Health Exchange Basics and Links

What is a Health Insurance Exchange?

The Affordable Care Act (ACA) established health insurance exchanges (sometimes referred to as “marketplaces”) to provide more affordable coverage options for those who are uninsured but make too much money to qualify for programs like Medicaid, as well as for those already buying their own insurance.

After the ACA became law, the states followed one of three paths:

  • Creating their own exchange
  • Formally or informally partnering with the federal government to set up an exchange, including providing consumer assistance and selecting and managing the health plans participating in the exchange
  • Relying fully on the federal exchange, where all operations, including health plan selection, are managed by the federal government

Click here for more information about which states have what type of exchange.

Your state’s health exchange allows you to compare health insurance plans, determine your eligibility for subsidies and other government health care programs, and purchase health coverage.

Selecting a Health Plan

To purchase health coverage through an exchange, you must enroll in a health plan during an open enrollment period. Open enrollment typically runs from November to February. For more detailed information on open enrollment, visit

You should consider several factors when selecting your health care plan or changing your coverage:

  • Type of Plan: The health insurance exchanges primarily offer four types of plans:

    Each type of plan has different costs, coverage, and other characteristics associated with it, and even plans offered in the same “metal level” can vary quite a bit. Picking the type of plan that works for you is one of the most important decisions you’ll make. Try to be as informed as possible about your options before making your decision. Click here for more information about different types of plans.

  • Premiums: A premium is the basic amount you pay each month for your health coverage. It’s important to remember, though, that your premium is not the only cost associated with your care (see “Out-of-Pocket Expenses” below). Click here for more information.
  • Out-of-Pocket Expenses: Every insurance plan includes costs that you have to pay as part of receiving health care, including:
    • Deductible: The amount you have to pay before your plan’s coverage kicks in. Click here for more information.
    • Co-payment: The fixed amount you pay each time you go to the doctor or pick up a prescription. Click here for more information.
    • Co-insurance: A percentage-based amount you pay for a particular service or prescription. (For example, to see some specialists, your health plan may only cover 80% of the cost, while you must pay the remaining 20%, in addition to your co-payment). Click here for more information.
  • Provider Network: This is the group of health care providers that you can see without paying additional, out-of-pocket costs. Your network can be relatively wide or very narrow, based on your plan. Click here for more information.
  • Benefits: At a minimum, health plans must treat pre-existing conditions and cover certain essential health benefits, including:
    • Ambulatory patient services
    • Emergency services
    • Hospitalization
    • Maternity and newborn care
    • Mental health and substance use disorder services
    • Prescription drugs
    • Rehabilitative and habilitative services and devices
    • Laboratory services
    • Preventive and wellness services and chronic disease management
    • Pediatric services

    Click here for more information on benefits.

Additional Considerations

Just because exchange plans are required to cover essential health benefits, you still need to take a look at the fine print to make sure you understand what is—and isn’t—actually covered. Take, for example, prescription drugs: even under the umbrella of “essential health benefits,” what is actually covered varies quite a bit from plan to plan. Before choosing a plan, make sure you know the answers to the following questions:

  • What is the actual list of medicines and providers that are covered?
  • Does this list include any medicines or providers you need on a regular basis?
  • What cost sharing is required for each medicine, and for each kind of doctor visit (family doctor, specialists etc.)?
  • Are there any specific coverage restrictions?

    When it comes to picking a health plan, knowledge really is power. You or your family member should learn as much as you can about which prescription drugs each health plan covers, which primary care providers and specialists are included in the provider network, and how much out-of-pocket costs could amount to if you or someone you care for has significant health care needs.

Below are a few additional things to consider as you or your loved one researches health plan options.

  • Deductibles: In most exchange plans, you will have to pay a certain amount—a deductible—before the health plan will start to pay for doctor visits, prescription drugs, or other treatments. Sometimes these deductibles amount to thousands of dollars.
  • Cost Sharing: Even when you or your loved one has paid the deductible for the year, you can still face high cost-sharing rates for prescription drugs or other treatments. High cost sharing can put some critical medications, specialists, or other treatments out of reach, leaving you or your loved one no better off than you were without health insurance.
  • Out-of-Pocket Costs: Under the Affordable Care Act, patients’ annual out-of-pocket expenses cannot exceed a certain amount ($6,350 in 2014). While this limit protects you and your family from devastating health care costs, if you have high coinsurance and need treatment, you may need to pay thousands of dollars over a short period of time before reaching your annual spending limit. For many, that’s just not a realistic possibility.
  • Access Problems: Because out-of-pocket expenses are high for many patients and their families, you may have trouble accessing the right care or even following the treatment plan prescribed by your physician. In the long run, this usually results in higher costs overall, because patients put off treatment until it is an emergency—and more expensive to treat.
  • Transparency: In many of the exchanges, it is difficult to determine how much a particular plan is really going to cost; what services, providers, and medications are covered; and what patient protections are in place. Wouldn’t it be great if the exchanges provided better information and more transparency—like an easy-to-use out-of-pocket expense calculator and searchable lists of pharmaceuticals and providers to help you identify plans that cover the medicines and doctors you need?

More Resources

For general information about the health insurance exchanges, or to find a plan, visit

To find contact information for your state insurance commission, click here.