Contents

• Introduction
• Overview
• Types and Administration of Exchanges
• Individual and SHOP Exchanges
• State-Based and Federally Facilitated Exchanges
• Exchange Administration
• Qualified Health Plans
• Standardized Plans
• Individual Exchanges
• Eligibility and Enrollment
• Interaction with Medicaid, CHIP, and Medicare
• Open and Special Enrollment Periods
• Enrollment Data
• Enrollment Trends
• Covered Benefits
• Premiums, Cost Sharing, and Subsidies
• Premiums
• Cost Sharing, Actuarial Value Levels, and Maximum Out-of-Pocket Limits
• Premium Tax Credits and Cost-Sharing Reductions
• Premium, APTC, and CSR Data
• Provider Networks
• Exchange Provider Network Data
• Insurer Participation
• SHOP Exchanges
• Eligibility and Enrollment
• Enrollment Periods
• Enrollment Processes and Options
• Enrollment Data
• Congressional Member and Staff Enrollment via the DC SHOP Exchange
• Benefits, Premiums, and Cost Sharing
• Small Business Health Care Tax Credit
• Provider Networks
• Insurer Participation
• Exchange Enrollment Assistance
• Navigators and Other Exchange-Based Enrollment Assistance
• Brokers, Agents, and Other Third-Party Assistance Entities
• Exchange Funding
• Initial Grants for Exchange Planning and Establishment
• Ongoing Federal Funding for Exchange Operations
• Funding Sources for Federal Exchange Spending
• User Fees Collected from Participating Insurers
• Other Federal Funding Sources
• State Financing of the Exchanges
• American Rescue Plan Act Grants for Exchange Modernization

Summary

The Patient Protection and Affordable Care Act (ACA; P.L. 111-148, as amended) required health insurance exchanges to be established in every state and the District of Columbia. Exchanges are virtual marketplaces in which consumers and small business owners and employees can shop for and purchase private health insurance coverage and, where applicable, be connected to public health insurance programs (e.g., Medicaid).

In general, states must have two types of exchanges: an individual exchange and a Small Business Health Options Program (SHOP) exchange. Exchanges may be established either by the state itself as a state-based exchange (SBE) or by the Secretary of Health and Human Services (HHS) as a federally facilitated exchange (FFE). A few states have a state-based exchange using the federal platform (SBE-FP): they administer their exchange but use the federal information technology platform, including the federal exchange website www.HealthCare.gov. SHOP exchanges may be administered as SB-SHOPs or FF-SHOPs, but there are no SB-FP-SHOPs.

A primary function of the exchanges is to facilitate enrollment. This generally includes operating a web portal that allows for the comparison and purchase of coverage; making determinations of eligibility for coverage and financial assistance; and offering different forms of enrollment assistance, including Navigators and a call center. Exchanges also are responsible for several administrative functions, including certifying the plans that will be offered in their marketplaces.

The ACA generally requires that the private health insurance plans offered through an exchange are qualified health plans (QHPs). To be a certified as a QHP, a plan must be offered by a state-licensed health insurance issuer and must meet specified requirements, including covering the essential health benefits (EHB). QHPs sold in the individual and SHOP exchanges must comply with the same state and federal requirements that apply to QHPs and other health plans offered outside of the exchanges in the individual (also called nongroup) market and small-group market, respectively. Additional requirements apply only to QHPs sold in the exchanges. Exchange insurers also may offer variations of QHPs, such as child-only or catastrophic plans, and they may also offer exchange-certified dental plans.

Consumers and small businesses must meet certain eligibility criteria to purchase coverage through the individual and SHOP exchanges, respectively. There is an annual open enrollment period (OEP) during which any eligible consumer may purchase coverage via the individual exchanges; otherwise, consumers may purchase coverage only if they qualify for a special enrollment period (SEP). In general, small businesses may enroll at any time during the year. There are plans available in all individual exchanges, and 20.8 million people were enrolled in health insurance through the individual exchanges as of February 2024. Data available at the time of this report indicate that over 24 million consumers selected a plan during the 2025 OEP. Nationwide SHOP exchange enrollment estimates are not regularly released; in addition, there are no SHOP exchange plans available in more than half of states in 2025, similar to recent years.

Plans sold through the exchanges, like private health insurance plans sold off the exchanges, have premiums and out-of-pocket (OOP) costs. Consumers who obtain coverage through the individual exchanges may be eligible for federal financial assistance with premiums and OOP costs in the form of premium tax credits and cost-sharing reductions. Small businesses that use the SHOP exchanges may be eligible for small business health insurance tax credits that assist with the cost of providing health insurance coverage to employees.

Federal government funding for the operation of the exchanges was $2.44 billion for FY2023 (final), $2.47 billion for FY2024 (CR), and was requested to be $2.34 billion for FY2025. Much of the federal spending on the exchanges is funded by user fees paid by the insurers who participate in FFE and SBE-FP exchanges. States with SBEs finance their own exchange administration; states with SBE-FPs also finance certain costs (e.g., their own Navigator programs).

This report provides overviews of and data on key topics including types and administration of exchanges, eligibility and enrollment, qualified health plan features (benefits, costs, and financial assistance), provider networks, insurer participation, enrollment assistance, and exchange financing. It also includes information about recent statutory and administrative policy changes and current policy issues related to the exchanges and QHPs.

---

Introduction

The Patient Protection and Affordable Care Act (ACA; P.L. 111-148, as amended) required health insurance exchanges (also known as marketplaces) to be established in every state and the District of Columbia.¹ The ACA exchanges are virtual marketplaces in which consumers and small businesses can shop for and purchase private health insurance coverage and, where applicable, be connected to public health insurance programs (e.g., Medicaid).² Certain consumers and small employers are eligible for financial assistance for private health insurance purchased (only) through the exchanges. Exchanges are intended to simplify the experience of obtaining health insurance. They are not intended to supplant the private market outside of the exchanges but rather to provide an additional source of private health insurance coverage options.

The exchanges may be administered by state governments and/or the federal government. Regardless, the major functions of the exchanges are (1) to facilitate consumers' and small businesses' purchase of coverage (by operating a web portal, making determinations of eligibility for coverage and any financial assistance, and offering different forms of enrollment assistance) and (2) to certify and otherwise monitor the plans that are offered in those marketplaces.

This report provides background on key aspects of the health insurance exchanges and the private health insurance plans sold within the exchanges, which are called qualified health plans (QHPs). It begins with summary information about types and administration of exchanges and an overview of QHPs. Sections on the individual and small business exchanges discuss eligibility and enrollment, plan features (benefits, premiums, cost sharing, and financial assistance available to eligible consumers and small businesses), provider networks, insurer participation, and other topics. The final sections of the report describe types of enrollment assistance available to exchange consumers and provide information on federal funding for the exchanges. Relevant data are provided throughout (e.g., individual exchange enrollment by year). Appendices offer further details, including exchange types by state and federal funding for the exchanges by year.

Throughout the report, there are also updates and insights on recent statutory and regulatory policy changes related to the exchanges and QHPs, and current policy and programmatic issues of interest. This includes discussions of standardized plan requirements, network adequacy requirements, direct enrollment options, special enrollment periods, temporary enhancements to premium tax credits, and requirements on exchange plan agents and brokers.

Although a relatively small proportion of people in the U.S. obtain their coverage through the exchanges,³ the administration and functioning of these marketplaces are ongoing topics of interest to congressional audiences and other stakeholders. An understanding of the exchanges can provide context for current health policy discussions and proposals related to health care coverage and costs, the roles of the public and private sectors in the provision of health coverage, and more.

Overview

Types and Administration of Exchanges

Individual and SHOP Exchanges

The ACA required health insurance exchanges to be established in all states and the District of Columbia.⁴ In general, the health insurance exchanges began operating in October 2013 to allow consumers to shop for health insurance plans that began as soon as January 1, 2014.

There are two types of exchanges—individual exchanges and Small Business Health Options Program (SHOP) exchanges.⁵ These exchanges are part of the nongroup and small-group segments of the private health insurance market, respectively.⁶

• In an individual exchange, eligible consumers can compare and purchase nongroup insurance for themselves and their families and can apply for premium tax credits and cost-sharing reductions (PTCs and CSRs) that are available only through the exchanges (see "Premium Tax Credits and Cost-Sharing Reductions").
• In a SHOP exchange, small businesses can compare and purchase small-group insurance and can apply for small business health insurance tax credits (see "Small Business Health Care Tax Credit"); in addition, employees of small businesses can enroll in plans offered by their employers on a SHOP exchange.

Each exchange covers a whole state.⁷ Within an exchange, private insurers may offer plans that cover the whole state or only certain areas within the state (e.g., one or more counties). Plans sold within a given exchange may cover services offered by providers located in more than one state.

In general, consumers and small businesses may obtain coverage within their state's individual or SHOP exchange, respectively, or they may shop in the nongroup or small-group health insurance markets outside of the exchanges, which existed prior to the ACA and continue to exist.⁸

There are different ways of obtaining coverage on the exchange, including via the exchange website or via agents or brokers or Navigators, as discussed later in this report.⁹ Outside of the ACA exchanges, consumers and small businesses can purchase coverage through agents or brokers, or they can purchase it directly from insurers. In addition, there were and still are privately operated websites that allow the comparison and purchase of coverage sold by different insurers, broadly similar in concept to the ACA exchanges.¹⁰

State-Based and Federally Facilitated Exchanges

A state can choose to establish its own state-based exchange (SBE). If a state opts not to administer its own exchange, or if the Department of Health and Human Services (HHS) determines the state is not in a position to do so, then HHS is required to establish and administer the exchange in the state as a federally facilitated exchange (FFE).

There is one variation on the SBE approach: a state may have a state-based exchange using a federal platform (SBE-FP), which means the state oversees the exchange but uses the federally facilitated information technology (IT) platform, or federal platform (FP) (i.e., HealthCare.gov).

There is also a variation on the FFE approach: a state may have a state partnership FFE, which allows the state to manage certain aspects of its exchange while HHS manages the remaining aspects and has authority over the exchange. In early guidance on this option, HHS indicated a state could elect to perform some plan management and/or certain consumer assistance functions, and HHS would perform other functions, including facilitating enrollment through the federal HealthCare.gov platform and funding Navigator entities in the state.¹¹ In federal and private resources that track exchange data, this variation may not be reported on separately, but rather may be included in overall counts of FFEs, which is the model this report generally follows.

