Choices. We all have to make a lot of them every day. What to wear, what to eat, what to watch on Netflix. We have a lot of choices when it comes to our health insurance options, as well. Every year, people who shop on Healthcare.gov or their state marketplace have to pick the best health insurance plan for themselves and their families.
But shopping on a government-run exchange isn’t your only option. You can also shop for so-called "off-exchange" plans – health insurance plans that aren’t available on a government-run marketplace. Despite what the name may imply, there’s nothing seedy about off-exchange plans. In fact, including off-exchange plans in your shopping process this open enrollment period might open the door to a better health insurance plan for you and your family.
Off-exchange health insurance plans provide you with choice. The choice of a different carrier, or network, or drug list. Choices that you can’t find on the exchange. If you’re shopping for a new health insurance plan this winter and you’re not looking at off-exchange plans, you’re not getting the full picture.
What do on-exchange and off-exchange plans have in common?
On-exchange and off-exchange plans have more in common than their names suggest. In fact, you may find more differences between two plans on the exchange than between on- and off-exchange plans.
On- and off-exchange plans are both types of private health insurance. All private health insurance works essentially the same way: it’s a cost-sharing agreement between you and your insurer. That means the standard cost-sharing elements of a health insurance plan – your deductible, copayment, coinsurance, and out-of-pocket limit – exist in both types of plans.
In fact, health insurers that offer both on- and off-exchange plans usually put all of their members in the same risk pool. That means that if you have an off-exchange plan, part of your bill could be paid with money from an on-exchange member, and vice versa.
Some on- and off-exchange plans are actually the same plan – you just have a choice as to how you want to purchase it. When the same plan is available both on and off the exchange, the premium will be the same, meaning that it will cost the same amount per month no matter where you buy it.
Off-exchange plans always cover the ten essential benefits
Another huge thing that on-exchange health insurance plans and off-exchange plans have in common? They both have to cover the ten essential benefits. The ten essential benefits are ten categories of healthcare services that all health insurance plans have to cover – you know, because it’s the law.
To put it simply: you don’t have to be worried that you’re going to get cheated out of coverage because you choose an off-exchange plans. Off-exchange plans have to comply with all of the same federal laws that on-exchange plans have to follow, including the ten essential benefits.
What are the differences between on-exchange and off-exchange plans?
Of course, there are some big differences between on-exchange and off-exchange plans – if there weren’t, we wouldn’t be writing this article. Carriers often choose to offer off-exchange plans because they have more freedom when structuring a policy – there are less rules to follow, so they don’t have to do things like offer a plan at every metal tier or build in pediatric benefits, for example.
For the consumer, the main reason to look at off-exchange plans is to expand your choices. What kind of choices? Here are four big choices you may have with an off-exchange plan:
1. The choice of a different carrier
You know how UnitedHealthcare is pulling out of almost every state health insurance exchange? Did you also know that in some of those states, they’re still offering off-exchange plans? In many states, carriers that don’t offer plans on the exchange do offer plans off-exchange.
2. The choice of a different network
Off-exchange plans sometimes work with different networks. Say you want to keep a particular family doctor, but none of the on-exchange plans in your price range work with her practice. You may be able to find an off-exchange plan in your price range that does include her in their network, making the off-exchange plan your best choice for keeping your preferred doctor.
3. The choice of different drug coverage
Prescription drug tiers: they’re complicated and annoying for even the most seasoned among us. If you have a specific drug (or drugs) that you need, you may be better off with an off-exchange plan that includes those drugs in their drug list, instead of an on-exchange plan that includes a different brand or a generic.
4. The choice of a different plan structure
Some state exchanges have additional rules on top of the federal laws that all health insurance plans must follow. These rules must be followed if you want to offer an on-exchange plan. However, these rules are sometimes very specific, and may increase the price of a base health insurance plan. For example, a state may require that children’s vision benefits be built into all health insurance plans sold on the exchange, instead of as a separate product.
Off-exchange plans, which don’t have to follow these rules, can be structured differently, potentially offering shoppers a lower price on similar coverage. Exactly how this works will depend on your state.
Be warned: off-exchange plans don’t qualify for subsidies
You know how people who make between 100% and 400% of the Federal Poverty Level in their state can qualify for a premium tax credit to help pay for their health insurance? Well, as you might have guessed, those subsidies don’t work on off-exchange plans. If you make above 400% of the Federal Poverty Level in your state (roughly $47,000 for individuals and $97,000 for a family of four), you don’t have to worry about this. But if you make between that 100% and 400% range, definitely make sure you’re taking your subsidy into account when comparing on- and off-exchange plans.
How do I shop for an off-exchange health insurance plan?
The best way to shop for an off-exchange health insurance plan is to use a private marketplace. Private health insurance marketplaces, like PolicyGenius, allow you to see plans from both your state’s government-run marketplace and off-exchange plans, comparing them directly in a way that you’d otherwise have to do manually. Of course, if you want to visit every health insurance carrier’s website and look through their archaic documentation to suss out all the details that matter to you, go ahead. We’ll be here waiting when you end up deciding you want to finish shopping for health insurance before the next open enrollment period starts.