The Health Insurance Marketplace may still be your best bet for getting adequate health insurance if you're not covered by an employer, a spouse's or parent's plan, or some other source.

And if you're getting by on a low income, browsing the Marketplace for a plan is a must. You may be eligible for extra savings that lower the amount you pay for your monthly health insurance bill, deductibles, copayments, and coinsurance.

Key Takeaways

  • You can buy a plan on the Health Insurance Marketplace if you don't have health insurance through a job, spouse, Medicare, Medicaid, or the Children’s Health Insurance Program (CHIP).
  • The Marketplace categorizes plans into four tiers: Bronze, Silver, Gold, and Platinum in the order of least to greatest coverage and cost.
  • Depending on your income, you may be able to lower your health insurance costs with tax credits and subsidies.
  • If you're under age 30—or have a hardship exemption—you may be eligible to buy a catastrophic plan with low monthly premiums.

The Health Insurance Marketplace

If you don't have health insurance through a job, Medicare, Medicaid, the Children’s Health Insurance Program (CHIP), or another source, you can buy a plan on the Health Insurance Marketplace.

The Marketplace (or Exchange) was created as part of the Affordable Care Act (ACA) of 2010, colloquially known as Obamacare. Most people can use the federal government's marketplace (you can access it at HealthCare.gov) to apply for and to enroll in health insurance, but 17 states, plus Washington D.C., have set up their own exchanges.

Required Coverage for Marketplace Plans

The ACA brought several key benefits to health insurance plans. One is that an insurance company can't deny you coverage (or charge you more) if you have a pre-existing condition. Another is that preventive care—things like routine checkups and screenings—is covered at 100%, even if you haven't met your deductible yet.

Also, all plans offered on the Marketplace must cover the following essential health benefits:

  • Ambulatory patient services
  • Breastfeeding coverage
  • Care for newborns and children (including dental and vision care)
  • Emergency services
  • Family planning coverage
  • Hospitalization
  • Laboratory services
  • Mental health and substance use disorder services
  • Occupational and physical therapy
  • Paternity, maternity, and newborn care
  • Prescription medications
  • Preventive and wellness services and chronic disease management

Preventive services include (but are not limited to):

  • Alcohol misuse screening and counseling
  • Blood pressure screening
  • Cholesterol screening
  • Colorectal cancer screening
  • Depression screening
  • Diabetes (Type 2) screening
  • Diet counseling
  • HIV screening
  • Immunization vaccines
  • Mammograms
  • Obesity screening

When to Apply for Coverage

You may be eligible for a special enrollment period if you have a qualifying event. That happens if you lose your existing health coverage (like from losing your job); get married or divorced; have a baby or adopt a child; move to a different ZIP code or county; or have a change in income that impacts your insurance coverage.

Otherwise, you have to shop for, apply for, and buy a health insurance plan during the open enrollment period—generally in the autumn.

Getting Started in the Marketplace

To get started, visit HealthCare.gov or your state's version of it. Either way, you'll get a quick side-by-side comparison of the plans available to you.

The database allows you to choose from four tiers of health insurance: Bronze, Silver, Gold, and Platinum. Bronze plans are the least expensive but require the highest copays and deductibles. Platinum plans are the most expensive, and they may have more bells and whistles than you want or can afford.

During the enrollment process, you'll learn whether you're eligible for the Advanced Premium Tax Credit or a cost-sharing reduction—and if so, you'll find out how much you can save. If you do qualify for savings, you must buy your plan through the Marketplace.

Comparing Health Plans

When you browse the Marketplace, you'll find that your choices come from private health insurance companies, including big names such as Blue Cross, Cigna, and UnitedHealthcare. The mix you get depends on where you live. 

Each company offers a range of healthcare plans within the four metallic levels. The levels indicate the rough percentage of costs that the plan will pay toward your healthcare services:

Plan Level The Plan Pays You Pay
Bronze 60% 40%
Silver 70% 30%
Gold 80% 20%
Platinum 90% 10%

Bronze plans, for example, provide the lowest level of coverage (60%) but have the lowest monthly premiums. As the plan level increases, so do the coverage and your monthly premium.

Even within the same metallic level, you'll still be able to choose from several coverage options. These options affect both your premiums and out-of-pocket costs for deductibles, copayments, and coinsurance. Because the Marketplace allows various private insurers to offer plans, a plan from one company may cost more or less than the same plan offered by a different insurer.

For example, a Silver plan from one company may cost you more up front for your monthly deductible, but your out-of-pocket expenses will be much lower. Conversely, a Silver plan from another insurer could cost less each month, but you'll pay more for healthcare expenses because of the higher deductible, copayment, and coinsurance amounts.

How to Reduce the Costs of Marketplace Insurance

Depending on your modified gross adjusted income (MAGI) and family size, you may be eligible for cost-sharing reductions and a premium tax credit to reduce your healthcare costs.

Cost-sharing reductions

A cost-sharing reduction is a discount available on Silver plans only. This reduction can help lower your out-of-pocket costs for:

  • Deductibles: the amount you owe for covered services before health insurance kicks in.
  • Copayments: a fixed amount you pay for covered healthcare services.
  • Coinsurance: your share of the costs of covered healthcare service.
  • Out-of-pocket maximum: the most you'll pay in a year for covered health expenses.

For example, say you visit the doctor and are charged $100. With your particular Silver plan, you normally have a copay of $25. Because you qualify for cost-sharing reductions and you chose a Silver plan through the Marketplace, your copay may be as low as $5.

Similarly, if your plan has a $3,500 deductible, it may be lowered to $500 with cost-sharing reductions. Essentially, you pay for a Silver plan, but receive the increased coverage of a higher metallic level plan, reducing your out-of-pocket expenses.