Direct Enrollment Exchange Types

In rulemaking finalized January 19, 2021 (the 2022 Notice of Benefit and Payment Parameters, or Payment Notice¹²), HHS and the Department of the Treasury established new "direct enrollment" variations of the exchange types: FFE-DE, SBE-DE, and SBE-FP-DE. States electing these options would "adopt a private sector-based enrollment approach as an alternative to the consumer-facing enrollment website operated by the Exchange (for example, HealthCare.gov for the FFEs)."¹³ Per the final rule, this would have been an option for SBEs as of plan year (PY) 2022, and for FFEs and SBE-FPs as of PY2023. The final rule was published but did not take effect before the presidential transition. The Biden Administration subsequently repealed the establishment of these DE exchange type options.¹⁴ Per rulemaking finalized in April 2024, an exchange must "operate a centralized eligibility and enrollment platform" on its website (state exchange website or HealthCare.gov), and exchanges are prohibited from "solely relying on non-Exchange entities" to make eligibility determinations.¹⁵

Although current regulations do not allow states to adopt a direct enrollment exchange type (e.g., FFE-DE), these regulations do not preclude other existing uses of DE approaches and systems in the exchanges, as discussed later in this report. For example, in the individual exchanges, consumers can enroll on their exchange website and there may also be DE options for them to enroll directly on an insurer's or web-broker's website.¹⁶ In FF-SHOP and some SB-SHOP exchanges, DE is the only enrollment option.¹⁷

Exchange Types by State

For PY2025, 28 states have FFEs, 20 states have SBEs, and three states have SBE-FPs.¹⁸ A few states have changed approaches one or more times (e.g., initially worked to create an SBE but then switched to an SBE-FP or FFE model). Changes in the first few years varied in terms of whether the state moved toward more or less federal involvement, but in several cases, a state transitioned from a fully state-based approach to an SBE-FP (i.e., transitioned toward more federal involvement). Recent and ongoing transitions have been in the direction of less federal and more state involvement.¹⁹ From PY2020 to PY2025, nine states transitioned from FFE to SBE-FP and/or from SBE-FP to SBE: Georgia, Illinois, Nevada, New Jersey, Pennsylvania, Maine, Virginia, Kentucky, and New Mexico. In the same time period, no states transitioned to an FFE. See Appendix A for more information about current exchange types and transitions over time.

SHOP exchanges may be federally facilitated (FF-SHOP) or state-based (SB-SHOP).²⁰ Most states' individual and SHOP exchanges are administered in the same way (e.g., both state-based or both federally facilitated). However, in 28 states, no insurers are offering medical plans in the SHOP exchange, meaning there is effectively no SHOP exchange there.²¹ For PY2025, there are 28 FF-SHOPs (6 with medical plans), 22 SB-SHOPs (16 with medical plans), and 1 state exempted from operating a SHOP exchange.²²

See Figure 1 for individual and SHOP exchange types by state in PY2025, and see Table A-1 for additional information, including on state transitions to different exchange types.

Figure 1. Individual and SHOP Exchange Types by State, Plan Year 2025

Source: CRS illustration. See data sources in Table A-1. Notes: IT = information technology; SHOP = Small Business Health Options Program. Counts of "states" include the District of Columbia. In the individual exchanges, plan year is generally the calendar year, but group plan years, including in the SHOP exchanges, may start at any time during a calendar year. See report "Overview" regarding individual and SHOP exchanges, and federal and state administration of exchanges. In more than half of the states, no insurers are offering medical plans in the SHOP exchange, meaning there is effectively no SHOP exchange there. See "Insurer Participation" in the SHOP section of this report for more information. There are medical plans available in all individual exchanges. Hawaii received a Section 1332 waiver exempting it from operating a SHOP exchange. For more information, see CRS Report R44760, State Innovation Waivers: Frequently Asked Questions.

Exchange Administration

Whether state-based or federally facilitated, exchanges are required by law to fulfill certain minimum functions. ACA provisions related to the establishment and operation of the exchanges are codified at 42 U.S.C. §§18031 et seq. Other federal provisions also are relevant, for example regarding the requirements for plans that may be sold through the exchanges.²³

A primary function of the exchanges is to provide a way for consumers and small businesses to compare and purchase health plan options offered by participating insurers.²⁴ This generally includes operating a web portal that allows for comparing and purchasing coverage, making determinations of eligibility for coverage and financial assistance, and offering different forms of enrollment assistance.

Exchanges also are responsible for several administrative functions, including certifying the plans that will be offered in their marketplaces.²⁵ This includes annually certifying or recertifying plans to be sold in their exchanges as qualified health plans (QHPs, discussed below). QHP certification involves a review of various factors, including the plan's benefits, cost-sharing structure, provider network, premiums, marketing practices, and quality improvement activities, to ensure compliance with applicable federal and state standards.²⁶ The QHP certification process is to be completed each year in time for insurers to market their plans and premiums during the exchanges' annual open enrollment period (see "Open and Special Enrollment Periods").

Exchanges' other administrative activities include collecting enrollment and other data, reporting data to and otherwise interacting with the Departments of HHS and the Treasury, and working with state insurance departments and federal regulators to conduct ongoing oversight of plans.

Qualified Health Plans

In general, health insurance plans offered through exchanges must be qualified health plans (QHPs).²⁷ A QHP is a health plan offered by a state-licensed insurer that is certified to be sold in that state's exchange, covers the essential health benefits (EHB) package, and meets other specified requirements.²⁸ Covering the EHB package means covering 10 broad categories of benefits,²⁹ complying with limits on consumer cost sharing on the EHB, and meeting certain generosity requirements (in terms of actuarial value or AV).³⁰ As discussed later in this report, an AV is the "percentage paid by a health plan of the percentage of the total allowed costs of benefits."³¹ Plan AVs are associated with metal levels (90% AV for platinum plans, 80% for gold, 70% for silver, and 60% for bronze), and the higher the AV percentage, the lower the cost sharing, on average.³²

Following are several key points about QHP requirements, as compared to requirements on other private health insurance plans:³³

• Requirements on private health insurance plans sold in the nongroup and small-group markets are applicable both in and out of the exchanges.³⁴ Thus, a QHP offered through an individual exchange must comply with state and federal requirements applicable to individual market (or nongroup market) plans; a QHP offered through a SHOP exchange must comply with state and federal requirements applicable to small-group market plans. For example, the requirement to cover the EHB applies to nongroup and small-group plans both in and out of the exchanges.
• There are additional requirements that apply only to QHPs sold in the exchanges.³⁵ For example, an insurer wanting to sell QHPs in an exchange must offer at least one silver-level and one gold-level plan in all of the areas in which the insurer offers coverage within that exchange. Exchange plans also are subject to certain network adequacy requirements, as discussed in the "Provider Networks" section of this report.
• There are multiple data reporting requirements on QHPs, some of which also apply to plans outside the exchanges. Per exchange requirements, QHPs must report data on claims payment policies and practices, claims denials, enrollment, cost sharing, premium rating practices, and other topics.³⁶ Other private health insurance plans are subject to some of these requirements.³⁷ Starting in 2026, QHPs in FFEs will be subject to additional reporting requirements regarding prior authorization, including a list of items and services requiring prior authorization and data on prior authorization request approvals, denials, and appeals.³⁸ These requirements will not apply to other private health insurance plans.
• As of PY2023, QHP issuers in FFEs and SBE-FPs must offer standardized plan options, as explained below.

A QHP is the only type of comprehensive health plan an exchange may offer, but QHPs may be offered outside of exchanges, as well. In addition to typical QHPs, certain QHP variations may be available in a given exchange, including child-only plans, catastrophic plans, consumer operated and oriented plans (CO-OPs), and multistate plans (MSPs). Stand-alone dental plans (SADPs), also sometimes referred to as qualified dental plans (QDPs), are the only non-health plans offered in the exchanges. They are subject to certain modified QHP requirements.³⁹ See Table B-1 for more information about types of plans offered in the exchanges.

Under federal law, insurers are not required to offer plans in the exchanges, just as they are not required to offer plans in markets outside the exchanges. If an insurer does want to offer a plan in an exchange, it must meet applicable federal and state requirements, as discussed in this section and the prior one on "Exchange Administration". Insurer participation in the individual and SHOP exchanges is discussed later in this report.

Standardized Plans

In the 2023 Payment Notice, finalized in May 2022, HHS indicated that insurers offering QHPs in most FFEs and SBE-FPs were required to offer "standardized" plans starting in PY2023.⁴⁰ The 2024 through 2026 Payment Notices have modified certain requirements for standardized plans and provided limits on the offering of non-standardized plans.⁴¹ These requirements do not apply in SBEs, although in the 2025 Payment Notice, HHS suggested that over half of SBEs have their own standardized plan requirements.⁴² The requirements do not apply in SHOP exchanges.

In general, a non-standardized plan is one that meets the requirements outlined above (i.e., QHP and other applicable federal or state requirements), but otherwise may vary in terms of benefits, cost sharing, and/or other features. A standardized plan also meets those requirements, and meets certain other parameters—particularly in terms of cost-sharing requirements—outlined by HHS in regulations and guidance.⁴³ Standardized plans may still vary in other ways. On HealthCare.gov, standardized plans are identified to consumers as "easy pricing" plan options.

Specifically, HHS designed a standardized plan option for each metal level of plan offered in the exchanges. For each of these standardized plans, cost-sharing requirements are set for certain categories of benefits and overall (e.g., the plan's deductible and annual out-of-pocket limit). Examples are shown in Table 2, in the cost-sharing section of this report.

In general, FFE and SBE-FP QHP issuers are required to "offer in the individual market at least one standardized plan "at every product network type ..., at every metal level, and throughout every service area that it also offers non-standardized QHP options, including, for silver plans, for the income-based cost-sharing reduction plan variations."⁴⁴ For example, if an insurer offers a non-standardized gold health maintenance organization (HMO) QHP in a given service area, such insurer must also offer a standardized gold HMO QHP throughout that service area.⁴⁵ As of PY2024, QHP issuers are not required to offer standardized plans at the "non-expanded bronze" metal level, and as of PY2026, QHP issuers that offer "multiple standardized plan options within the same product network type, metal level, and service area must meaningfully differentiate these plans," as specified.⁴⁶

As of PY2025, issuers are generally limited to offering two non-standardized plan options per product network type and per metal level, although there are exceptions as specified in regulations (e.g., "if issuers demonstrate that these additional non-standardized plans have specific design features that will substantially benefit consumers with chronic and high-cost conditions").⁴⁷ Variations are also allowed with regard to inclusion of adult dental, pediatric dental, and adult vision benefit coverage.

