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 exchangeThe 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 networkAnother 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."
Your preferred doctor or hospital may not be included in the plan that looks best to you on the exchange. Some health plans such as EPOs and HMOs won't provide coverage if you go outside of their networks for care; others provide only limited coverage, certainly less than you would get if you go to providers in network.Buying off-exchange can give you access to larger provider networks. "If you're someone who has a chronic condition or specialist that you appreciate, it would be important to you to make sure that doctor or hospital is part of the network of any health plan you choose," says Kevin Coleman, head of research and data for HealthPocket Inc. of Sunnyvale, Calif.
DeductiblesOff-exchange plans also may give you a greater choice when it comes to deductibles, the amount you pay out of pocket before your plan begins to pay. A recent HealthPocket study showed a great variation in deductibles of the different tiers of plans available on and off exchanges. When deciding on a plan, you have to consider not only the monthly premiums but also the deductibles, Coleman says. If you use a lot of health services and choose a plan with lower monthly premiums but a high deductible, you could end up paying much more out of pocket than you planned. "When you are comparing plans on and off the exchanges, you have to sweat the details," he says. Looks closely at deductibles and premiums.
Drug coverageDrug coverage is yet another variable. You may find you have more options when it comes to drug coverage if you shop off-exchange. Like provider networks, health plans can limit the drugs that are covered, or reimburse more for generics than brand-names, or reimburse more for drugs you buy mail-order than from your local pharmacy.
If you have a health condition and use a particular drug, you should check that it's covered under the plan in which you want to enroll, whether that plan is on the exchange or off-exchange, Coleman advises.Remember, too, he says, the cap on out-of-pocket expenses doesn't apply to drugs not on a health plan's list of covered medications.