What is a Marketplace Plan?

A Marketplace plan is just a way to indicate where you purchased the insurance.  The coverage benefits from a Marketplace plan or usually no better or worse than what you would get from group insurance or a private insurance, but Marketplace plans do have a few features that are worth considering.


The biggest feature of a Marketplace plan is the subsidies.  There are two types, the first a tax credit, and the second a reduction to the out of pocket cost you would need to pay when you seek medical care.  These subsidies are calculated automatically for you when you start applying for coverage.


No matter what plan you are looking at on the Marketplace, all 10 of the essential health benefits will be covered.  All plans are categorized in one of four tiers.  Some plans are marked as ‘easy pricing,’ which means that amongst these plans, all deductibles, copayments/coinsurance, and max out of pockets will be the same.

Who Is Allowed to Use the Marketplace?

The Marketplace is designed to provide access to affordable health insurance to people who otherwise do not have access.  There are a few requirements to being able to use the Marketplace.  First, you need to be living in one of the 50 US states or in Washington DC.  You also need to be either a US citizen, national, or a lawful resident.  Third, you cannot be incarcerated.  Finally, if you have Medicare, you will not be able to use the Marketplace.


Assuming you meet all these requirements, you need to next look at if the Marketplace is your best option.

Who Should Use the Marketplace?

The Marketplace was established to provide access to healthcare for those that otherwise would be required to go directly to the health insurance companies for coverage.  Prior to the ACA, if you were not offered group benefits from your work or other organization, you didn’t have a lot of options on where you could get insurance.  Even then, you were at the mercy of the insurance company when it came to prices and what they would cover.


Health insurance from work remains the top way Americans get their health insurance, and for good reason.  Groups have a lot of buying power that can really drive the premiums down, and your work may even be paying part of your premiums for you.  This makes employer-based health coverage relatively inexpensive for a lot of people.  If you have the option to get insurance from work, the options available to you on the Marketplace will most likely be more expensive.


For those that do not have access to work insurance, the people who maybe do not work full time, so they don’t qualify, or if you’re a 1099 employee, or even a sole proprietor business owner, the Marketplace is our best place to go.

Plan Types

All Marketplace plans are categorized into one of 4 tiers; bronze, silver, gold, and platinum.  There is a fifth their called a Catastrophic Plan that offer catastrophic coverage only.  This type of plan is only available to certain people under the age of 30 and is designed to act as a safety net for serious medical conditions.


Regardless of the plan tier, all health coverage plans purchased through the Marketplace cover the 10 essential health benefits.  Additionally, the none of the plans are able to charge you more for health problem you may have had in the past, they cannot deny you coverage due to health issues you have had in the past, and any future care you may need due to a health issue in the past will be covered.


The level of tiers has nothing to do with the level of care they provide, but rather the various cost associated with each.  Bronze plans offer a low monthly premium but a very high max cost share and high max-out-of-pocket.  The closer you get to the platinum tier, the monthly cost increase through higher premiums, but the cost sharing decreases drastically, with some plans boasting a $0 deductible.

Bronze Tier

These plans have the lowest monthly premiums, but the highest cost when you do need care.  Your coinsurance amount will be 40% with all bronze plans and deductibles can be in the thousands (the amount of money you need to spend before the insurance company begins to pay).

They are however a good choice if you want a low-cost way to protect yourself from the worst-case medical scenarios.  Your monthly premiums will be low, but you’ll need to pay for most routine care yourself.

Silver Tier

Moderate monthly premiums and moderate cost when you need care.  These are a good choice if you’re willing to pay slightly higher monthly premiums to have more of your routine care covered.  Coinsurance with a silver tier plan of 70/30.


Silver plans are required if you qualify for Cost-Sharing Reductions and want to get the extra savings.  You can save hundreds or even thousands of dollars per year if you go to the doctor a lot.

Gold Tier

Gold tier plans offer a high monthly premium, but very low cost when you need care.  Annual deductibles are usually low, and coinsurance is 80/20.