According to an HHS issue brief, standardized plan requirements (and limits on non-standardized plans) are intended to help consumers understand their plan options and reduce "choice overload." This brief and other resources provide further background on standardized plans, including prior federal rulemaking and certain state approaches.⁴⁸

Individual Exchanges

Eligibility and Enrollment

Qualified individuals may purchase health insurance plans for themselves and their families in their state's individual exchange.⁴⁹ Consumers are qualified individuals—i.e., eligible for exchange coverage—as long as they (1) meet state residency requirements;⁵⁰ (2) are not incarcerated, except individuals in custody pending the disposition of charges; and (3) are U.S. citizens, U.S. nationals, or "lawfully present" residents.⁵¹ Undocumented individuals are prohibited from purchasing coverage through the exchanges, even if they were to pay the entire premium without financial assistance.

Consumers can use their state's exchange website (HealthCare.gov or a state-run site) to apply for coverage and financial assistance and to compare and enroll in plans. The ACA requires exchanges to provide a "single, streamlined" form that consumers can use to apply for "all applicable State health subsidy programs within the State."⁵² This means that through one form, consumers can be determined eligible for exchange financial assistance (see "Premium Tax Credits and Cost-Sharing Reductions" in this report), as well as Medicaid and the State Children's Health Insurance Program (CHIP), as discussed below.⁵³ The exchange website displays all exchange plans available to a consumer, with estimates of the consumer's costs, including monthly premiums that reflect the application of any federal financial assistance for which they are eligible.

In addition to using their exchange website, consumers can apply and enroll by phone, by mail, in person, and/or via approved partner websites (i.e., via direct enrollment), as available by state. Enrollment assistance is available for those who want it (e.g., through exchange Navigators or through agents or brokers).⁵⁴

Interaction with Medicaid, CHIP, and Medicare

In conjunction with the streamlined application mentioned above, exchanges must have "screen and enroll" systems for coordinating with the Medicaid and CHIP programs on eligibility determinations and enrollment into those programs, for eligible consumers. These systems may vary by state.⁵⁵

Consumers who are eligible for Medicaid or CHIP may choose to buy exchange coverage instead, but they would not be eligible for financial assistance for exchange coverage (i.e., PTCs or cost-sharing reductions).

There are some limitations on the sale of exchange plans to Medicare-eligible or Medicare-enrolled individuals.⁵⁶ In short, it is generally illegal to sell an individual exchange plan to someone enrolled in or entitled to Medicare because it would duplicate coverage.

Open and Special Enrollment Periods

Consumers may enroll in coverage through the exchanges only during specified "open" and "special" enrollment periods.

Open Enrollment Periods

Anyone eligible for exchange plan coverage may newly enroll (or make changes to existing coverage) during an annual open enrollment period (OEP).⁵⁷ The OEP typically takes place in fall of the year preceding the plan year (PY; the calendar year in the individual exchanges) during which the coverage is in effect.

The annual federal OEP is November 1 to January 15, for FFE and SBE-FP states.⁵⁸ This means, for example, that the OEP for PY2025 was November 1, 2024, to January 15, 2025.⁵⁹ This is also the default OEP for SBEs, but states with SBEs may extend or otherwise modify their OEPs, subject to federal regulations.⁶⁰

Before and during an OEP, consumers already enrolled in coverage through an exchange should receive notification from the exchange and from their insurer about the opportunity to make any updates to their application data and/or coverage choices. Insurers must notify consumers of changes to their plans such as premiums, benefit coverage, or provider networks.⁶¹ If an existing exchange plan enrollee does not take any action during the OEP, they generally will be automatically reenrolled in the same plan for the upcoming plan year.⁶²

Special Enrollment Periods

Outside of an OEP, consumers may only enroll in coverage or switch plans via the exchange if they qualify for a special enrollment period (SEP). Generally, consumers qualify for SEPs due to a qualifying life event (QLE), also called a triggering event.⁶³ This includes, for example:

• Loss of qualifying coverage, which includes most types of comprehensive coverage (e.g., Medicaid, and group and nongroup private insurance).⁶⁴ This SEP also applies when a dependent turns 26 and is no longer eligible to be covered on a parent's plan. This SEP does not apply in certain circumstances, such as loss of coverage due to failure to pay premiums, or voluntarily ending coverage during a plan year.⁶⁵
• Change in household size, for example due to a change in marital status or number of dependents, or due to a death in the family.⁶⁶ Regarding dependents, birth and adoption (and other specified scenarios) are QLEs that trigger SEPs, but generally not pregnancy.⁶⁷
• Becoming newly eligible for exchange coverage (e.g., by becoming a U.S. citizen or leaving incarceration), and/or having a change in income that affects eligibility for federal subsidies for coverage.⁶⁸
• Change in residence, such as moving to a new state (or new ZIP code or county within a state), including moves for school or seasonal work.⁶⁹
• Certain other situations, including errors or misrepresentations made by exchanges and/or plans,⁷⁰ and other exceptional or complex circumstances.⁷¹

HHS also may choose to offer SEPs or extend an OEP for some or all consumers due to broadly applicable circumstances, or otherwise make SEP changes (subject to statutory requirements).⁷² For example, due in part to the COVID-19 pandemic, HHS created an SEP to allow all exchange-eligible consumers to newly enroll or update their enrollment in an exchange plan from February 15, 2021, to August 15, 2021.⁷³

CMS later announced another temporary SEP for eligible consumers who lost Medicaid or CHIP coverage due to the end of the Medicaid continuous enrollment requirement that was in place during the pandemic.⁷⁴ The SEP was available if consumers applied for coverage or updated their applications between March 31, 2023, and November 30, 2024, and attested to an end of Medicaid or CHIP coverage during that period.⁷⁵ While there is already an SEP based on loss of qualifying coverage, this "Unwinding SEP" temporarily provided additional time for affected individuals to enroll in an exchange plan. In the 2024 Payment Notice, CMS permanently provided a longer SEP for individuals losing Medicaid or CHIP coverage (generally 90 days, as compared to the 60-day SEP applicable to most other QLEs).⁷⁶

Federal SEPs apply to FFEs, SBE-FPs, and generally to SBEs. However, SBEs have flexibility regarding implementation of some SEPs.⁷⁷ SBEs also may create their own SEPs, subject to applicable federal and state laws. SEPs for the individual exchanges may or may not apply to the federal SHOP exchanges and/or to the nongroup market outside the exchanges.⁷⁸

Eligibility for Medicaid or CHIP may be determined at any point during the calendar year and has no connection to an applicant's state's exchange OEP.

Monthly SEP for Certain Low-Income Populations

As discussed later in this report, consumers may be eligible based on income and other criteria to receive premium tax credits (PTCs) that reduce the cost of buying certain health plans offered through the exchanges. In March 2021, the American Rescue Plan Act (ARPA; P.L. 117-2) temporarily enhanced eligibility for and the amount of these PTCs. In August 2022, P.L. 117-169, which is commonly known as the Inflation Reduction Act of 2022 (IRA), extended these PTC enhancements through tax year 2025.

Separately, a new federal SEP was created in September 2021, through the 2022 Payment Notice, Part 3.⁷⁹ This is a monthly SEP for consumers who are eligible for the PTC and have expected household incomes up to 150% of the federal poverty level (FPL). Initially, this SEP allowed such individuals to newly enroll or switch plans once a month, only during periods of time when they would qualify for a $0 premium on a benchmark plan due to the PTC. In the preamble of the rule finalizing this SEP, HHS stated that the SEP eligibility criteria were based on the ARPA enhancements to the PTC. Although this SEP was not required by ARPA and was not exclusive to ARPA, it would have been effective only during times when PTC enhancements are available, such as those in ARPA and the IRA.

In the 2025 Payment Notice, finalized April 2024, this SEP was made permanent, with a modification.⁸⁰ The SEP is still for consumers who are eligible for the PTC and have expected household incomes up to 150% of FPL, but the limitation regarding $0 premiums was removed.

Consumers eligible for this SEP have certain enrollment options depending on their current enrollment status. For example, current exchange plan enrollees who become eligible under this SEP are only able to change to a silver-level plan, but new enrollees may select any metal-level plan. These options may be more limited than the enrollment options related to other SEPs.⁸¹ The enrollment options and adverse selection concerns are also summarized in a Health Affairs article on the September 2021 rule.⁸²

This SEP is available in all FFE and SBE-FP states, and it is optional for SBEs.⁸³ Insurers are not required to offer this SEP outside of the exchanges.⁸⁴ HHS also clarified that this SEP and its related enrollment options do not change eligibility for, or enrollment options for, any other exchange SEP.

Enrollment Data

Nationwide individual exchange enrollment by year is shown in Table 1.

Given the exchange eligibility determination process, as well as the different time frames of OEPs and SEPs, CMS releases data on exchange enrollment in stages. Pre-effectuated enrollment is the number of unique individuals who have been determined eligible to enroll in an exchange plan and have selected a plan. These individuals may or may not have submitted the first premium payment. In general, cumulative and final pre-effectuated enrollment data are released during, and soon after, an annual open enrollment period. For example, in March 2024, CMS reported that 21.4 million consumers signed up for a plan (or were automatically reenrolled) in the individual exchanges nationwide during the 2024 open enrollment period (November 1, 2023-January 16, 2024 in most states).⁸⁵ In an early 2025 enrollment "snapshot," CMS reported that 24.2 million consumers had selected a plan during the 2025 OEP as of January 15, 2025.⁸⁶ Additional pre-effectuated enrollment data will likely be released in spring 2025.

Subsequently, effectuated enrollment is the number of unique individuals who have been determined eligible to enroll in an exchange plan, have selected a plan, and have submitted the first premium payment for an exchange plan. Effectuated enrollment data generally are point-in-time and enrollment numbers may change over the coverage year. For example, due to changes in life circumstances, an individual may disenroll (e.g., if later offered coverage through an employer), or enroll (e.g., given eligibility for an SEP) in an exchange plan, outside of an OEP. In July 2024, CMS reported that 20.8 million consumers, or 97% of the OEP 2024 individual exchange enrollees, had effectuated their enrollment as of February 2024.⁸⁷

CMS also releases data on average effectuated enrollment over specified time periods (e.g., over the first half of an enrollment year or monthly for the previous enrollment year). See the "Enrollment Statistics" section of CRS Report R46638, Health Insurance Exchanges: Sources of Statistics, for HHS reports and resources detailing various enrollment data.

