What Is the ACA Health Insurance Marketplace?
The Health Insurance Marketplace is a platform that offers insurance plans to individuals, families, and small businesses. The Affordable Care Act (ACA) established the Marketplace as a means to extend health insurance coverage to millions of uninsured Americans. Many states offer their own marketplaces, while the federal government manages an exchange open to residents of other states.
- The Health Insurance Marketplace is a gateway for individuals, families, and small businesses to access health insurance.
- It was created following the passage of the Affordable Care Act.
- The Marketplace is available to those who don't have access to health insurance through employer-sponsored plans.
- The Marketplace enables various insurers to compete for customers by offering a variety of plans based on cost and need.
- A number of states have marketplaces and the federal government has an exchange.
Understanding the ACA Health Insurance Marketplace
The Health Insurance Marketplace is a key element of the Affordable Care Act, a healthcare reform signed into law by President Barack Obama in 2010 also known as Obamacare. The law instructed states to set up their own exchanges where individuals or families without employer-sponsored coverage could compare plans. Many states, however, have chosen not to establish a marketplace and have joined the federal exchange.
The Marketplace facilitates competition among private insurers in a central location where people who do not have access to employer-sponsored insurance can find a suitable plan. Individuals can compare and apply for plans via the Marketplace during the open enrollment period.
Typically, this period takes place in November and December of the year prior to the year in which the coverage will take effect. Consumers can apply for a special enrollment period in the case of a qualifying event such as the birth of a child, marriage, or the loss of another insurance plan.
The Marketplace categorizes plans into four tiers: bronze, silver, gold, and platinum, in the order of least to greatest coverage. The highest tier, platinum, includes plans that cover approximately 90% of health expenses, but is also the most costly.
Lower-income individuals and families can qualify for extra savings on all the health insurance plans offered on the exchange through premium tax credits and cost-sharing reductions.
ACA Health Insurance Marketplace Requirements
The Health Insurance Marketplace has requirements for individuals and families who use it, as well as for the insurance companies that offer coverage. To be eligible to buy coverage offered on the Marketplace, you must live in the United States and be a U.S. citizen or national. If you are covered by Medicare, you’re not eligible.
While the plans that insurers offer on the Marketplace can vary widely, the ACA requires that they must each satisfy 10 basic requirements or essential health benefits (EHBs).
Required benefits include:
- Ambulatory patient services
- Emergency services
- Laboratory services
- Mental health and substance use disorder services
- Pregnancy, maternity, and newborn care
- Prescription medications
- Preventive and wellness services and chronic disease management
- Pediatric services
- Rehabilitative and habilitative services
The ACA does not require large, employer-sponsored insurance plans to cover any of the EHBs. Instead, the writers of the law felt that the Marketplace would apply competitive pressure that would force employer plans to comply with these basic mandates.
Changes have been made to the ACA that have addressed some of the objections raised by its opponents, while still keeping the Marketplace open. For example, as part of the Tax Cuts and Jobs Act, in Dec. 2017 Congress removed a penalty individuals had to pay for not having health insurance, a requirement that many Republicans had opposed.
President Biden, who had helped President Obama pass the Affordable Care Act, enacted more changes. Eight days after he took office, he signed an executive order focused on strengthening the ACA, as well as Medicaid.
Then, on Aug. 16, 2022, Biden signed the Inflation Reduction Act of 2022 to extend ACA insurance premium subsidies to include more middle-class families for three years through 2025.