How the Health Insurance Marketplace Works When You're On Your Own

What the Marketplace is and how to find plans

The Health Insurance Marketplace is where you shop for and compare health plans if you don't have coverage through an employer, a spouse's job, or a government program like Medicare. You go to HealthCare.gov (or your state's own marketplace website if your state runs one) and enter your information to see what plans are available to you and what you'd pay each month.

The Marketplace exists because the Affordable Care Act requires health insurers to offer plans there and requires most people to have health coverage. When you turn 26 and age off a parent's plan, the Marketplace is usually the most straightforward place to look — though you may also find plans directly through an insurer's website or through a broker.

You don't have to use HealthCare.gov. Some states run their own marketplaces (California, New York, and a dozen others have their own websites). You can also work with a broker or agent who helps you compare plans at no cost to you — they're paid by the insurance companies. But HealthCare.gov and state marketplaces are free, and they show you the same plans plus any tax credits you might receive.

Key Takeaways

• The Marketplace opens each year on November 1 and closes January 15, but you can enroll anytime if you've had a major life change like turning 26 or losing coverage.
• You'll see your monthly premium, deductible, and out-of-pocket costs for each plan before you choose, so you can compare what you'd actually pay.
• Tax credits (subsidies) lower your monthly premium if your income falls within certain ranges, and you find out how much you may have access to for during enrollment.
• Once you pick a plan, coverage usually starts the first day of the following month, so timing your enrollment matters if you need coverage to begin right away.
• You can change plans or drop coverage during the annual open enrollment period, or immediately if you have a may have access to life event like losing your parent's coverage.

When you can enroll and what counts as a may have access to event

The Marketplace has an annual open enrollment period each year from November 1 through January 15. During this window, you can sign up for a plan, switch plans, or drop coverage without any restrictions. If you miss this deadline, you cannot enroll until the next year unless you have a may have access to life event.

Turning 26 and losing your parent's coverage is a may have access to event. You have 60 days from the date you lose coverage to enroll in a Marketplace plan. Other may have access to events include getting married, having a child, moving to a new state, losing a job, or having your income drop significantly. When you report a may have access to event during enrollment, the system gives you a special enrollment period — usually 60 days — to sign up outside the annual window.

You report the may have access to event directly on HealthCare.gov or your state marketplace when you start your application. You'll need to provide a document that proves it happened — for losing your parent's coverage, that might be a letter from the parent's employer or insurer, or a screenshot showing you're no longer listed as a dependent.

How to compare plans and understand what you'll pay

When you log into the Marketplace and enter your information, you'll see a list of plans sorted by monthly premium (the amount you pay each month). Each plan shows you four numbers that matter: the monthly premium, the annual deductible, the out-of-pocket maximum, and the copay or coinsurance amounts for common services like doctor visits or prescriptions.

The monthly premium is what you pay to the insurance company every month whether you use care or not. The deductible is the amount you have to pay out of your own pocket before the insurance company starts sharing costs with you. The out-of-pocket maximum is the most you'll pay in a year for covered services (after you hit this number, the insurance company pays 100 percent). Copays and coinsurance are what you pay when you actually use a service — a copay is a flat fee (like $30 to see a doctor), and coinsurance is a percentage (like 20 percent of the cost).

Plans are labeled by metal tier: Bronze, Silver, Gold, and Platinum. Bronze plans have the lowest monthly premium but the highest deductible and out-of-pocket costs. Platinum plans have the highest monthly premium but the lowest deductible and out-of-pocket costs. Silver and Gold fall in between. There's no "best" tier — it depends on how often you expect to use care and what you can afford to pay each month.

The Marketplace also shows you which doctors and hospitals are in each plan's network. Before you choose a plan, check whether your current doctor is included. If your doctor isn't in the network, you'll pay more to see them or have to switch.

Tax credits and how they lower your monthly cost

If your income falls within certain ranges, you may receive a tax credit (also called a subsidy) that lowers your monthly premium. The credit is based on your expected income for the year you're enrolling in, not your income from last year. When you turn 26 and are no longer claimed as a dependent, your household income changes, which often makes you newly may be able to access for a credit.

