What's the Difference Between On-Exchange and Off-Exchange?


Open Enrollment is here. And while buying health insurance has gotten easier over the last few years, some of the words and phrases you encounter can make the entire process confusing. I know I get turned off when random health insurance jargon is thrown my way. But once you understand what some of these terms, like “on-exchange” and “off-exchange” mean, then it makes the entire health insurance experience a little bit better.


What is on-exchange?

Health insurance plans that are offered through the Marketplace – a massive online store for health insurance plans that is run by the federal government or state. These plans are required to provide essential health benefits and follow more guidelines as set by the Affordable Care Act (ACA). You usually purchase these plans from either Healthcare.gov or your state’s exchange platform. 


With these plans, you may be eligible to receive a government subsidy depending on your household size and income, meaning that your monthly health insurance costs (a.k.a. your premium) might be lower.


What is off-exchange?

Health insurance plans that are offered privately by each health insurance company. These plans also offer most if not all the essential health benefits as their on-exchange counterparts and are usually are a mirror of their on-exchange plans. The names of the plans are often exactly the same as well.


The difference? You won't buy these plans from Healthcare.gov or your state exchange platform. You also won't receive a government subsidy or discounts for these plans.


Choose on-exchange if…

- you qualify for a government subsidy,

- would like assistance in paying for healthcare,

- are willing to accept a narrow in-network list of doctors,

- and you make too much $$$ to qualify for Medicaid, but paying the full cost of a private health insurance plan is financially difficult for you.


Choose off-exchange if…

- you make too much money to qualify for a government subsidy and

- your favorite doctor doesn't accept any health insurance plans that are on-exchange and you see this doctor enough that it makes sense to have visits covered rather than pay out of pocket to see them.


Insider tip: If you purchase an on-exchange plan (a.k.a. Government plan) without receiving a subsidy, you're essentially buying an off-exchange plan (a.k.a. private plan) with an "on-exchange" label. Then, you're not receiving the benefits of a government plan at all.



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