Shopping for health insurance can feel like wandering through a maze. Between marketplaces, subsidies, acronyms, and deadlines—it’s easy to get lost. One of the biggest questions people ask is:
👉 Should I buy my health plan on-exchange or off-exchange?
Let’s break it down in plain English so you can see which option makes sense for you (or your clients, if you’re a benefits advisor).
What Is On-Exchange Health Insurance?
These are health plans sold through government-run marketplaces like Healthcare.gov or your state’s exchange. You can also use enrollment platforms like HealthSherpa, Stride, or INSX to make the process smoother.
All on-exchange plans must follow Affordable Care Act (ACA) rules, which means:
- Coverage for essential health benefits (like hospital stays, maternity care, and prescriptions)
- No exclusions for pre-existing conditions
- Guaranteed issue (you can’t be denied coverage)
- Caps on your annual out-of-pocket costs
- Protections against surprise medical bills
The Big Advantage: Subsidies
If your income is low to moderate, you may qualify for premium tax credits (aka subsidies). That can bring your monthly payment way down—sometimes even to $0. Note - if you’re taking ICHRA funding, you may not qualify for subsidies. When in doubt, ask your broker.
Read our blog "ACA Subsidies Explained" for the lowdown.
Enrollmen
- Apply by the 30th/31st to start coverage the 1st of the next month
- Open Enrollment: Nov 1 – Dec 15 (dates can vary by state)
- Special Enrollment: If you have a qualifying life event (like losing a job or having a baby)
Who Should Choose On-Exchange Health Plans?
- Individuals and families with lower or variable income
- People who qualify for subsidies
- Self-employed folks
- Recent grads or anyone just starting out
What Is Off-Exchange Insurance?
These are ACA-compliant plans too—but they’re bought outside of the government marketplace. You can purchase them directly from insurance carriers or through platforms like HealthSherpa and Stride (if you’re not looking for subsidies).
You still get the full ACA protections: essential health benefits, no pre-existing exclusions, guaranteed coverage, cost caps, and surprise billing protections.
The Big Difference: No Subsidies
Off-exchange plans don’t come with financial assistance. What you see is what you pay.
The Advantages of Off-Exchange Plans: Speed & More Flexibility
Since subsidies aren’t in play, off-exchange applications are simpler (usually under 10 minutes) and don’t require as much identity verification.
Carriers also have a bit more flexibility in what they offer off-exchange—sometimes leading to creative perks. For example, Oscar teamed up with Hy-Vee grocery stores to include free onsite primary care.
Enrollment Rules
- Apply by the 15th of the month for coverage starting the 1st of the next month
- Miss that? Your coverage may not kick in until a month or two later
Who Benefits Most from Off-Exchange Health Plans?
- Higher-income households who don’t qualify for subsidies
- Clients who want specific PPOs or networks
- Small business owners using ICHRA to reimburse employees
Real-Life Examples: Choosing the Best Health Insurance Option
Still not sure which camp you fall into? Let’s look at a few examples.
When On-Exchange Wins
Maria, 28 – Freelance Photographer
- Income: ~$22,000/year
- Gets subsidies that drop her Silver plan to ~$40/month
- Bonus: cost-sharing reductions make her out-of-pocket costs lower
The Thompsons – Family of 4 with Seasonal Income
- Income: ~$48,000/year (varies month to month)
- Subsidies adjust with their income, keeping premiums affordable
- Can update their plan mid-year if their income changes
Jack, 24 – Recent College Grad
- Income: ~$16,000/year
- Qualifies for a $0 Bronze plan or Medicaid
- Has pre-existing anxiety but gets full coverage without issue
When Off-Exchange Wins
Susan, 45 – High-Income Consultant
- Income: $150,000/year
- Doesn’t qualify for subsidies
- Wants a specific PPO not available on the exchange
- Buys directly from her carrier
Mark, 50 – S-Corp Owner with 3 Employees
- Wants to use ICHRA for his team
- Chooses off-exchange plans that feature interesting perks (like Oscar + Hy-Vee)
- No income paperwork, and employees pick the plans that work best for them
Bottom Line
On-Exchange (Marketplace plans):
- Purchased through Healthcare.gov or a state marketplace
- Eligible for subsidies if you qualify
- Standardized plan categories ex) Bronze, Silver, Gold, Platinum
Off-Exchange (Direct-to-carrier plans):
- Bought directly from an insurance company
- Not eligible for subsidies
- Additional plan options -- "secret menu"
- Simple verification
Either way, both options are ACA-compliant, protect you from surprise bills, and cover the essentials. The right choice depends less on the plan itself—and more on your income, network preferences, and how you want to pay for coverage.