During enrollment, you enter your expected income for the year. The Marketplace calculates how much of a credit you may have access to for based on the federal poverty level and your state. The credit is applied directly to your monthly premium — you don't pay the full amount and then get reimbursed later. If your actual income at the end of the year is different from what you estimated, you may owe money back or receive a refund when you file your taxes.

Tax credits are only available through the Marketplace, not if you buy a plan directly from an insurance company. This is one reason using HealthCare.gov or your state marketplace matters even if you could buy directly elsewhere.

What happens after you choose a plan

Once you select a plan and confirm your enrollment, you'll receive a confirmation email with your policy number and effective date. Coverage usually starts on the first day of the month after you enroll. If you enroll on November 15, your coverage starts December 1. If you enroll on January 10, your coverage starts February 1.

You'll receive an insurance card in the mail within one to two weeks, though you can usually use your policy number to see a doctor before the card arrives. When you go to a doctor or pharmacy, you'll show your insurance card or give them your policy number so they can bill the insurance company.

You'll also receive a document called a Summary of Benefits and Coverage (SBC) that explains exactly what the plan covers and what you'll pay. Read this carefully — it's the official description of what's included and what isn't.

Changing or dropping your plan during the year

Once you've enrolled, you're locked into that plan until the next annual open enrollment period (November 1 through January 15) unless you have another may have access to life event. You cannot simply change your mind and switch plans in March because you want to.

If you have a may have access to event — like getting married, having a child, moving, or losing coverage — you can change plans or enroll in a new one during a special enrollment period. You report the event on the Marketplace website and receive a new 60-day window to make changes.

If you want to drop coverage entirely, you can do so during open enrollment or immediately after a may have access to event. If you drop coverage and don't have another plan in place, you may owe a penalty when you file your taxes, depending on your state and income level.

What to do if you can't afford the monthly premium

If even the lowest-cost Silver plan is too expensive after your tax credit, you have a few options. First, double-check that you've entered your income correctly — small changes in reported income can significantly change your credit amount. Second, look at Bronze plans, which have lower premiums than Silver even though they have higher deductibles.

If you still can't afford any plan, some states offer Medicaid (a government health program for people with low income) as an alternative. When you apply on the Marketplace, the system will tell you if you're may be able to access for Medicaid in your state. Medicaid has no monthly premium and typically lower out-of-pocket costs than Marketplace plans.

If you're between jobs and have very low income temporarily, you may also be may be able to access for a short-term health plan or a catastrophic plan (a special Marketplace plan available to people under 30 with very low premiums but very high deductibles). These are not ideal long-term solutions, but they provide basic coverage while your situation stabilizes.

Frequently Asked Questions

Do I have to enroll in a Marketplace plan when I turn 26?

You don't have to, but you should. If you go without health coverage, you may owe a penalty when you file your taxes (the amount varies by state). More importantly, if you get sick or injured and don't have insurance, you could face very large medical bills. You have 60 days from losing your parent's coverage to enroll without penalty.

What if I don't know my expected income for the year?

Make your best estimate based on the job you have or expect to have. If you're starting a new job, use the salary you've been offered. If you're unsure, estimate on the lower side — you can update your income later if it changes. At the end of the year, when you file taxes, you'll reconcile the difference between what you estimated and what you actually earned.

Can I use a Marketplace plan if I'm in school?

Yes. Student status doesn't disqualify you from Marketplace plans. If you're working part-time or have other income, you may still may have access to for a tax credit. Enter your actual expected income during enrollment, and the system will calculate your credit based on that.

What if I move to a different state after I enroll?

Moving to a new state is a may have access to life event. You have 60 days from your move to enroll in a plan in your new state. Contact the Marketplace in your new state (or HealthCare.gov if your new state uses the federal marketplace) and report the move. Your old plan will end on the last day of the month you move, and your new coverage will start on the first day of the following month.

Can I get a refund if I don't use my insurance?

No. Health insurance premiums are not refundable. You pay each month for the right to use the plan if you need it. If you don't go to the doctor or use any services, you don't get your money back — that's how insurance works. However, you can drop the plan during the next open enrollment period or if you have a may have access to event.