Private Coverage Options vs. The ACA Marketplace

A straight comparison for 1099 workers, business owners, and the self-employed

MOST PEOPLE ONLY KNOW ABOUT ONE DOOR

When people think about buying their own health coverage, they think about the Marketplace. That is one option. It is not the only one, and for a lot of self-employed people it is not the best one.

There is a private market that operates alongside the Marketplace, with different rules on when you can apply, how your price is set, and how long that price holds. Here is how the two compare, honestly, including where the Marketplace wins.

SIDE BY SIDE COMPARISON

When you can apply

Marketplace: Open enrollment only, generally starting November 1, unless you have a qualifying life event such as losing coverage, moving, or getting married.

Private options: Apply any month of the year. No waiting for a window, and coverage can often begin soon after approval.

How your price is set

Marketplace: Age, location, tobacco use, and household income. Health history cannot affect the price.

Private options: Age and health. What you earn does not enter into it.

Income reporting

Marketplace: You project your income for the coming year, and that projection is reconciled at tax time. Earn more than you projected and you may owe part of the subsidy back.

Private options: No income projection, no year-end reconciliation, nothing to pay back. You can have the best year of your life and it does not change your rate.

Who can get it

Marketplace: Guaranteed issue. Nobody is turned down for health reasons.

Private options: Medically underwritten. Health history is part of the application, and not everyone will qualify.

Rate stability

Marketplace: Rates reset annually. Plans, networks, and drug formularies change every year.

Private options: Written with defined terms, and where a rate lock applies it means not fighting a rate increase every single year. The plan document governs the specific terms.

Moving and changing jobs

Marketplace: Tied to the state you live in. Move and you generally start over.

Private options: Portable. Coverage travels with you if you move or change jobs.

What is covered

Marketplace: The ten essential health benefits, including maternity, mental health, and substance use treatment, with pre-existing conditions covered from day one.

Private options: Benefits are defined by a schedule rather than a percentage of billed charges. Maternity, mental health, and substance use treatment are generally not covered, and pre-existing condition provisions apply. Read the benefit schedule before you enroll. This is the most important difference on this page.

Treatment as a business expense

Marketplace: Premiums may be deductible for the self-employed, subject to the rules on that deduction.

Private options: For business owners, premiums may be treated as a business expense depending on entity structure. That is a question for your tax professional, and I will say so every time.

WHO EACH ONE ACTUALLY FITS

The Marketplace is the right answer when you have a significant health history, need maternity or mental health or substance use coverage, take expensive prescriptions, or qualify for a meaningful subsidy based on your income.

A private option is worth a serious look when you are a 1099 worker, a business owner, or self-employed, you are in reasonably good health, you earn too much for a meaningful subsidy, you are tired of your rate moving every January, you need coverage that follows you across state lines, and you do not want to wait for an enrollment window.

That second description fits a lot of the people I work with. It does not fit everybody, and I will tell you straight when the Marketplace is the better answer for you.

THE HONEST SUMMARY

There is no plan that is better for every person. There is a plan that is better for you.

If you work for yourself, you are healthy, you earn a good living, and you are tired of your income determining your price and your rate changing every year, the private market deserves a look. If your situation is different, the Marketplace may serve you better, and I will say so.

The only way to know is to run your numbers.

THREE THINGS TO HAVE READY BEFORE YOU CALL

Your projected household income for the coming year.

A list of every medication you take, with the dosage.

The names of the doctors and facilities you want to keep.

With those three things in hand, the conversation takes about twenty minutes.

 

Robert Peraino, Licensed Health Insurance Advisor

Streamline Healthcare

Call or text (815) 790-1190