Enrollment Trends

As shown in Table 1, early year effectuated enrollment was around 10-11 million each year until 2021, but it has increased sharply since then. February 2024 enrollment (20.8 million) is 32.5% higher than February 2023 (15.7 million), and 94.4% higher than February 2020 (10.7 million). Changes in exchange enrollment have varied by state.

Year-over-year changes in the other types of exchange enrollment data (e.g., pre-effectuated enrollment) generally followed the same pattern. However, when comparing enrollment rates within a given year, it is evident that there were greater shifts in exchange enrollment rates in the early years of the exchanges than there have been in recent years. For example, from 2014 through 2019, there was more than a 20% decrease in each year's late year effectuated enrollment as compared to that year's pre-effectuated enrollment. The greatest changes were in 2016 and 2017, with decreases of 28.3% and 27%, respectively. The changes have varied since 2020, ranging from a 13.2% decrease in 2020 to a 6.1% increase in 2023. See Table 1. Increases or decreases in enrollment within a given year are the net of disenrollments (and those who did not effectuate their initial plan selections) as well as new enrollments throughout the year (e.g., through special enrollment periods).

Increases or decreases in exchange enrollment—including changes over time and within a given year—may be due to numerous factors, including federal and state policy changes as well as market and demographic effects. For example, exchange enrollment increases during and after the COVID-19 pandemic may be attributable, at least in part, to new eligibility for subsidized exchange coverage (discussed later in this report), new special enrollment periods, and changes in income and/or access to other forms of health coverage. Other factors that may affect enrollment include marketing and outreach efforts, plan choices and costs on and off the exchanges, enrollment processes and available assistance, and consumer preferences. It would be difficult to isolate the effects of any particular variable (policy or otherwise) on enrollment, given their interacting effects.⁸⁸

Covered Benefits

In and out of the exchanges, covered benefits may differ by private health insurance plan, subject to applicable federal and state requirements.

As stated earlier,⁸⁹ private health insurance plans sold in the individual exchanges (i.e., QHPs) are subject to the same federal requirements on benefit coverage as private health insurance plans sold in the nongroup market outside the exchanges. This includes, for example, coverage of 10 categories of essential health benefits (EHB).⁹⁰ Per current federal regulations, states generally specify the benefits to be covered within the 10 categories, so particular EHB benefits vary by state. Other federal requirements that apply both on and off the exchanges include coverage of certain preventive services without cost sharing, mental health parity, and a prohibition on benefit coverage exclusions based on an enrollee's preexisting health conditions.⁹¹ States also may impose requirements on the types of plans they regulate, including those sold on the exchanges.

One distinction regarding QHPs (as compared to plans sold off the exchanges) is related to dental coverage. While EHB coverage includes the category "pediatric services, including oral and vision care," QHPs are exempt from covering pediatric dental benefits if a stand-alone dental plan (SADP) is also available in that exchange. In turn, one requirement on SADPs is that they must cover pediatric dental in accordance with relevant EHB standards.⁹²

Certain ACA provisions address QHP coverage and financing of abortion. The ACA specifies that states may elect to require or prohibit coverage of abortion by QHPs (and other private plans regulated by states).⁹³ If QHPs do cover elective abortion, there are payment segregation requirements, including that a plan cannot use any funds attributable to premium tax credits (discussed below) to pay for such services.⁹⁴

CMS public use files (PUFs) on plans offered in the federal and state exchanges include data on certain benefits covered by QHPs, including benefits covered as EHB.⁹⁵

Premiums, Cost Sharing, and Subsidies

Typically, enrollees of private health insurance plans (in or out of the exchanges) pay premiums to obtain coverage. They also are generally responsible for out-of-pocket (OOP) costs, or cost sharing, as they use benefits.

Premiums

Premiums are set by insurers and are based on their expected medical claims costs (i.e., the payments they expect to make to health care providers for covered health benefits for a given group of enrollees) and associated administrative expenses (including taxes and fees).⁹⁶

The premium-setting process is subject to federal and state requirements, as applicable to plans both in and out of the exchanges. For example, insurers cannot vary premiums based on health status, and insurers are subject to annual state and federal review of their premium rates.⁹⁷ In addition, insurers that want to offer plans in the exchanges must submit their proposed premiums to the exchanges as part of the QHP certification process each year.⁹⁸ Data on exchange premiums are in Table 3 at the end of this section.

Because a premium is the price for coverage, the premium amount generally reflects plan features (e.g., covered benefits, cost-sharing requirements). As the majority of premium revenue pays for medical claims, the relationship of plan features to potential claims costs may directly affect a given premium. For example, a plan that covers many benefits—which has the potential to lead to numerous medical claims—can have higher premiums than a plan that covers few benefits, all else equal.

Changes in premiums may be related to numerous factors, including changes in plan features (e.g., more or fewer benefits covered), changes in the prices insurers pay for covered benefits (e.g., higher or lower provider payments), or changes in enrollee demand for healthcare (e.g., more or fewer number of claims filed). These changes can be affected by federal or state requirements or market dynamics, and they can vary geographically and by plan type.

One analysis suggests that rising health care prices are a key driver of increases in exchange plan premiums for PY2025.⁹⁹ It also points to increased utilization of costly prescription drugs as a factor affecting premiums. Another analysis of 2025 health insurance premium drivers in the nongroup and small group markets (not specific to the exchanges) similarly highlights prescription drug spending as a driver of premium increases.¹⁰⁰ These resources also discuss various recent and ongoing policy changes (e.g., the temporarily enhanced premium subsidies discussed below in this report), and the extent to which there are any indications of their effects on premiums.

Cost Sharing, Actuarial Value Levels, and Maximum Out-of-Pocket Limits

As enrollees receive benefits covered by their plan, the costs for the benefits are paid by the enrollee and/or the plan, depending on the plan's terms. In general, enrollee cost sharing includes deductibles, coinsurance, and co-payments, up to an annual limit on consumer out-of-pocket spending.¹⁰¹ Consumer cost-sharing requirements on covered benefits may vary by QHP, subject to applicable federal requirements as discussed here, and any applicable state requirements.

Actuarial Value and the "Metal Levels"

Most health plans sold through the exchanges (and non-grandfathered plans sold in the nongroup and small-group markets off-exchange¹⁰²) must provide coverage in compliance with one of four levels of actuarial value (AV), which correspond to a precious metal designation.¹⁰³ AV is the "percentage paid by a health plan of the percentage of the total allowed costs of benefits."¹⁰⁴ In other words, a plan's AV indicates the average share of the medical costs that it will pay for covered benefits. Given that plans and enrollees collectively pay total costs, AV is the plan counterpart to enrollee cost-sharing expenses.

The four AV levels are 90% for platinum, 80% for gold, 70% for silver, and 60% for bronze.¹⁰⁵ The higher the AV percentage, the lower the cost sharing, on average. For example, a silver plan expects to cover approximately 70% of total costs for covered benefits. Because enrollees' use of such benefits vary, a given silver plan enrollee's actual cost sharing may be more or less than 30% of costs associated with receipt of covered benefits. AV is not a measure of plan generosity for an enrolled individual or family, nor is it a measure of premiums or benefits packages.

With the exception of "catastrophic" plans and stand-alone dental plans (see Table B-1), plans sold in the exchanges must have at least 60% AV. An insurer selling plans in an exchange must offer at least a silver and gold plan throughout each service area in which it offers coverage.¹⁰⁶

CMS reports on pre-effectuated enrollment include data on enrollment by metal level. During the PY2024 open enrollment period, 31% of individual exchange consumers nationwide selected bronze plans, 54% silver, 13% gold, 1% platinum, and less than 1% catastrophic plans.¹⁰⁷

Maximum Out-of-Pocket Limits

Federally set maximum OOP limits apply to all health plans sold in the exchanges and to all non-grandfathered nongroup and group plans sold outside the exchanges.¹⁰⁸ The maximum OOP limits are updated each year through HHS rulemaking and/or guidance. See Figure 2 for the generally applicable maximum limits by year. For example, the PY2025 maximum OOP limit for self-only coverage is $9,200; the limit is doubled for coverage other than self-only. Plans may set their OOP limits lower than these applicable maximums.

QHP issuers also must offer plan variations with reduced OOP limits for certain standardized plan options and for consumers who qualify for cost-sharing reductions, as discussed below in this section. SADPs are subject to modified OOP limits.¹⁰⁹

Figure 2. Maximum Annual Limitations on Cost Sharing, by Plan Year (federally set maximums; insurers may set lower out-of-pocket [OOP] limits)

Source: CRS analysis of relevant federal rulemaking and guidance regarding 45 C.F.R. §156.130(a)(2). These amounts have generally been updated each year through an HHS rule called the Notice of Benefit and Payment Parameters, also known as the Payment Notice. Annual payment notices are cited in Table D-1. Starting with PY2023, these OOP limits and certain other payment parameters are published in guidance instead of Payment Notices. For PY2025 amounts, see CMS, Premium Adjustment Percentage, Maximum Annual Limitation on Cost Sharing, Reduced Maximum Annual Limitation on Cost Sharing, and Required Contribution Percentage for the 2025 Benefit Year, November 15, 2023, https://www.cms.gov/files/document/2025-papi-parameters-guidance-2023-11-15.pdf. See the similarly titled guidance on PY2026 amounts, issued October 8, 2024, https://www.cms.gov/files/document/2026-papi-parameters-guidance-2024-10-08.pdf. Notes: Once an enrollee's cost sharing (including deductibles, coinsurance, and co-payments) meets the plan's OOP limit in a plan year, the insurer generally will pay 100% of covered costs for the remainder of the plan year. If a consumer is solely enrolled in a plan, the self-only limit applies. If a consumer and one or more dependents are enrolled in a plan, both the self-only and the other than self-only limits may apply. See "Maximum Annual Limitation on Cost-Sharing" in CRS Report R45146, Federal Requirements on Private Health Insurance Plans for further information. This table shows federally set OOP limits that apply to most plans, but some plan variations must have lower OOP limits. See "Standardized Plans" and "Premium Tax Credits and Cost-Sharing Reductions" in this report. Plans also may set their OOP limits lower than the applicable maximums.

