Should You Shop in the Health Exchange or Outside the Exchange?

Official = compliant

Every plan sold through the official exchange in your state is fully compliant with the Affordable Care Act (ACA). There are also lots of ACA-compliant plans that are sold outside the exchange. If you're shopping for an HDHP, it's going to have to be ACA-compliant, regardless of where you buy it.

But you need to be cautious when you're shopping outside the exchange, as there are also other types of coverage, like short-term plans and limited benefit plans, that people sometimes purchase without a full understanding of their shortcomings.

HSA open enrollment deadlines still apply

Both on-exchange and off-exchange, you can only buy ACA compliant coverage (including HDHP) during open enrollment, or during a special enrollment period if you experience a qualifying event.

Open enrollment in most states begins November 1st, but could launch sooner. Some state-run exchanges have longer enrollment windows. But with the exception of Nevada, you cannot avoid enrollment window restrictions by shopping outside the exchange.

Cost savings are available

If you're eligible for premium subsidies, you must shop in the exchange in order to get the subsidies. As recently as 2021, of the 11.3 million people who had coverage through the exchanges, more than 9.7 million of them were receiving advanced premium tax credits (APTC). And there's also an option to pay full price throughout the year and then claim the subsidy (which is actually just a tax credit) on your tax return.

But in either case, you can only get your subsidy if you buy a plan through the exchange. If you shop off-exchange and then you end up with a subsidy-eligible income after all, you're just out of luck.

Special circumstances can be accommodated

Premium subsidies are available to people in all sorts of circumstances. Maybe you have a large family, or maybe you're a young adult just starting your career. Maybe you're a single parent, or maybe you're an early retiree looking for health coverage for the years before you're eligible for Medicare… Whatever your circumstances, you may find that you're eligible for premium subsidies. 

It's worth it to shop around

If you're NOT eligible for premium subsidies — perhaps because you have a qualifying offer of coverage from your employer, or because of the family glitch — you can shop in or out of the exchange, since you'll be paying full price for your coverage either way. Knowing that your HSA can help you cover some of your healthcare expenses can make the decision making during shopping at health exchanges a lot easier. 

If you have your heart set on a silver-level plan and you're not eligible for a subsidy, you might find that the silver-level plans outside the exchange are less expensive than the silver-level plans inside the exchange. If you're not subsidy-eligible and you want a silver plan, you'll want to look at the off-exchange options alongside the on-exchange options to make sure you're getting the best value. 

But be aware that if you buy an off-exchange plan, you can't change your mind mid-year if your income changes and you become subsidy-eligible (unless you also experience a qualifying event).

Expect some big differences in plan options

The available options, both in the exchange and outside the exchange, vary considerably from one area to another, even within a single state. Don't assume anything, and don't base your decisions on what you've heard from a friend who lives elsewhere or who has different circumstances.

Many insurance companies offer their plans both on- and off-exchange, but some only offer on-exchange plans while others only offer off-exchange plans. To see your full range of options, you'll need to compare both.

Most people who are eligible for premium subsidies can ignore the off-exchange options, but there are circumstances in which it might make sense to forfeit your premium subsidy and buy an off-exchange plan instead. An example would be a person in the midst of cancer treatment who discovers that the only insurers providing in-network coverage of the person's oncology center are off-exchange.

In that case, the applicant might decide it's worth losing out on their premium subsidy in trade for having in-network coverage of their preferred cancer treatment center. Every aspect of health care is personal, and that includes the decisions you make about what health plan to buy and where to buy it. 

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