Marketplace vs private health insurance: what is the real difference?

• 23.1Mpeople picked a marketplace plan for 2026, per CMS
• $619 to $178average 2026 monthly marketplace premium before and after the tax credit, per CMS
• 14 + DCstates plus the District of Columbia where short term plans are not available at all, per healthinsurance.org

Three kinds of individual coverage, not two

When people say "private health insurance," they usually mean one of two very different things. It helps to split the market into three groups.

Based on HealthCare.gov, healthinsurance.org, and the federal short term plan rules. Non ACA plan rules vary by product and by state.

On the marketplace: the only door to the subsidy

A marketplace plan is an ACA plan you buy through HealthCare.gov or your state exchange. It is the only way to get the premium tax credit, and the only way to get cost sharing reductions on a silver plan. CMS reports 23.1 million people picked a marketplace plan for 2026, with an average premium of $619 a month before tax credits and $178 after them. CMS also reports that 76 percent of HealthCare.gov plan selections were made with help from an agent or broker.

The subsidy math changed for 2026. The enhanced tax credits expired at the end of 2025, so for 2027 coverage the credit generally stops at 400 percent of the federal poverty line: $63,840 for a single person and $132,000 for a family of four. Starting with 2026 coverage, there is no cap on paying back excess credit at tax time either, so estimating income carefully matters more than ever. My subsidy calculator shows where you land.

Off the marketplace: same rules, no subsidy

Carriers can also sell ACA plans directly, off the marketplace. These follow the same rules: guaranteed issue, the same essential benefits, and the same open enrollment window. For 2027 coverage on HealthCare.gov, that window runs November 1, 2026 to January 15, 2027, with a December 15 deadline for coverage starting January 1. State exchanges can set different dates.

The difference is money. Healthinsurance.org is blunt about it: subsidies are only available for plans purchased in the exchanges. So off marketplace ACA plans mostly make sense for people who clearly earn too much for a tax credit. There is one useful quirk. In states that load the cost of cost sharing reductions only onto marketplace silver plans, a similar silver plan sold off the marketplace can cost noticeably less for someone paying full price. Some carriers also sell plans only off the marketplace, so a full comparison covers both.

Non ACA plans: cheaper for a reason

These are plans that do not have to follow ACA rules. They can cost much less, and for the right person at the right time they can be a reasonable tool. But the savings come from the protections they leave out.

Short term health plans

Short term plans are medically underwritten, generally exclude pre-existing conditions, and often review your medical records after a claim to decide whether to pay it. They do not count as minimum essential coverage, and losing one does not open a special enrollment period for an ACA plan. They also cannot be paired with a tax credit.

The rules on how long you can keep one are in flux. A 2024 federal rule limited new short term plans to three months, and four months total with renewals. In August 2025 the Departments of Labor, Health and Human Services, and the Treasury said they would not prioritize enforcing that rule while they rewrite it, so state law now does most of the work. They are not available at all in 14 states and the District of Columbia, including Colorado, Illinois, California, New York, and New Jersey. Where they are sold, limits vary widely by state.

Medically underwritten membership plans

Some states let certain farm organization health plans operate outside insurance rules. KFF Health News counted 14 states allowing them in 2026, including Florida. They can reject applicants based on medical history and can exclude conditions for a period of time, which is how they can price 30 to 50 percent below unsubsidized marketplace plans. Once you are in, they cannot drop you or raise your rate for getting sick.

Who each option fits

• On the marketplace: anyone who might qualify for a tax credit, anyone with a health condition, and anyone whose income is uncertain. That covers most people I talk to.
• ACA plan off the marketplace: higher earners well above the subsidy line who want full ACA protection and may find a better price or plan design off exchange.
• Short term plan: a healthy person with a known, brief gap, in a state where they are sold, who understands nothing pre-existing is covered. My guide to coverage between jobs covers this.
• Underwritten membership plan: a healthy, high income person who pays full price for ACA coverage and accepts the risk of a denied claim for an excluded condition and the fact that approval is not guaranteed.

My honest advice: if you have any health history at all, or any chance of a subsidy, start on the marketplace. If you do buy a non ACA plan, know that if you get seriously sick, you generally cannot move to an ACA plan until the next open enrollment unless you have a qualifying life event. Here is how special enrollment works.

I am licensed in 31 states and compare on and off marketplace options side by side. Sometimes the answer is the plan you would have found yourself, and that is fine. My help is free. Here is why a broker costs nothing, and here is my page for your state. If you work for yourself, start with my self employed guide.

Common questions