Cost-Sharing Limits for Standardized Plans

As discussed earlier in this report, QHP issuers in FFEs and SBE-FPs are generally required to offer standardized QHPs—with certain cost-sharing limits designed by HHS—in addition to any non-standardized QHPs they offer. Specifically, HHS designed a standardized plan option for each metal level of plan offered in the exchanges. For each of these standardized plans, cost-sharing requirements are set for certain categories of benefits and overall (e.g., the plan's deductible and annual out-of-pocket limit). Examples of such cost-sharing amounts set for PY2025 standardized plans are shown in Table 2 below. The 2025 maximum OOP limit for the standardized expanded bronze plan is the same as the 2025 maximum OOP limit generally applicable to non-standardized plans, as shown in Figure 2 above.

Premium Tax Credits and Cost-Sharing Reductions

Consumers purchasing coverage through the individual exchanges may be eligible to receive financial assistance that effectively reduces their cost of that coverage. Eligibility for such assistance is based primarily on income, and assistance is provided in the form of premium tax credits (PTCs) and cost-sharing reductions (CSRs).¹¹⁰

As temporarily enhanced (through the end of 2025; see text box), the PTC generally is available to consumers with household incomes at or above 100% of the federal poverty level (FPL) and who do not have access to public coverage (e.g., Medicaid) or employment-based coverage that meets certain standards. Some exceptions apply. The credit is designed to reduce an eligible individual's (or family's) cost of purchasing health insurance coverage through the exchange. The amount of the PTC is based on a statutory formula and varies from person to person. It is designed to provide larger credit amounts to individuals with lower incomes compared to those with higher incomes. Although the amount of the PTC is based on the second-lowest-cost silver plan (SLCSP) in a consumer's local area, consumers may apply the credit to any bronze- or higher-metal level plan available to them on their state's exchange.

Individuals who receive PTCs also may be eligible for subsidies that reduce cost-sharing expenses.¹¹¹ These cost-sharing reductions (CSRs) are applied in two ways. First, an insurer must reduce the annual OOP limit that otherwise would apply to an eligible individual's exchange plan. Second, the insurer must effectively raise the AV of the eligible individual's plan, for example by reducing other cost-sharing requirements in addition to the lowered OOP cap. Among other eligibility requirements, CSRs generally are available to consumers who are eligible for PTCs and have incomes between 100% and 250% of the FPL. Although a PTC can be applied to any metal level plan, CSRs are applicable only to silver plans.

Premium, APTC, and CSR Data

Table 3 summarizes nationwide data on premiums, advance premium tax credits (APTCs),¹¹² and CSRs by year, as available in relevant HHS reports on effectuated enrollment in the individual exchanges.¹¹³ The average premium and APTC amounts shown in the table are provided for general reference, but they obscure wide variations in actual amounts per consumer, depending on the plan and metal level an individual chooses and/or the factors by which an insurer is able to vary premiums (e.g., age). In addition, the APTC data in the table are typically not final for each year, because when an individual receiving an APTC files his or her tax return for a given year, the total amount of advance payments he or she received in that tax year is reconciled with the amount he or she should have received.

Premium and cost-sharing data on all plans offered in the exchanges, as opposed to such data for plans selected, also are available, including for PY2025.¹¹⁴

Provider Networks

Most plans—in and out of the exchanges—have a provider network, which refers to a set of health care providers and facilities that the insurer has contracted with to furnish covered benefits to plan enrollees at specified prices. In general, insurers can make various decisions about their provider networks, including whether to include out-of-state providers in their networks and whether to provide coverage for benefits furnished by out-of-network providers.

There are no federal requirements generally related to provider network composition that apply to private health insurance plans outside the exchanges,¹¹⁵ but there are certain network adequacy requirements that apply to QHPs in the exchanges.¹¹⁶

Per current regulations on exchange network adequacy requirements, QHP issuers must use provider networks and must ensure their networks are "sufficient in number and types of providers, including providers that specialize in mental health and substance use disorder services, to ensure that all services will be accessible without unreasonable delay."¹¹⁷ This is further defined in terms of the following standards:

• As of PY2023, QHP issuers in FFEs generally must meet "time and distance" network adequacy standards set by HHS.¹¹⁸ Plans must provide access to at least one provider in each category listed in guidance, within set time and distance parameters (which vary by provider type and by geography), for at least 90% of enrollees. "For example, for endocrinology in a large metro county, at least 90 percent of enrollees would be required to have reasonable access to at least one provider within 15 miles and 30 minutes." ¹¹⁹
• As of PY2025, QHP issuers in FFEs generally also must meet "appointment wait time" network adequacy standards. For example, enrollees seeking an appointment for routine primary care must be able to schedule an appointment within 15 business days, at least 90% of the time.¹²⁰

These network adequacy requirements also apply in some or all exchanges:

• QHP issuers in all exchanges must include essential community providers (ECPs) in their provider networks, namely a "a sufficient number and geographic distribution of [ECPs], where available, to ensure reasonable and timely access" for low-income and medically underserved individuals.¹²¹ QHP issuers in FFEs are subject to specific ECP standards—for example, that they must offer a contract to at least one ECP in each of eight categories of providers (e.g., federally qualified health centers, mental health facilities, and family planning providers) in each county in the plan's service area and all available Indian Health Care providers in the plan's service area.
• QHP issuers in all exchanges "must publish an up-to-date, accurate, and complete provider directory, including information on which providers are accepting new patients" and other information as specified, "in a manner that is easily accessible."¹²²

Exchange Provider Network Data

CMS PUFs on plans offered in the federal and state exchanges include certain data on QHPs' provider networks—for example, plans' provider network URLs and indications of whether a plan has a nationwide network—but the files do not appear to measure network composition.¹²³

There have been some analyses of QHP provider networks, including estimates of plans' network composition relative to available providers in the area. For example, an August 2024 KFF report estimated the following, regarding the individual exchanges nationwide in 2021:

On average, Marketplace enrollees had access to 40% of the doctors near their home through their plan's network, with considerable variation around the average. Twenty-three percent of Marketplace enrollees were in a plan with a network that included a quarter or fewer of the doctors in their area, while only 4% were in a plan that included more than three-quarters of the area doctors in their network.¹²⁴

These analyses also address some factors that insurers may consider when establishing their networks (e.g., provider availability, market dynamics between insurers and providers, costs and their effect on premiums, consumer preferences regarding access and costs, and applicable federal and state requirements).

Insurer Participation

As stated earlier (see "Qualified Health Plans"), insurers are not federally required to participate in the exchanges, but they must meet certain requirements if they do want to offer plans in an exchange. Also as stated earlier (see "Individual and SHOP Exchanges"), insurers offering QHPs—also called QHP issuers—may offer plans that cover the whole state or only certain areas within a state, such as one or more counties.

For each plan year to date, at least one insurer has offered an individual exchange plan in each county in all states. However, there have been concerns about "bare counties" in one or more plan years, particularly as insurers were making their decisions in 2017 about offering coverage for PY2018.¹²⁵

See Figure 3 for CMS projections of insurer participation in all individual exchanges (including SBEs) in PY2025. It shows that 18% of counties have one or two QHP issuers, 49% of counties have three or four QHP issuers, and 32% of counties have five or more QHP issuers.¹²⁶

According to a CMS report on the 31 FFE and SBE-FP states in PY25, eight states have more QHP issuers in PY25 than PY24 (Florida, Iowa, Michigan, Nebraska, New Hampshire, Ohio, Texas, and Wyoming) and three states have fewer QHP issuers in PY25 than PY24 (Illinois, Kansas, and Utah).¹²⁷ Additional data on issuer participation and plan availability are provided at the end of this section.

Figure 3. Plan Year 2025 Insurer Participation in the Individual Exchanges, by County

Source: CRS adapted from Centers for Medicare & Medicaid Services (CMS), Center for Consumer Information and Insurance Oversight (CCIIO), "County by County Plan Year 2025 Insurer Participation in Health Insurance Exchanges," October 25, 2024, https://www.cms.gov/marketplace/about/exchange-coverage-maps. This page also has such maps for prior years.

An insurer might choose to begin, continue, or stop offering coverage in a state or locality, on and/or off an exchange, for various reasons. In January 2019, the Government Accountability Office (GAO) released a report on insurer participation and related issues in the individual exchanges.¹²⁸ The report provided background on a range of policy factors that may have affected insurer participation in various ways, including the following:

• the federal requirements imposed by the ACA on plans sold in the nongroup market, including the individual exchanges;¹²⁹
• the consumer financial assistance available only in the exchanges;¹³⁰
• the three ACA programs—risk corridors, reinsurance, and risk adjustment—meant to mitigate insurers' financial risk in the nongroup and small-group markets, including in the exchanges;¹³¹
• federal policy changes in the years since the enactment of the ACA;¹³² and
• state-level requirements.

These and other factors, such as the health of the populations enrolling in exchange plans, had varying impacts on claims costs (the costs insurers pay for their enrollees' health benefits), which in turn impacted insurer participation, as well as insurers' decisions about premium amounts and plan designs (e.g., covered benefits, cost sharing, and provider networks).

The GAO also reports biannually on private health insurance market concentration, including in the individual exchanges. In its November 2024 and prior such reports, the GAO defines a concentrated market (in a state or otherwise) as one where "three or fewer issuers held at least 80 percent of the market share of enrollment among consumers."¹³³ The GAO finds that market concentration generally has increased in the nongroup market (the individual market overall, including the exchanges), from 2011 through 2022. Focusing on the exchanges, market concentration increased from 2015 through 2020, when all 51 individual exchange markets were concentrated, per the definition above. This number has decreased slightly since then, and as of 2022, 47 individual exchange markets were concentrated. As shown in Figure 4, other private health insurance markets were also concentrated in 2022 (i.e., the large group market in 43 states, the small group in 47 states, and the individual market overall in 35 states). Factors affecting market concentration are discussed below.

Figure 4. Private Health Insurance Market Concentration in the Individual Exchanges and Other Markets, 2022

Source: CRS illustration of data from the Government Accountability Office (GAO), Private Health Insurance: Market Concentration Generally Increased from 2011 Through 2022, November 2024, at https://www.gao.gov/products/gao-25-107194. See Table 1 in this GAO report for these 2022 as well as prior year data. Notes: Counts include the 50 states and the District of Columbia. The individual health insurance market (nongroup market) includes the individual exchanges. And per GAO, "Where multiple issuers in a state shared a parent company, we aggregated the individual issuers to the parent company level. We calculated market share using covered life-years, which measure the average number of lives insured, including dependents, during the reporting year." See GAO report for methodology, additional details, and prior year data.

