When employers start exploring Individual Coverage Health Reimbursement Arrangements (ICHRAs), one of the first questions that comes up is: what’s the difference between on- and off-exchange health plans?
This guide breaks it down and explores which option may be the best fit for your team.
What are on-exchange plans?
On-exchange plans are plans sold to individuals through Affordable Care Act (ACA) marketplaces such as HealthCare.gov or state-based exchanges. These plans are subsidy-eligible, meaning employees may qualify for premium tax credits if their household income falls within certain thresholds.
What are off-exchange plans?
Off-exchange plans are purchased by individuals directly from insurance carriers outside of the ACA marketplaces. Since they aren’t tied to the Exchange, employees do not receive premium tax credits with these plans.
It’s worth noting that many ICHRA administrators (including Zorro!) enroll most groups into off-exchange coverage to ensure a better experience, access better pricing, and unlock tax benefits for employers and employees. And carriers are responding to the growing number of ICHRA enrollees by designing off-exchange products built with them in mind, often with stronger provider networks, better family coverage, and a smoother enrollment experience.
Which is better: On-exchange or off-exchange plans?
Realistically, there’s no straightforward answer; on- and off-exchange function similarly, and plans often mirror each other.
However, on-exchange plans may be a better fit for individuals who qualify for subsidies, while off-exchange plans are the preferred method for many ICHRA administrators. And, as ICHRA continues to grow, off-exchange plans will likely begin to offer even broader provider networks and more flexible plan designs.
Why this matters for brokers and employers
Knowing the difference between on- and off-exchange plans is key to helping employees make smart plan choices (don’t worry, Zorro’s platform helps too!). Subsidies may make on-exchange plans a strong fit in some situations, while off-exchange plans can unlock tax advantages, broader networks, and long-term stability. Curious what this could look like for your team? Book a 1:1 demo with Zorro for a closer look.
