What Is the Health Insurance Marketplace?

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 (ACA) 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 reduce costs. Marketplace enrollment has grown to record levels in recent years: more than 24 million Americans selected marketplace plans for the 2025 plan year, according to CMS (enrollment figures are updated each year). 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 in 2026. For more on US health insurance policy, see our healthcare policy guide, and for the calendar and rules around signing up, see our companion article on what open enrollment is.

This article is general information, not tax, legal, or financial advice. Subsidy rules and dollar amounts change from year to year and can be affected by new legislation. Always confirm the current details for your situation at HealthCare.gov (or your state exchange).

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. A growing number of states plus the District of Columbia run their own exchanges — including California (Covered California), New York (NY State of Health), Colorado (Connect for Health Colorado), Pennsylvania (Pennie), and Massachusetts (Health Connector). If your state runs its own exchange, HealthCare.gov will direct you to it.

All marketplace plans must cover the ACA’s ten essential health benefits: ambulatory (outpatient) care, emergency services, hospitalization, maternity and newborn care, mental health and substance use services, prescription drugs, rehabilitative services and devices, laboratory services, preventive and wellness services and chronic disease management, and pediatric services including dental and vision. No plan can deny you coverage or charge more based on pre-existing conditions. Recommended preventive care — including many annual physicals, immunizations, and cancer screenings — is generally covered at no cost sharing when you use an in-network provider.

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 and household size, which can substantially lower what you pay.

Understanding Metal Tiers

Marketplace plans are categorized into four tiers — Bronze, Silver, Gold, and Platinum — plus a Catastrophic option for some enrollees. The tiers indicate the plan’s actuarial value: the average percentage of covered healthcare costs the plan pays across a standard population. A higher metal level means the plan pays more of your costs, usually in exchange for a higher premium.

Bronze plans cover roughly 60% of costs on average. They tend to have the lowest premiums but the highest deductibles and out-of-pocket costs. Best for healthy people who rarely use healthcare beyond preventive services and want protection against a worst-case bill. 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 raise the effective actuarial value to as high as 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, predictable healthcare needs.

Catastrophic plans are available only to people under 30 or those with a qualifying hardship or affordability exemption. They cover a few primary care visits per year before the deductible and pair very high deductibles with 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 eligible households whose benchmark Silver plan premium would otherwise exceed a set percentage of their income. During recent years, a set of “enhanced” subsidies (originally passed in the American Rescue Plan Act and extended by the Inflation Reduction Act) lowered premiums further and removed the previous income cap, so that many enrollees paid little or nothing per month. According to KFF, a large majority of marketplace enrollees receive premium subsidies.

Important 2026 update: those enhanced subsidies were scheduled to expire after the 2025 plan year. Whether Congress extends, modifies, or lets them lapse directly affects how much you pay in 2026 and beyond — potentially raising net premiums significantly for many enrollees if the enhancements end. Because this was subject to legislative action, do not assume the enhanced amounts still apply. Confirm the current subsidy rules and see your actual price at HealthCare.gov (or your state exchange) before you decide.

Subsidy amounts are calculated from your expected household income relative to the federal poverty level (FPL) and household size. You can apply the credit in advance (reducing your monthly premium) or claim it when you file your federal taxes. Because advance credits are based on estimated income, the IRS reconciles them on your tax return: if your income ends up higher than estimated, you may repay some credit; if lower, you may receive more. Update your marketplace application whenever your income or household changes.

Cost-sharing reductions (CSRs) are a separate benefit available only with Silver plans for households in a lower income range (generally 100% to 250% of FPL). CSRs lower your deductible, copays, and out-of-pocket maximum. For someone near the lower end of that range, a Silver CSR plan can have an actuarial value around 94% — better than a standard Platinum plan, at a fraction of the premium. This is why many insurance experts recommend Silver plans for lower-income enrollees even when Bronze premiums are lower.