Market concentration is affected by insurer entrances and exits in a given market, and the related factors discussed earlier in this section. It is also affected by market consolidation, including when one insurance company merges with or purchases another insurance company.¹³⁴ Health insurance market concentration and consolidation may have implications for insurers (e.g., in terms of their contract negotiating power with healthcare providers) and implications for consumers (e.g., in terms of plan choices and costs). However, insurer-provider interactions and health insurance premiums are also affected by numerous other factors. ¹³⁵

There are several ways to measure the health insurance options that consumers have. As discussed above in this section, there are counts of insurer participation (how many insurers are offering plans) and insurer concentration (insurers' market share of enrollment). There are also counts of the number of plans available in a market, because a given insurer might offer one or multiple plan options. Per the aforementioned CMS analysis of the 31 FFE and SBE-FP exchanges in PY2025, there are an average of 7.3 QHP issuers—and an average of 100 QHPs—available to exchange consumers per county.¹³⁶

Agency concerns about "choice overload" have contributed to recent regulatory requirements regarding "standardized plans" and limitations on non-standardized plans, discussed earlier in this report.¹³⁷

SHOP Exchanges

Eligibility and Enrollment

Certain small businesses are eligible to use the SHOP exchanges. For purposes of SHOP eligibility, a small business, or small employer, is generally an employer with not more than 50 employees.¹³⁸ States also may define small employer as having not more than 100 employees–four states do.¹³⁹ As of 2017, all states have the option to allow large employers to use SHOP exchanges, as well, but no states have done so.¹⁴⁰

SHOP eligibility also depends on an employer having at least at least one common-law employee.¹⁴¹ This means, for example, that a person who is self-employed and who has no employees would not be eligible for the SHOP exchange (although they could purchase coverage in the individual exchange, if they meet the other eligibility requirements). In addition, per the definition of common-law employee, neither the business owner nor their business partner(s) nor their spouse or family members (even if involved in the business) count as an employee for purposes of SHOP eligibility.

To participate in a SHOP exchange, a small business must offer coverage to all of its full-time employees, which, for purposes of SHOP eligibility, means those employees working 30 or more hours per week on average.¹⁴² The business may, but is not required to, offer coverage to part-time or other employees, and/or to the spouses and dependents of any employees offered coverage.¹⁴³ Employees and their enrolling family members must meet the same eligibility requirements that apply in the individual exchanges.

Enrollment Periods

Enrollment in a SHOP exchange is not limited to a specified OEP, except in certain circumstances.¹⁴⁴ Such circumstances aside, a SHOP exchange must allow employers to enroll any time during a year, and the employer's plan year must consist of the 12-month period beginning with the employer's effective date of coverage.¹⁴⁵ Whereas plans sold in the individual exchanges generally align with the calendar year, plans sold in the SHOP exchanges need not (thus, statutory or regulatory provisions affecting the SHOP exchanges may refer to "plan years beginning in" a given year).

There are SEPs for SHOP exchange coverage. Some of the SEPs for the SHOP exchanges are the same as in the individual exchanges.¹⁴⁶

Enrollment Processes and Options

For an employee to obtain coverage through a SHOP exchange, a SHOP-eligible employer must select one or more plan options on the SHOP exchange for its employees to choose from.¹⁴⁷ Then, employees review their employer's plan option(s) and enroll if they choose. The process of comparing and enrolling in coverage depends partially on a state's SHOP exchange type:

• In states with FF-SHOPs (i.e., states with SHOP exchanges using the federal HealthCare.gov platform), employers determine their SHOP eligibility and can browse plan options on HealthCare.gov, but they need to work directly with a SHOP-registered agent, broker, or insurer to purchase coverage.¹⁴⁸ This is sometimes called SHOP direct enrollment, and it has been the only option in such states since plan years beginning in 2018. Previously, employers and employees could purchase SHOP coverage on HealthCare.gov or via direct enrollment. HHS finalized this change in the 2019 Payment Notice, citing generally low employer participation in the SHOP exchanges and decreasing insurer participation (both further discussed below in this section).¹⁴⁹
• States administering their own SB-SHOPs initially were allowed to use a SHOP direct enrollment approach, due to early difficulties some states had in getting their SHOP exchange websites online.¹⁵⁰ As of April 2016, HHS indicated SB-SHOPs would need to implement online portals in time for plan years beginning in 2019.¹⁵¹ However, when HHS transitioned HealthCare.gov SHOP exchanges to direct enrollment (see previous bullet), HHS also announced SB-SHOPs had the option of retaining or returning to a direct enrollment approach or maintaining enrollment sites if they had created them. For PY2025, of the 16 SB-SHOP states with medical plans offered, 11 are using SHOP direct enrollment approaches only.¹⁵²

Besides SHOP exchange website enrollment versus direct enrollment options, a significant factor affecting enrollment processes is whether any insurers are offering plans in that state's SHOP exchange. For PY2025, there are no insurers offering medical plans in SHOP exchanges in more than half of states.¹⁵³ In such states, the federal or state SHOP web page instructs users to work directly with an agent, broker, or insurer to obtain coverage in the small-group market off-exchange.

See Table A-1 for more information on SHOP exchange plan availability and enrollment methods, by state.

Enrollment Data

Unlike individual exchange enrollment data, SHOP exchange enrollment data are not released annually. However, CMS estimated that there were approximately 27,000 small employers and 233,000 employees using the SHOP exchanges across the country in January 2017.¹⁵⁴ CMS previously estimated 10,700 active small employers and 85,000 employees in the SHOP exchanges as of May 2015.¹⁵⁵

According to a 2019 GAO report that included 2016 SHOP exchange enrollment data for 46 states,

As a proportion of the overall small-group market, SHOP exchanges in most states had little enrollment—that is, typically less than 1 percent of the overall small-group market ... The District of Columbia, Rhode Island, and Vermont were the only states where the SHOP exchange was more than 3 percent of the overall small-group market. The District of Columbia and Vermont require all small-group plans to be purchased through the state's SHOP exchange.¹⁵⁶

In addition, District of Columbia SHOP enrollment includes congressional Members and staff, as discussed below.

Congressional Member and Staff Enrollment via the DC SHOP Exchange

Per the ACA, Members of Congress and their designated staff are required to obtain their health insurance through the exchanges in order to receive a government contribution (i.e., their employer's contribution) for their coverage.¹⁵⁷ This includes designated staff working in a Member's home state.¹⁵⁸ As implemented, they purchase coverage through the District of Columbia's SHOP exchange, DC Health Link.

Congressional offices are not eligible for the small business tax credit (discussed below), and congressional Members and staff obtaining coverage through the SHOP are not eligible for the PTC and CSRs that are available to individuals who enroll in coverage offered on the individual exchanges (see "Premium Tax Credits and Cost-Sharing Reductions").

Benefits, Premiums, and Cost Sharing

The information earlier in this report on certain federal requirements that apply to benefits, premiums, and cost sharing in the individual exchanges (e.g., coverage of the EHB, minimum AV levels), generally applies in the SHOP exchanges, as well.¹⁵⁹ See CRS Report R45146, Federal Requirements on Private Health Insurance Plans for other requirements applicable to the nongroup and small-group markets, on and off the exchanges.

Employers who offer coverage through the SHOP exchange, like employers who offer coverage otherwise, may choose to subsidize their employees' premiums. This means the employer pays for part of their employees' premiums.

CRS is not aware of HHS or other organizations' reports on plan features specific to the SHOP exchanges, but certain CMS PUFs on the federal and state exchanges include data on SHOP plans.¹⁶⁰

Small Business Health Care Tax Credit

Certain small businesses are eligible for the small business health care tax credit (SBTC).¹⁶¹ In general, this credit is available only to small employers with 25 or fewer full-time-equivalent (FTE) employees that purchase coverage through SHOP exchanges and contribute at least 50% of premium costs for their full-time employees.¹⁶² For the purpose of this tax credit, full-time employees are those who work an average of 40 hours per week, whereas for the purpose of SHOP eligibility, full-time employees are those who work an average of 30 hours per week.¹⁶³

The intent of the credit is to assist small employers with the cost of providing health insurance coverage to employees. The credit is available to eligible small businesses for two consecutive tax years (beginning with the first year the small employer purchases coverage through a SHOP exchange).

In states with no insurers offering plans through the SHOP exchange, certain eligible employers still may be able to receive the credit. If they received their first year's credit by offering coverage through the SHOP exchange and there were no SHOP plans available the next year, they may receive their second consecutive year's credit with a plan purchased off-exchange.¹⁶⁴

The maximum credit is 50% of an employer's contribution toward premiums for for-profit employers and 35% of employer contributions for nonprofit organizations. The full credit is available to employers that have 10 or fewer FTE employees who have average taxable wages of $33,300 or less for taxable years beginning in 2025.¹⁶⁵ In general, the credit is phased out as the number of FTE employees increases from 10 to 25 and as average employee compensation increases to a maximum of two times the limit for the full credit.¹⁶⁶

The SBTC is different than the business expense deduction that employers can claim for the costs of the health insurance premiums they subsidize. If an employer qualifies for the SBTC, they can claim the deduction for the premiums that exceed the credit amount. If an employer doesn't qualify for the SBTC, they can claim the deduction.

Employees who enroll in a SHOP plan do not receive the SBTC, nor are they eligible for the financial assistance available to certain consumers who purchase coverage on the individual exchanges (see "Premium Tax Credits and Cost-Sharing Reductions").

The IRS has published information on the number of SBTCs filed in tax years 2010-2016.¹⁶⁷ For 2016, the IRS indicates that 6,952 employers claimed the SBTC.¹⁶⁸

Provider Networks

Exchange requirements related to network adequacy and essential community providers apply in the SHOP exchanges as in the individual exchanges.¹⁶⁹

Also as for the individual exchanges, certain CMS PUFs include limited data on SHOP QHPs' provider networks—for example, plans' provider network URLs and indications of whether a plan has a nationwide network.¹⁷⁰

Insurer Participation

As stated above, there are no insurers offering SHOP medical plans in more than half of states. Some of the factors affecting insurer participation in the individual exchanges also may affect insurer participation in the SHOP exchanges.¹⁷¹ For example, just as in the nongroup market, there were new federal requirements imposed by the ACA on plans sold in the small-group market (including the SHOP exchanges), and insurers in the small-group market were or are participating in risk-mitigation programs.

