If you do not get health insurance through an employer, Medicare, or Medicaid, the health insurance marketplace is likely where you will shop for coverage. Created by the Affordable Care Act in 2010 and launched in 2013, the marketplace — also called the “exchange” or “Obamacare marketplace” — is a platform where individuals and families can compare and purchase health insurance plans, often with federal subsidies that significantly reduce costs. More than 21 million Americans enrolled through the marketplace for 2025 coverage, according to CMS, the highest number since the exchanges opened. Yet many eligible people still do not know what the marketplace offers or how to use it. This guide explains how it works, what it costs, and how to get the best deal. For more on US health insurance policy, see our healthcare policy guide.
How the Health Insurance Marketplace Works
The marketplace functions like an online shopping platform for health insurance. You create an account, enter your household information and income, browse available plans in your area, and enroll. The federal marketplace at HealthCare.gov serves residents of most states. Eighteen states and the District of Columbia run their own exchanges — including California (Covered California), New York (NY State of Health), Colorado (Connect for Health Colorado), and Massachusetts (Health Connector).
All marketplace plans must cover the ACA’s ten essential health benefits: ambulatory care, emergency services, hospitalization, maternity and newborn care, mental health and substance use services, prescription drugs, rehabilitative services, laboratory services, preventive and wellness services, and pediatric services including dental and vision. No plan can deny you coverage or charge more based on pre-existing conditions. Preventive care — including annual physicals, immunizations, and cancer screenings — is covered at 100% with no cost sharing.
Plans are organized into metal tiers based on how costs are shared between you and the insurer. The marketplace also calculates whether you qualify for premium tax credits (subsidies) and cost-sharing reductions based on your income, which can dramatically lower what you pay.
Understanding Metal Tiers
Marketplace plans are categorized into four tiers — Bronze, Silver, Gold, and Platinum — plus a Catastrophic option for people under 30. The tiers indicate the plan’s actuarial value: the average percentage of healthcare costs the plan covers.
Bronze plans cover about 60% of costs on average. They have the lowest premiums but the highest deductibles and out-of-pocket costs — typically $6,000 to $8,000 individual deductibles. Best for healthy people who rarely use healthcare beyond preventive services. Silver plans cover about 70% of costs. They offer moderate premiums and deductibles and are the only tier eligible for cost-sharing reductions (CSRs) if your income qualifies — which can boost the actuarial value to 73%, 87%, or even 94%. Gold plans cover about 80% of costs with higher premiums but lower deductibles and copays, good for people who use healthcare regularly. Platinum plans cover about 90% of costs with the highest premiums and lowest out-of-pocket costs, best for people with significant healthcare needs.
Catastrophic plans are available only to people under 30 or those with a hardship exemption. They cover three primary care visits per year before the deductible and have very high deductibles with very low premiums. They are not eligible for premium subsidies.
Premium Subsidies and Cost-Sharing Reductions
The marketplace’s most powerful feature is its financial assistance. Premium tax credits are available to households with incomes that would otherwise make the benchmark Silver plan’s premium exceed a set percentage of their income. Thanks to enhanced subsidies originally passed in the American Rescue Plan and extended through 2025, millions of Americans pay $0 to $50 per month for marketplace coverage. According to KFF, about 80% of marketplace enrollees receive premium subsidies.
Subsidy amounts are calculated based on your expected household income relative to the federal poverty level (FPL). You can choose to apply the credit in advance (reducing your monthly premium) or claim it when you file taxes. If your income changes during the year, update your marketplace application to avoid owing money back at tax time or missing out on additional subsidies you qualify for.
Cost-sharing reductions (CSRs) are a separate benefit available only with Silver plans for households earning 100% to 250% of FPL. CSRs lower your deductible, copays, and out-of-pocket maximum. For someone at 138% of FPL, a Silver CSR plan can have an actuarial value of 94% — better than a standard Platinum plan, at a fraction of the premium. This is why insurance experts often recommend Silver plans for lower-income enrollees even when Bronze premiums are lower.
How to Enroll in a Marketplace Plan
Enrollment is available during the annual open enrollment period, typically November 1 through mid-January. You can also enroll during a Special Enrollment Period if you experience a qualifying life event. Here is the step-by-step process.
Create an account at HealthCare.gov (or your state exchange). Enter your household size, expected income for the coverage year, and basic personal information. The system calculates your subsidy eligibility and displays available plans in your area with estimated costs after subsidies. Compare plans by premium, deductible, out-of-pocket maximum, and network. Check whether your doctors and preferred hospitals are in each plan’s network — this is critical and varies significantly between plans. Review prescription drug formularies if you take medications regularly.