How to Enroll in a Marketplace Plan

Enrollment happens during the annual open enrollment period, which for HealthCare.gov has typically run from November 1 through January 15 (state exchanges may set slightly different dates, and exact dates and rules can change year to year — always confirm the current window). You can also enroll outside that window during a Special Enrollment Period (SEP) if you experience a qualifying life event such as losing other coverage, marriage, birth or adoption, or a move. For a deeper look at the calendar, deadlines, and SEP triggers, see our companion guide on what open enrollment is. Here is the general 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 estimates your subsidy eligibility and displays available plans in your area with prices after any 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 and in-person assisters, and the HealthCare.gov call center is reachable at 1-800-318-2596. Insurance agents and brokers certified with the marketplace can also help at no direct 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, adequate coverage through an employer, Medicare, or Medicaid. Common marketplace users include self-employed individuals and freelancers, small business owners, early retirees (under 65 and not yet eligible for Medicare), part-time workers whose employers do not offer insurance, people between jobs, and young adults aging off a parent’s plan at 26.

You can use the marketplace even if your employer offers insurance — but you will generally qualify for subsidies only if that employer plan is considered unaffordable or fails to meet minimum value under ACA rules. The affordability threshold is an IRS-set percentage of household income that is updated annually, so check the figure that applies for the current plan year rather than relying on a past number. If you are comparing 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 low enough (generally below 138% of FPL in a state that expanded Medicaid), you will likely be directed to Medicaid instead of a subsidized marketplace plan. Medicaid and the Children’s Health Insurance Program (CHIP) provide free or very low-cost coverage and have no annual open enrollment restriction — you can apply any time of year. Eligibility rules differ by state, especially in states that did not expand Medicaid.

Common Marketplace Mistakes to Avoid

Choosing based solely on premium is the most expensive mistake marketplace shoppers make. A very low-premium Bronze plan with a high deductible can cost far more overall than a modest-premium Silver plan with a lower deductible if you need any care beyond preventive visits. Always compare total estimated annual cost — premiums plus expected out-of-pocket spending — and factor in whether you qualify for Silver-only cost-sharing reductions.

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 also cause subsidy miscalculations — you could owe money back at tax time or miss out on savings.

Finally, many people eligible for marketplace coverage do not realize 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 — and re-check each year, since subsidy rules and plan prices change.

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.

What is the difference between the marketplace and open enrollment?

The marketplace is the place — the website and program where you compare and buy plans. Open enrollment is the time — the annual window (typically November 1 to January 15 on HealthCare.gov) when anyone can enroll or switch plans without a qualifying event. Outside that window you generally need a Special Enrollment Period. See our dedicated guide on what open enrollment is for the full calendar and rules.

Can I use the marketplace if my employer offers insurance?

Yes, you can shop on the marketplace regardless of employer coverage. However, you will generally receive premium subsidies only if your employer’s plan does not meet the ACA’s affordability or minimum-value standards. If your employer offers affordable, adequate coverage, you can still buy a marketplace plan — but you would typically pay full price without subsidies.

How much does a marketplace plan cost?

It varies widely based on your age, location, income, household size, and the plan you choose, and net prices depend heavily on whether you qualify for subsidies. Because subsidy rules were in flux heading into 2026, the most reliable way to know your actual cost is to run your own numbers with the HealthCare.gov window-shopping tool (you can preview plans and prices without creating an account). Avoid relying on old “average premium” figures, which change each year.

What if my income changes during the year?

Report income changes to the marketplace as soon as possible. If your income increases, your advance subsidy may be reduced — and you could owe money back at tax time if you received too much. If your income decreases, you may qualify for a larger subsidy. Keeping your information current avoids surprises when you file your federal tax return.

Sources

• HealthCare.gov — Official ACA Marketplace
• Centers for Medicare & Medicaid Services (CMS)
• IRS — The Premium Tax Credit: The Basics
• KFF — Affordable Care Act research
• Medicaid.gov