There are also factors unique to the SHOP exchanges that may have affected insurer participation. For example, in December 2016 rulemaking, effective January 2018, HHS removed a requirement that in order to participate in a federally facilitated individual exchange, an insurer with more than 20% of the small-group market in that state also would have to participate in that SHOP exchange. In the rule, HHS acknowledged the elimination of this requirement likely would reduce insurer participation, and thus employer and employee participation, in affected SHOP exchanges.¹⁷² Other issues also have been discussed as affecting employer and/or insurer participation in the SHOP exchanges, such as delays in setting up online enrollment capabilities when the SHOPs were being established, and the limited duration and administrative complexity of the small business tax credit.¹⁷³

Exchange Enrollment Assistance

Navigators and Other Exchange-Based Enrollment Assistance

Federal statute and regulations require exchanges to carry out certain consumer outreach and assistance functions. These functions generally include in-person and other forms of outreach and assistance.¹⁷⁴

Each exchange must have a Navigator program.¹⁷⁵ Navigators are entities whose employees and/or volunteers

• conduct public outreach and education activities about the exchanges and QHPs;
• provide impartial information to consumers (including small employers and their employees) about their insurance options;
• help consumers access individual and SHOP exchange coverage, exchange financial assistance, and/or public program coverage (e.g., Medicaid or CHIP) if they qualify;
• refer consumers to any applicable consumer assistance programs as needed, such as state agencies that assist consumers with questions or complaints about their plans; and
• comply with other Navigator requirements, as specified.

States may impose additional Navigator requirements, as long as "such standards do not prevent the application of the provisions of Title I of the Affordable Care Act."¹⁷⁶

Navigators are funded by the exchanges, via grants (federal or state, depending on exchange type) provided to qualifying organizations. There is no specific appropriation or statutorily required funding level for the Navigator program, and HHS funding for the Navigators in FFEs has varied over the years.¹⁷⁷ States with SBEs and SBE-FPs fund their own Navigator programs.

In August 2024, HHS announced $100 million per year in grants to 44 Navigator organizations in the 28 FFE states as of PY2025. Per this funding announcement, this is "part of a commitment of up to $500 million over five years" (August 2024-August 2029).¹⁷⁸ This is longer than prior Navigator grant periods, which have ranged from one to three years. In February 2025, CMS announced a reduction in this funding to $10 million per year, as of the 2026 grant period that starts in August 2025.¹⁷⁹ More information on current and prior year Navigator grants in FFE states is available on the CMS website.¹⁸⁰

For FFE states, certain Navigator eligibility requirements were changed in the 2019 and 2020 Payment Notices. For example, Navigator entities were no longer required to maintain a physical presence in their exchange service area, and it became optional rather than mandatory for Navigators to provide assistance on certain post-enrollment topics (e.g., eligibility appeals, PTC reconciliation, and how to use health coverage).¹⁸¹ In the 2022 Payment Notice "Part 3," HHS again required that FFE Navigators provide assistance on the post-enrollment topics but did not reverse the other changes.¹⁸² Other Navigator program changes have been made via rulemaking over time.¹⁸³

Exchanges also must have a Certified Application Counselor (CAC) program.¹⁸⁴ CAC staff and/or volunteers also provide impartial information to consumers about their insurance options and can assist them in applying for individual and SHOP exchange coverage, exchange financial assistance, and/or public program coverage (e.g., Medicaid or CHIP) if they qualify. They do not necessarily provide public outreach and education or perform many of the other functions that Navigators do. CACs are not exchange-funded in FFE states and are not required to be exchange-funded in other states.

Although Navigator and CAC assisters can help consumers understand their options, assisters may not advise consumers on which plan to select, or complete the enrollment application for consumers. Once a consumer chooses a plan, the assisters may help as the consumer enrolls in coverage (including educating them about the enrollment process).¹⁸⁵ Neither Navigators nor CACs may be health insurers or take compensation for selling health policies from insurers or consumers.¹⁸⁶

Besides facilitating the above assistance programs, exchanges must provide for the operation of a call center and maintain a website (e.g., HealthCare.gov) that meets certain informational requirements.¹⁸⁷ Exchanges also provide consumer information and outreach via mail, radio or television ads, and/or other methods. Overall, exchanges' consumer outreach efforts and materials must meet certain standards regarding accessibility for individuals with disabilities or with limited English proficiency.¹⁸⁸

Brokers, Agents, and Other Third-Party Assistance Entities

Pursuant to state law, exchanges also may certify insurance agents, brokers, and/or web-brokers to help consumers obtain coverage through exchanges.¹⁸⁹ These entities are not funded by the exchanges; they are compensated by the health plans that they help sell.

According to the National Association of Insurance Commissioners (NAIC), individuals who want to "sell, solicit or negotiate insurance in the United States must be licensed as a 'producer'" in the state in which they do business.¹⁹⁰ The term producer includes insurance agents and brokers. Agents may sell plans for one insurance company or they may represent more than one company, and they may receive salary and/or commission income. Brokers "work on behalf of the customer and are not restricted to selling policies for a specific company but commissions are paid by the company with which the sale was made."¹⁹¹ Because brokers do not represent insurers, they must work through an agent or other insurance company representative to purchase a policy for a customer. In federal exchange regulations, the term "agent or broker" is defined as "a person or entity licensed by the State as an agent, broker, or insurance producer."¹⁹²

As permitted by states, and after meeting exchange requirements, agents and brokers may assist consumers in comparing and enrolling in an exchange QHP.¹⁹³ It is not apparent that any states have disallowed agents and brokers from participating in their exchange.

In all exchange types, agents and brokers may help consumers enroll via the "Marketplace pathway" as shown here. In the FFEs and SBE-FPs (and in SBEs if available), agents and brokers may also help consumers via of the other following pathways:

• Marketplace Pathway: Completing an eligibility application, comparing plans, and enrolling in a plan via HealthCare.gov or the SBE website.
• Direct Enrollment [DE] or "Classic Direct Enrollment" Pathway: Completing an eligibility application via HealthCare.gov, then redirecting to an approved DE website to compare plans and enroll in an exchange plan.
• "Enhanced Direct Enrollment" [EDE] Pathway: Completing all steps, including eligibility application, plan comparison, and enrollment, directly on the approved EDE website without needing to be redirected to HealthCare.gov (in most cases).¹⁹⁴

Agents or brokers using the DE or EDE pathways may use their own approved websites or contract with approved web-brokers, including direct enrollment technology providers that operate exchange DE and EDE websites.¹⁹⁵ In some cases, health insurance issuers and web-brokers may also offer DE or EDE to consumers without the assistance of agents or brokers.

If certified to sell exchange plans, these entities (e.g., agents, brokers, and web-brokers) must follow rules related to plan marketing, display of plan information, and enrollment assistance, among other things. This includes providing consumers "with correct information, without omission of material fact," regarding the exchanges, QHPs, and subsidies, and "refrain[ing] from marketing or conduct" that is misleading, coercive, or discriminatory, as specified.¹⁹⁶ In addition, web-broker websites must provide consumers information and access to all QHPs that would be available to them on the exchange website, and comply with rules about whether and how to promote certain QHPs over others.¹⁹⁷ Unlike the exchange websites and exchange Navigators and other assistors, however, these entities may also assist consumers with enrolling in plans that are not available on the exchanges, subject to rules about displaying non-exchange plans separately from QHPs, displaying a disclaimer provided by HHS, and limiting the marketing of non-QHPs during exchange open enrollment periods.¹⁹⁸

The regulatory requirements for exchange agents, brokers, and web-brokers have previously applied primarily in the FFEs, with some extended to the SBE-FPs. The 2025 Payment Notice also applied certain of these requirements in the SBEs.¹⁹⁹

Insurers that offer QHPs are also subject to certain requirements related to marketing and plan display. Regulations also specify that a QHP issuer is responsible for its own compliance and the compliance of any "delegated or downstream entities" with all applicable federal exchange standards.²⁰⁰ The relevant definitions of delegated and downstream entities include agents and brokers.

Issuers of nongroup plans, including QHPs, are also required to disclose to enrollees any direct or indirect compensation provided to agents or brokers associated with enrolling individuals in such coverage.²⁰¹ Insurers must annually report similar information to HHS.

In SHOPs in which small businesses cannot purchase SHOP plans via the exchange website, or in states where there are no insurers offering SHOP plans, the SHOP exchange websites direct employers to agents, brokers, or insurers who can help them enroll in SHOP plans and/or small-group plans available off-exchange.²⁰² These options may be referenced as "SHOP direct enrollment" but such enrollment processes may be different than the DE and EDE pathways described above.

Exchange Funding

Initial Grants for Exchange Planning and Establishment

The ACA provided an indefinite (i.e., unspecified) appropriation for HHS grants to states to support the planning and establishment of exchanges.²⁰³ For each fiscal year (FY) between FY2011 and FY2014, the HHS Secretary determined the total amount that was made available to each state for exchange grants. However, none of these exchange grants could be awarded after January 1, 2015, and exchanges were expected to be self-sustaining beginning in 2015.²⁰⁴

Ongoing Federal Funding for Exchange Operations

Information on prior and proposed federal funding for exchange operations can be found in the annual President's budget requests. For example, the FY2025 President's budget request provided federal funding amounts for FY2023 and FY2024, as well as the proposed FY2025 amounts.

A given budget request typically provides an update on the amount that was enacted for the prior year, but temporary funding under a "continuing resolution" (CR) was in effect at the time that the FY2025 budget request was being formulated.²⁰⁵ Thus, the amount listed for FY2024 was based on an annualized estimate under that temporary funding and not the amount that was ultimately enacted for FY2024. Federal government funding for the operation of the exchanges was $2.44 billion for FY2023 (final), $2.47 billion for FY2024 (CR), and requested to be $2.34 billion for FY2025.²⁰⁶ See Appendix C, which includes these funding levels by source, as well as estimated and prior year federal funding for the exchanges by activity (e.g., information technology, Navigator grants), as provided by CMS in recent annual budget justifications to Congress.

Much of this federal funding is specific to FFEs. For example, the federal government funds the Navigator program only in states with FFEs. Some of the federal funding, particularly in terms of information technology and the call center, also is applicable to SBE-FPs because these state-based exchanges use the federal HealthCare.gov platform. CMS performs and funds some functions for all exchanges, including SBEs, such as "verifying eligibility data for financial assistance through the Marketplace or other health insurance programs, including Medicaid and the Children's Health Insurance Program (CHIP)" and "ensuring proper payment of financial assistance" for eligible consumers.²⁰⁷

The premiums of the plans purchased through the exchanges are covered by enrollees' premium contributions and, in some cases, are subsidized by the federal government (i.e., via PTCs). The PTCs are financed through a permanent appropriation.²⁰⁸ These tax expenditures are beyond the scope of this report and are not included in the funding totals discussed in this section.

