- Prescription drugs
- Rehabilitative and habilitative care
- Lab tests
- Preventive and wellness care, including chronic disease management
- Pediatric care, including dental and vision for children
That list is the minimum. Beyond that, plans differ a lot. They differ on which doctors and hospitals are in network, which drugs are on the formulary, how much you pay before the plan starts paying, and how much your monthly premium is.
How plans are sorted: metal levels
Marketplace plans are grouped into four metal categories. The metal does not say anything about the quality of care. It describes how the bill is split between you and the plan when you actually use care.
| Level | Roughly how costs split | Who tends to pick it |
|---|---|---|
| Bronze | Plan pays about 60 percent of expected care costs, you pay about 40 percent | Lower monthly premium, higher costs when you use care |
| Silver | Plan pays about 70 percent, you pay about 30 percent | Middle ground. Cost-sharing reductions only apply to Silver |
| Gold | Plan pays about 80 percent, you pay about 20 percent | Higher premium, lower costs when you use care |
| Platinum | Plan pays about 90 percent, you pay about 10 percent | Highest premium. Not offered in every area |
There is also a Catastrophic category for people under 30 or with a hardship exemption. Premiums are low, but you pay almost everything out of pocket until the annual out-of-pocket maximum.
The reason Silver gets special attention is cost-sharing reductions (CSRs). If your income falls in a certain range, picking a Silver plan can reduce your deductible, copays, and out-of-pocket maximum. You only get that discount on a Silver plan, so people who qualify for CSRs and pick Bronze are usually leaving money on the table.
Premiums, deductibles, and the out-of-pocket maximum
Four numbers control most of your costs.
The premium is the monthly bill, due whether or not you use care. After a tax credit, your share of the premium may be much lower than the sticker price.
The deductible is what you pay out of pocket before the plan starts paying for most services. Preventive care is the main exception. The ACA requires preventive care to be free in network even before you meet the deductible.
The copay or coinsurance is what you pay each time you use a service after the deductible. A copay is a flat dollar amount. Coinsurance is a percentage.
The out-of-pocket maximum is the most you can be charged for in-network covered care in a calendar year, not counting your premium. Once you hit it, the plan pays 100 percent of covered in-network services for the rest of the year. HealthCare.gov publishes the federal upper limit each year, and most plans set their max at or below that ceiling.
A common mistake is to compare two plans only on premium. A Bronze plan with a high deductible can be a great deal if you almost never see a doctor and a terrible deal if you get hit with one hospital stay.
Premium tax credits and subsidies
The marketplace is where you find out whether you qualify for the premium tax credit. This is a subsidy tied to your household income and the cost of the second-lowest-cost Silver plan in your area. You can take it monthly (called advance premium tax credit, paid directly to your insurer to lower your premium) or claim it as a lump sum at tax time. The rules and income thresholds change, and Congress has changed the cliffs more than once in recent years, so check the current rule on HealthCare.gov before you assume anything. Our premium tax credit income guide walks through how the math actually works.
State-run marketplaces
Not every state uses HealthCare.gov. State-based marketplaces include California (Covered California), New York (NY State of Health), Washington (Washington Healthplanfinder), Massachusetts (Health Connector), Pennsylvania (Pennie), Maryland (Maryland Health Connection), New Jersey (Get Covered NJ), Colorado (Connect for Health Colorado), Idaho (Your Health Idaho), Kentucky (Kynect), Maine (CoverME), Minnesota (MNsure), Nevada (Nevada Health Link), Rhode Island (HealthSource RI), Vermont (Vermont Health Connect), Virginia (Virginia Insurance Marketplace), and the District of Columbia (DC Health Link). HealthCare.gov keeps the current list updated. Coverage levels and essential benefits follow the federal rules, but the website, the assister network, and sometimes the enrollment dates can differ. If you live in one of these states, go to the state marketplace, not HealthCare.gov.
A simple way to choose
When I am helping someone pick a marketplace plan, I work through five questions in this order.
- Are my doctors in network? If a plan does not cover the doctor or hospital you care about, nothing else matters.
- Are my prescriptions on the formulary, and at what tier? A covered drug at the highest tier can still cost hundreds per month.
- What is the realistic medical year? If a couple is planning to have a baby or you know you have surgery coming up, the deductible and out-of-pocket maximum matter more than the premium.
- Do I qualify for a cost-sharing reduction? If yes, Silver is almost always the right tier.
- What does the total annual cost look like? Take the post-subsidy premium times twelve and add the deductible (or out-of-pocket max for heavier expected use). That number is what you actually compare.
What to do next
Go to HealthCare.gov or your state marketplace and start an application with rough income and household numbers. You can save it and come back. You do not have to commit to a plan to see your subsidy estimate.
If your situation is complicated, get a free certified assister or licensed broker. HealthCare.gov has a "Find Local Help" tool, and state marketplaces have their own.
If you are weighing marketplace against Medicaid, our marketplace vs Medicaid guide explains how the two interact. If you are aging into Medicare, see Medicare vs marketplace insurance. And if you are deciding between COBRA and a marketplace plan after leaving a job, the COBRA vs marketplace comparison covers the trade-off.
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Frequently asked questions
Is ACA marketplace insurance the same as Obamacare?
Yes. Obamacare is the informal name people use for insurance sold under the Affordable Care Act, including marketplace plans.
Do I have to use HealthCare.gov?
Only if your state uses the federal marketplace. About a third of states run their own marketplace, and residents apply there instead.
Can I sign up any time?
No. Most people can only enroll during the annual Open Enrollment Period. Outside that window, you need a Special Enrollment Period, which usually requires a life event like losing other coverage, moving, getting married, or having a baby.
Will I qualify for help paying for a plan?
Many marketplace shoppers qualify for a premium tax credit based on household income. You will not know until you enter your details on the marketplace. Eligibility and amounts change year to year, so always check the current rules on HealthCare.gov or your state marketplace.