health plan metal levelsThere are currently three types of individual health insurance coverage that can be purchased “off-exchange” (i.e. outside of marketplaces established by the affordable care act (ACA)) not including some niche coverage offerings that will not satisfy the individual mandate.

note: If you qualify for income based subsidies or are not sure if you will qualify, you will want to shop on exchange first.  Health plans purchased off-exchange cannot be subsidized.

ACA Compliant Plans

Anyone purchasing individual health insurance coverage with an effective date on or after January 1, 2014 is required to purchase an ACA compliant health planRegardless of whether the health plan is purchased “on exchange” or off exchange”.  ACA compliant plans all must include a set of 10 essential benefits, and cannot discriminate against individuals with pre-existing conditions.  The one downside to purchasing a ACA compliant plan off-exchange is that income-based premium subsidies available to low to middle income shoppers are only available on-exchange.

For health insurance shoppers who will not be eligible for income based subsidies, there is no real advantage to buying through marketplaces such as healthcare.gov or state based exchanges.

There are two other types of off exchange plans that can be purchased that are not necessarily ACA compliant.  These plans are not available to all shoppers.

Grandfathered Plans

These plans were purchased before the enactment of the Affordable care act in March 2010, and need not meet the requirements set forth by the ACA.  Health insurance shoppers who were not enrolled in these health plans prior to March 2010 cannot purchase them.

The existence of these plans will diminish over time as they cannot accept new enrollees only re-enroll those who initially purchased prior to March 2010.

Transitional Plans

Transitional plans were purchased after the enactment of the ACA in March 2010, but before the beginning of the first open enrollment window in October 2013. These plans are permitted to continue until December 31 2017 at which point their enrollees will be required to purchase and ACA compliant plan.

Live grandfathered plans, these plans are not available to those who are not already enrolled in them.

Niche Coverage

Other types of non-major medical health insurance that can per purchased off-exchange to meet specific needs include short term health plans, and gap coverage (i.e. accident plans, critical illness).  It should be noted that these types of health plans are not considered qualified health plans and may still subject their members to tax penalties unless they qualify for an exemption to the health insurance mandate.