Funding Sources for Federal Exchange Spending

User Fees Collected from Participating Insurers

Exchanges may generate funding to sustain their operations, including by assessing fees on participating health insurance plans.²⁰⁹

To raise funds for the exchanges it administers and/or provides a web platform, HHS assesses a monthly fee on each health insurance issuer that offers plans through an FFE or SBE-FP. The fee is a percentage of the value of the monthly premiums the insurer collects on exchange plans in a given state, and HHS updates the percentage each year through rulemaking. For example, the user fee rates in PY2025 are 1.5% of total monthly premiums for issuers in FFEs and 1.2% of total monthly premiums for issuers in SBE-FPs. See Figure 5 below.

These user fee amounts are allowed to fund only federal activities or functions specific to the FFE and SBE-FP exchanges; the user fees cannot fund federal activities that serve all exchanges (including SBEs).²¹⁰ The fees are lower for insurers in SBE-FP states because the federal government performs fewer functions for those exchanges than for FFEs, but those insurers also may be subject to exchange participation fees levied by the states. Most of the total federal spending on exchange operations is funded by these user fees, as shown in Table C-1. Other funding sources, including for federal activities applicable also to SBEs, are discussed in the next section.

In prior years, user fees were also assessed on insurers participating in SHOP exchanges. However, HHS announced in the 2019 Payment Notice that as of plan years beginning on or after January 1, 2018, the fees would no longer be assessed on insurers participating in FF-SHOPs and SB-FP-SHOPs, due to the reduced functionality of the federal SHOP website also announced in that rule.²¹¹

Figure 5. Federal User Fees for Insurers Participating in Specified Types of Individual Exchanges, by Plan Year (fee is the stated percentage of the value of monthly premiums collected by insurer on exchange plans)

Source: Congressional Research Service analysis of annual payment notice federal rules cited in Table D-1, as well as Internal Revenue Service, "Rev. Proc. 2013-25," May 2, 2013, https://www.irs.gov/pub/irs-drop/rp-13-25.pdf. For example, the Plan Year (PY) 2025 user fees were finalized in the 2025 Payment Notice, April 2024, starting at https://www.federalregister.gov/d/2024-07274/p-1240. Notes: FFE = federally facilitated exchange; PTC = premium tax credit; SBE = state-based exchange; SBE-FP = state-based exchange using the federal information technology (IT) platform. See "Types and Administration of Exchanges" for discussion of exchange types. See "Premium Tax Credits and Cost-Sharing Reductions" for information about the temporarily enhanced PTCs. SBEs' assessment of user fees, if any, varies, as discussed below in this report. The 2026 Payment Notice, finalized January 15, 2025, established two possible sets of user fee rates for PY2026: first, 2.5% for FFE issuers and 2.0% for SBE-FP issuers if the temporarily enhanced PTCs expire at the end of 2025, as provided by current law. Alternately, if the enhanced PTCs are extended through PY2026 at current or higher levels by July 31, 2025, the 2026 user fees will be 2.2% for FFE issuers and 1.8% for SBE-FP issuers. The rule did not specifically address the user fee with regard to potential extensions of the enhanced PTC that may occur after July 31, 2025. See https://www.federalregister.gov/d/2025-00640/page-4487.

Other Federal Funding Sources

Besides the user fees collected from participating insurers, federal funding for the exchanges (including for federal activities related to all exchanges, including SBEs) largely comes from discretionary appropriations for program management and program integrity. Within these appropriations (e.g., for CMS Program Management), Congress has not required any particular level of spending on the exchanges. There is also a risk-adjustment user fee, related to the risk-mitigation program briefly mentioned earlier in this report.²¹² There is currently no mandatory HHS appropriation for exchange activities.²¹³ An overview of recent and currently proposed federal funding sources for exchange operations is in Table C-1.

State Financing of the Exchanges

States with SBEs finance their own exchange administration. States with SBE-FPs also finance the costs associated with the exchange functions they administer (whereas the federal user fee is assessed on insurers in FFE/SBE-FP states to finance federally run functions such as the IT platform, as discussed above in this section).

States may finance their exchanges by collecting user fees from participating insurers, as the federal government does. In addition, states may use other state funding to support their exchanges. CRS is not aware of comprehensive estimates of total or state-level spending on SBE and SBE-FP exchanges, but one stakeholder group analysis includes information on these exchanges' user fees and other financing mechanisms.²¹⁴

American Rescue Plan Act Grants for Exchange Modernization

Section 2801 of the ARPA provided for new grants to be awarded to health insurance exchanges "for purposes of enabling such Exchange to modernize or update any system, program, or technology utilized by such Exchange to ensure such Exchange is compliant with all applicable requirements." The HHS Secretary was authorized to determine specified aspects of the grant funding application process. Eligibility for these grants was limited to SBEs and SBE-FPs. The legislation specified that FFEs were not eligible through its reference to exchanges established under 42 U.S.C. Section 18041(c).

For this grant program, $20 million was appropriated for FY2021, out of Treasury funds not otherwise appropriated. The funding was to remain available until the end of FY2022. In September 2021, CMS awarded $20 million in grants to 21 SBEs and SBE-FPs that applied for them.²¹⁵

See "Premium Tax Credits and Cost-Sharing Reductions" regarding other ARPA provisions relevant to the exchanges and the plans sold in them.²¹⁶

Appendix A. Exchange Information by State

As discussed in this report, the major types of exchanges in terms of state versus federal administration are state-based exchanges (SBEs), federally facilitated exchanges (FFEs), and state-based exchanges using a federal platform (SBE-FPs). For plan year (PY) 2025, there are 28 FFEs, 20 SBEs, and 3 SBE-FPs.

A few states have changed approaches one or more times (e.g., initially worked to create an SBE but then switched to an SBE-FP or FFE model). Changes in the first few years varied in terms of whether the state moved toward more or less federal involvement, but in several cases, a state transitioned from a fully state-based approach to an SBE-FP (i.e., transitioned toward more federal involvement). Recent and ongoing transitions generally are in the direction of less federal involvement.

SHOP exchanges may be federally facilitated (FF-SHOP) or state-based (SB-SHOP).²¹⁷ For PY2025, there are 28 FF-SHOPs and 22 SB-SHOPs. One state (Hawaii) is exempted from operating a SHOP exchange. However, in more than half of all states, no insurers are offering medical plans in the SHOP exchange, meaning there is effectively no SHOP exchange there.

For PY2025, most states' individual and SHOP exchanges are administered in the same way (i.e., both state-based or both federally facilitated). However, a few states (Arkansas, Hawaii, Illinois, and Oregon) have different approaches for their individual and SHOP exchanges. Some resources refer to this as a bifurcated approach.

Table A-1 shows individual exchange types by state, with information on past changes in individual exchange types and changes underway. It also shows SHOP exchange types by state and provides details on SHOP plan availability and enrollment method.

Appendix B. Types of Plans Offered Through the Exchanges

In general, health insurance plans offered through exchanges must be qualified health plans (QHPs).²¹⁸ See "Qualified Health Plans" in this report regarding QHP certification requirements.

A QHP is the only type of comprehensive health plan an exchange may offer, but QHPs may be offered outside of exchanges, as well. Besides general QHPs, certain QHP variations are also (or may be) available in a given exchange, including standardized plans, child-only plans, catastrophic plans, consumer operated and oriented plans (CO-OPs), and multistate plans (MSPs). Stand-alone dental plans (SADPs) are the only non-health plans that are offered in the exchanges.

Appendix C. Exchange Funding Details from CMS Budget Justifications

The Centers for Medicare & Medicaid Services (CMS) in the U.S. Department of Health and Human Services (HHS) is the federal agency responsible for administering the health insurance exchanges. In support of the President's annual budget request, CMS, like other agencies, produces a performance budget, also called a budget justification. Actual spending for the proposed budget year depends on the availability of appropriations, among other factors. However, the narratives and tables in each year's budget document are also useful in understanding prior year funding. For example, per the FY2025 CMS budget justification, federal funding for the operation of the exchanges was $2.44 billion for FY2023 (final), $2.47 billion for FY2024 (continuing resolution, or CR), and requested to be $2.34 billion for FY2025. See Table C-1.

The exchanges are largely funded by user fees assessed on the insurers that offer plans in federally facilitated exchanges (FFEs) and state-based exchanges using the federal platform (SBE-FPs). In addition to these user fees, funding comes from discretionary appropriations to the CMS Program Management account, risk-adjustment user fees, and appropriations to the Health Care Fraud and Abuse Control (HCFAC) account, among other sources. Within these annual appropriations, Congress has not required any particular level of spending on the exchanges. Table C-1 displays federal exchange funding by source, by year.

Provisions in annual appropriations acts require CMS to provide, in its budget justification for each fiscal year, "information that details the uses of all funds used by the Centers for Medicare & Medicaid Services specifically for Health Insurance Exchanges for each fiscal year since the enactment of the ACA and the proposed uses for such funds [for the upcoming fiscal year]."²¹⁹ In its annual budget justifications, CMS generally has provided a "Health Insurance Marketplaces Transparency Table" that tracks federal funding for multiple exchange activities, but such a table was not included in the FY2025 CMS budget justification. This may be because temporary funding under a CR, rather than a full-year appropriation, was in effect at the time that the FY2025 budget request was being formulated.²²⁰ However, each CMS budget justification—including for FY2025—also includes narrative information about federal funding for the same or similar activities. See Table C-2 for federal exchange funding by activity, by year.

See "Exchange Funding" in this report for more information. Find current and prior year CMS budget justifications at CMS, "Performance and Budget," at https://www.cms.gov/About-CMS/Agency-Information/PerformanceBudget.

Appendix D. Additional Resources

HHS "Notice of Benefit and Payment Parameters" by Year

The "Notice of Benefit and Payment Parameters," also called the "Payment Notice," is a rule published annually by the Department of Health and Human Services (HHS). It addresses the exchanges and certain other private health insurance topics. It includes annual updates such as changes to insurer user fee amounts, and policy changes such as modified eligibility requirements for the Navigator program. The rule is titled according to the upcoming plan year that it addresses. For example, the 2021 Payment Notice was finalized in May 2020, with changes applicable to the 2021 plan year (which is generally the calendar year).

Final and proposed Payment Notices can also be found by searching "Notice of Benefit and Payment Parameters" at www.federalregister.gov.

Other Federal Resources

Selected additional resources are listed below.