Cost-sharing reductions are available only to the following:

  • Those who are ineligible for public coverage such as Medicaid or the Children’s Health Insurance Program (CHIP)
  • Those who are unable to get qualified health insurance through an employer
  • Those whose incomes fall between 100% and 250% of the federal poverty level

The cost-sharing reduction and Advanced Premium Tax Credit subsidies are not automatic: You must apply for them on the Health Insurance Marketplace.

Advanced Premium Tax Credit

Many more people qualify for an Advanced Premium Tax Credit, which lowers your monthly health insurance bill for coverage bought through the Marketplace. Like the cost-sharing reductions, you must be ineligible for public coverage and unable to get qualified health insurance through an employer in order to qualify.

Though you can choose any metallic level plan in the marketplace, your income must fall between 100% and 400% of the federal poverty level to qualify for the tax credit. For 2021, in order to be eligible for a subsidy, you must make below $68,960 for an individual and $104,800 for a family of four. In each case, that number represents four times the federal poverty rate for 2020.

For 2021 and 2022, the American Rescue Plan Act of 2021 changes how the Advanced Premium Tax Credit is applied. The law increases premium tax credits for all income brackets for these years. Previously, households with incomes that are more than 400% of the federal poverty level were not eligible for such tax credits. The law allows families making more than 400% of the poverty level to claim premium tax credits and instead places a cap on the level of household income families must pay toward premiums at 8.5%. Other tax brackets and income levels are also expected to see lower premiums due to the American Rescue Plan as the percentage of tax credits relative to income increases.

Premium tax credits are sent directly from the government to your health insurer to lower your monthly premium. If you qualify, you can decide how much of the credit to apply to your premium each month—up to the full amount.

When you file your annual tax return, you'll "reconcile" the premium tax credits you received and the actual amount you qualify for based on your final income for that year. If you've taken more payments than you're eligible for, you may have to pay the money back when you file your return. If you should have taken more, however, you may get a refund.

HealthCare.gov has an online tool that shows the subsidy you might receive based on your income, the number of adults and children enrolling in coverage, and your state.

Choosing Catastrophic Coverage

When you fill out an application online, you'll see catastrophic plans listed among your plan options (if you qualify for them). If you do qualify for and choose a catastrophic plan, you won't be eligible for either cost-sharing reductions or premium tax credits. Catastrophic plans cannot be purchased with premium subsidies.

A catastrophic health plan covers three primary care visits per year before the deductible is met. It also covers preventive services at no cost to you. The premium you pay each month should be considerably lower than for other plans, but the out-of-pocket costs (deductibles, copayments, and coinsurance) are generally much higher.

You may be eligible for a catastrophic plan if you're under 30 years old or if you qualify for a hardship exemption because you can't afford health coverage. This is determined during the application process and is based on your family size and income.

Qualifying for Medicaid

Depending on your income and family size, you may qualify for Medicaid, a program that provides health coverage for eligible people in the following categories:

  • Low-income individuals, families, and children
  • Pregnant women
  • Older people
  • People with disabilities

Each state has its own rules about who qualifies for Medicaid. Under the Affordable Care Act, Medicaid eligibility expanded in many states, and an increased number of people qualified for benefits. If you are eligible, you can get free or low-cost coverage, and you won’t need to buy a Marketplace plan.

Many states also have a separate program, the Children’s Health Insurance Program (CHIP), which provides health insurance for uninsured children in low-income families who don't qualify for Medicaid but cannot afford private coverage.

You can fill out an application on the Health Insurance Marketplace to find out if you are eligible for Medicaid or CHIP benefits. You can also visit your state’s Medicaid website to apply and find out if you qualify.

Marketplace Health Plan FAQs

What Are State Healthcare Exchanges?

State healthcare exchanges, aka state healthcare marketplaces, are sites where individuals and small businesses can compare and purchase health insurance options. Though offered by private insurers, these policies follow the coverage guidelines and criteria set forth in the Affordable Care Act. In 17 states and the District of Columbia, residents seeking such policies go through these state exchanges. Americans in other states purchase health insurance through the federal government's marketplace.

Can I Refuse Health Insurance From My Employer and Get Obamacare?

Yes, the Affordable Care Act ensures that almost all Americans can buy individual and family health insurance from its online Marketplace, aka Obamacare—either the federal exchange or a state-run one. However, you most likely will not qualify for any subsidies, tax credits, or other financial assistance. The only way you might be eligible is if a) your employer-sponsored health plan doesn’t meet the “minimum value standard” of coverage required by the ACA, or b) the cheapest plan through your employer costs more than a certain percentage of your household income. Even without the subsidy, though, a Marketplace plan may offer a more economical deal than your employer-based insurance, so comparison-shopping never hurts.

What Is the Income Limit for Marketplace Insurance?

Strictly speaking, there is no income limit for Marketplace insurance—anyone can purchase it. What is limited by income is the amount of the subsidy, or premium tax credit, you might qualify for to help pay for that insurance. In 2021, you qualify for subsidies if you pay more than 8.5% of your household income toward health insurance premiums—specifically, the cost of the Silver “benchmark plan” (the second-lowest-cost plan on the exchange).

The Bottom Line

Many individuals and families will be able to compare and buy their 2021 health coverage through the Health Insurance Marketplace. After you fill out an application online, you can see if you qualify for Medicaid, CHIP, cost-sharing reductions, and/or premium tax credits. You will also find out if you are eligible for a catastrophic plan that charges lower premiums but higher out-of-pocket costs.

To find additional information regarding the Health Insurance Marketplace and extra savings, as well as state-specific information and how to apply in your state:

  • Visit HealthCare.gov
  • Call 1-800-318-2596
  • Contact your current health insurance company