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The advantages of buying health insurance outside an exchange

The Affordable Care Act says you must enroll in a health insurance plan by March 31, 2014, or you could face penalties -- up to $95 a person this year, more in later years. To help people buy insurance under this "individual mandate," the feds told each state to open a health insurance marketplace, aka exchange. In states that refused or failed to do so, the federal government runs the exchange.

But health insurance exchanges aren't the only game in town. You are free to buy health insurance outside your state's exchange.

Only people who qualify for subsidies are forced into the exchanges -- if your plan isn't from the exchange, you won't get your tax credits as subsidy. But for everyone else, the free market awaits.

Greater choice off exchange

The No. 1 reason for buying off-exchange is greater choice. Every health plan on an exchange in your state must be offered off the exchange at the exact same price, says Peter Freska, a benefits consultant with The LBL Group in Los Alamitos, Calif.

However, the opposite is not true. Health insurance companies can and do offer lots of health plans that are not available through the exchanges.

Under the Affordable Care Act, all plans must offer 10 essential benefits, inside and outside exchanges. But if you're looking for a specific set of benefits beyond that, shopping off-exchange could give you a wide range of choices and opportunity to better tailor a policy to your needs.

More providers in the network

Another reason to shop for your health insurance off-exchange is the network of health care providers included in the plan. In some cases, health insurance companies are controlling their costs by limiting the provider networks for exchange plans.

One large insurance company in California, Anthem, does not offer a preferred provider organization on the exchange. Rather, it has exclusive provider organization plans, or EPOs, Freska says. "But if you shop off-exchange and ask an agent to review all options available, you would have many different plans from which to choose at that metal level."

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