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What is a health insurance exchange?

A health insurance exchange is an online marketplace where consumers can compare and buy individual health insurance plans.

The number of private exchanges – established by benefit companies and health insurance carriers – has grown in recent years. However, the exchanges you’re hearing about are most likely the state health insurance exchanges that were established as part of the Affordable Care Act (ACA) – that’s what’s described here.

State health insurance exchanges are a platform that allows individuals and small businesses to compare numerous health insurance plans side-by-side, and purchase the coverage that best fits their needs.

Under the ACA, all individual and small-group plans must conform to the same regulations, regardless of whether they’re sold through the exchange or off-exchange. All individual and small-group plans effective January 2014 or later must cover ten essential health benefits including emergency services, hospitalization, preventive services and more; these requirements apply both on and off the exchange.

But consumers are only eligible to receive premium subsidies and cost-sharing reductions if they purchase their coverage through the exchange.

Open enrollment periods are the same on or off the exchange, and you can’t switch from having an off-exchange plan to having an on-exchange plan outside of open enrollment, unless you have a qualifying event.

As of 2020, there are 38 states that use as their exchange portal; the remaining 12 states and DC have their own state-run exchanges and enrollment systems. Five of the states that use are considered state-based exchanges, but use the federal platform for enrollment (Arkansas, Kentucky, New Jersey, Pennsylvania, Oregon, and New Mexico).

Pennsylvania and New Jersey, both of which use in 2020, plan to operate their own state-run health insurance exchanges starting in the fall of 2020. So residents in those states will enroll in 2021 coverage using the state-run platforms.

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