If you are willing to pay more each month to have more cost covered when you get medical treatment, or if you use a lot of care, a Gold plan may be a good value.

Platinum Tier

Monthly premiums are a very high, but out of pocket cost are the lowest you can get.  These can be great for people who are willing to pay a high monthly premium, knowing that nearly all their other cost will be covered.

Marketplace Subsidies

The subsidies offered on the Marketplace are one of its defining features.  When you apply for coverage, the income that you estimate to make this calendar year is used to determine how much, if any, of a subsidy you can receive.


There are two different types of subsidies you can receive, Premium Tax Credits (or PTC) and Cost Sharing Reductions (or CSR).  Everyone who seeks coverage from the Marketplace is eligible to receive these, but both are based on your AGI, so high earners will not see a noticeable amount of savings or subsidies.

Premium Tax Credits

The PTC subsidy is intended to lower the amount you pay each month in premiums.  No matter which health plan tier you choose, you can save a lot of money on your monthly premium based on your income.


When you first start applying for health insurance on the Marketplace, you will be asked to estimate your current year household AGI.  This estimated amount is what is used to determine how much of a tax credit you will receive.


You can find out if your estimated income will qualify for a PTC here.


The Marketplace will automatically send your tax credit to the insurance company, so you will end up paying less each month.  This is called an Advanced Premium Tax Credit, because you are receiving the tax credit in advance of knowing your actual yearly AGI.


As your income changes or if you adjust the number of people in your household, make sure to report this as it will affect the amount of tax credit you receive.  If your income goes up, you will most likely receive less of a tax credit.  If you choose to wait until the end of the year to report the increased income, you will go through what is called ‘reconciling,’ where the advance PTC you did receive and the PTC you should have received are compared and you are required to pay the excess money back to the IRS.

Cost-Sharing Reductions

The CSR subsidy is meant to lower the amount you pay each time you seek care using your plan.  The amount of CSR that you qualify for are based entirely on your household income, just like the Premium Tax Credits.


If you qualify for a CSR, you must pick a Silver Tier plan.  Picking a plan that is not in the Silver Tier will result in a loss of the extra savings from your CSR.


Cost Sharing Reductions work by reducing the amount that you need to pay when you seek medical care.  The deductibles, copayments & coinsurance, and out-of-pocket max are all reduced.


For instance, if a Silver plan has a $750 deductible, this means that you need to pay the first $750 before the insurance company starts to pay their portion.  With a CSR, you deductible may drop to $500 or $250, depending on your income.


There are also payments you make each time you get care, such as a $30 copayment you need to make when you visit the doctor.  With a CSR, your $30 copayment may instead be $15 or $20.


Your yearly maximum out of pocket can also change.  This is the limit that you will ever spend on medical care in one year.  Once you reach this limit, the insurance company will pay 100% of the cost.  Max out of pockets can be over $8,000, but with CSR, yours might be reduced to $5000, or maybe $3,000.


To reiterate, you will only receive these if you pick a Silver plan

When Can You Sign Up for Health Coverage?

There are restrictions to when you can buy insurance through the Marketplace.  Because insurance is meant to be something you have year-round and not just when you need it, there are restrictions on when you buy health insurance so to keep people from getting it only when they get sick.


Every year, starting November 1, Open Enrollment starts and last until January 15.  During this time, you can sign up or change your current coverage as you see fit.  Your new plan however will not take affect right away. 


If you sign up for a plan between November 1 and December 15, your new plan will start on January 1.  If you sign up for a new plan between December 16 and January 15, you new plan will start on February 1.


Outside of these dates, you will need what is called a Special Enrollment Period to be able to change or purchase a plan.  There are a variety of SEPs, but the most used ones are from qualifying events, such as having a baby, getting married, moving, losing your current health coverage, or a drastic change in income.  You can also have an SEP if you lose coverage from Medicaid or CHIP.


You can learn more about SEPs here.

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