Once you select a plan, confirm your enrollment and pay your first month’s premium by the deadline to activate coverage. If you are enrolling for the first time, you may need to provide documentation to verify your identity and income. For help navigating the process, free assistance is available through certified marketplace navigators, in-person assisters, and the HealthCare.gov call center at 1-800-318-2596. Insurance brokers certified with the marketplace can also help at no cost to you — they are paid by the insurer.
Who Should Use the Marketplace?
The marketplace is designed for people who do not have access to affordable employer-sponsored coverage, Medicare, or Medicaid. Common marketplace users include self-employed individuals and freelancers, small business owners, early retirees (under 65, not yet eligible for Medicare), part-time workers whose employers do not offer insurance, people between jobs, and dependents aging off a parent’s plan at 26.
You can use the marketplace even if your employer offers insurance — but you will only qualify for subsidies if your employer’s plan is considered “unaffordable” under ACA rules (if the employee-only premium exceeds 8.39% of household income for 2025). If you are shopping for coverage and want to compare specific insurers, our guides to the best health insurance companies and Ambetter health insurance can help you evaluate popular marketplace carriers.
If your income is below 138% of FPL in a state that expanded Medicaid, you will likely be directed to Medicaid instead of marketplace plans. Medicaid provides free or very low-cost coverage and has no open enrollment restriction — you can apply any time of year.
Common Marketplace Mistakes to Avoid
Choosing based solely on premium is the most expensive mistake marketplace shoppers make. A $0 premium Bronze plan with a $9,000 deductible can cost far more than a $75/month Silver plan with a $1,500 deductible if you need any medical care beyond preventive visits. Always compare total estimated annual costs — premiums plus expected out-of-pocket spending.
Not checking provider networks is another costly error. Marketplace plans, especially at the Bronze and Silver tiers, often use narrow networks to keep premiums low. Your preferred doctor or hospital may not be included. Call the provider’s office directly to verify in-network status rather than relying solely on the insurer’s online directory, which can be outdated. Forgetting to update your income during the year can result in subsidy miscalculations — you could owe money back at tax time or miss out on savings.
Finally, many people eligible for marketplace coverage do not know it. If you are uninsured and your income is above the Medicaid threshold, check your options at HealthCare.gov before assuming you cannot afford insurance. With enhanced subsidies, many people qualify for plans costing less than $50 per month after credits.
Frequently Asked Questions
Is the health insurance marketplace the same as Obamacare?
“Obamacare” is the informal name for the Affordable Care Act (ACA), the law that created the marketplace. The marketplace is the platform where you shop for and purchase ACA-compliant insurance plans. The terms are often used interchangeably in casual conversation, but technically the ACA is the law and the marketplace is one of its key provisions.
Can I use the marketplace if my employer offers insurance?
Yes, you can shop on the marketplace regardless of employer coverage. However, you will only receive premium subsidies if your employer’s plan does not meet the ACA’s affordability or minimum value standards. If your employer offers affordable coverage, you can still buy a marketplace plan — but you will pay full price without subsidies.
How much does a marketplace plan cost?
It varies widely based on your age, location, income, and the plan you choose. Before subsidies, a benchmark Silver plan costs about $450 to $700 per month for a 40-year-old, depending on the state. After subsidies, many enrollees pay $0 to $150 per month. Lower-income enrollees often qualify for $0 premium plans. Use the HealthCare.gov window-shopping tool to get an estimate without creating an account.
What if my income changes during the year?
Report income changes to the marketplace as soon as possible. If your income increases, your subsidy may decrease — and you could owe money back at tax time if you received too much in advance credits. If your income decreases, you may qualify for a larger subsidy. Keeping your information current avoids unpleasant surprises when you file your tax return.
The Bottom Line
The health insurance marketplace is a legitimate, government-backed platform that has made health insurance accessible to millions of Americans who would otherwise be uninsured. With premium subsidies and cost-sharing reductions, coverage is more affordable than most people assume — especially for those with low to moderate incomes. If you are uninsured, self-employed, or losing employer coverage, start at HealthCare.gov to see what is available in your area. Compare at least three plans across different metal tiers, verify that your doctors are in-network, and update your income information annually to ensure accurate subsidies. The marketplace is not perfect, but for millions of Americans it is the best option available.