As of late 2020, the Health Insurance Marketplace may still be your best bet to get 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, and 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—also known as Obamacare. Most people can use healthcare.gov to apply for and enroll in health insurance, but there are 13 states that have set up their own marketplace.

The enrollment period for coverage in 2021 runs from Nov. 1 through Dec. 15, 2020. 

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 preexisting 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, 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.

Otherwise, you have to shop for, apply for, and buy an insurance plan during the open enrollment period.

Getting Started in the Marketplace

To get started, visit www.healthcare.gov or your state's version of the site. Either way, you'll get a quick side-by-side comparison of the plans that are 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. 

You'll use your state's website to enroll if you live in one of these states:
California, Colorado, Connecticut, District of Columbia, Idaho, Maryland, Massachusetts, Minnesota, Nevada, New York, Rhode Island, Vermont, and Washington.

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 towards 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. Since 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 many cost you more upfront 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 Lower Costs on 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 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.

As an 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 people:

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

The Cost-Sharing Reduction and Advanced Premium Tax Credits subsidies are not automatic: You must apply for them on the Health Insurance Marketplace.

Advanced Premium Tax Credits

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.

While 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 2020, in order to be eligible for a subsidy you must make below $51,040 for an individual and $104,800 for a family of four, for example. In each case, that number represents four times the federal poverty rate for 2020.

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 only 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.

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), that 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.

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 www.healthcare.gov
  • Call 1-800-318-2596
  • Contact your current health insurance company