Health Insurance Marketplace

DEFINITION of 'Health Insurance Marketplace'

Organizations that facilitate structured and competitive markets for purchasing health coverage. The Health Insurance Marketplace, or "Exchange," offers standardized health insurance plans to individuals, families and small businesses. Certain states operate their own marketplace, while others opt for a partnership exchange where the federal government manages the marketplace. In each state, various private insurance companies submit plans to be included in the marketplace. The marketplace plans are separated into four primary levels: Bronze, Silver, Gold and Platinum, each based on the average percentage the plan pays toward health-care services.

Also known as Health Insurance Exchange.

BREAKING DOWN 'Health Insurance Marketplace'

The Health Insurance Marketplace was established as part of the Patient Protection and Affordable Care Act (ACA), the U.S. health reform signed into law by President Barack Obama on March 23, 2010. The marketplaces are intended to provide places where consumers can compare and purchase standardized health coverage that includes a mandatory set of covered health-care items and services known as essential health benefits. These benefits are minimum requirements for all health plans offered to individuals or through the small-group market to employers with 50 or fewer employees. They include ambulatory patient services, emergency services, hospitalization, laboratory services, maternity/newborn care, mental health services and addiction treatment, rehabilitative services and devices, pediatric services, prescription drugs, preventive and wellness services, and chronic disease management.

Most individuals and families qualify for federal subsidies that can help lower health insurance costs. Cost-sharing reductions can help lower out-of-pocket costs such as deductibles, copayments and coinsurance, and advanced premium tax credits can reduce the amount consumers pay each month for their health insurance premiums. Both subsidies are available only to qualified individuals who meet certain income requirements and who are ineligible for public coverage (such as Medicaid and the Children’s Health Insurance Plan), are unable to get qualified health insurance through an employer, and who purchase health coverage on the Health Insurance Marketplace.