Insurance Basics 101: On and Off Exchange Health Plans

With a plethora of health insurance options, we've put together a series of articles explaining health insurance terminology and options. Read on for the first segment of our Health Insurance 101.

Many people hear about Obamacare policies or ACA policies, but the term ACA does not refer to a type of insurance policy. ACA stands for the Affordable Care Act, which is a set of laws or regulations regarding health insurance. These regulations were put into place by the Obama administration and apply to all health policies, regardless of whether an insurance policy is On Exchange or Off Exchange.

So what do On Exchange and Off Exchange mean? Both terms refer to individual health insurance (ie. not group health insurance through work). Individual health insurance can be purchased for an individual or an individual's family, but does not cover anyone outside a person's immediate family. The biggest difference between the two is the tax credit subsidy. Only On Exchange plans qualify for tax credit subsidies. Here are the basics differences.

Individual Health Insurance that is "On Exchange"

• Is purchased by individuals through Healthcare.gov.

• Is often called an Obamacare policy, though that term is not a very accurate one.

• May be offered by the same insurance companies offering Off Exchange policies, but the plans themselves can be different and have different options.

• May be subsidized by the government if a family or individual meets the income requirements. This means a lower monthly premium cost.

• Offers cost sharing at a certain income threshold. Cost sharing gives assistance with deductibles, copays and co-insurance.

• Uses a different chain of command when changes need to be made to an On Exchange policy. Most changes take place at healthcare.gov instead of the issuing insurance company.

Individual Health Insurance that is "Off Exchange"

• Is purchased by individuals from the company that is selling the policy (ex. Blue Cross Blue Shield, Community Health Care, Oscar).

• Is not subsidized by the government. An Off Exchange policy can never qualify for a tax credit subsidy.

• Often has features that make the out of pocket costs of insurance lower for the individual and family.

If you need health insurance for the upcoming enrollment period, please contact us to find out more about the best plan for you and your family.