Texas Health Insurance Marketplace: How It Works

If you are a Texan who does not get health insurance through a job, Medicare, or Medicaid, the Health Insurance Marketplace is where you buy a plan and find out whether you qualify for help paying for it. Texas does not run its own exchange, so everything happens on HealthCare.gov. This guide explains how the Marketplace works for Texans, how financial help is calculated in plain terms, what the Medicaid coverage gap means for low-income adults, when you can enroll, and how a licensed agent can help without charging you.

Key takeaways

• Texas uses the federal Marketplace at HealthCare.gov. There is no separate Texas exchange.
• Open enrollment has opened November 1 in recent years. Deadlines can change, so confirm the current dates before you plan.
• Premium tax credits lower your monthly premium based on your expected income and household size. Cost-sharing reductions lower deductibles and copays on Silver plans.
• Texas has not expanded Medicaid, so some low-income adults fall into a coverage gap with no subsidized option.
• Marketplace-registered agents enroll you in the same plans at the same price, and their help is free.

Texas uses HealthCare.gov

Every state either runs its own marketplace or uses the federal platform. Texas is a federal-platform state, which means:

• You apply and enroll at HealthCare.gov or by phone through the Marketplace call center.
• Plans sold on the Marketplace are approved by the Texas Department of Insurance and must cover the ten essential health benefits, including hospital care, prescriptions, maternity care, and mental health.
• No plan on the Marketplace can turn you down or charge you more because of a pre-existing condition.

Texas is consistently one of the largest Marketplace states by enrollment, which means insurers compete for customers in the major metros. In Houston, Dallas-Fort Worth, San Antonio, and Austin you will typically see several insurers, while some rural counties have fewer choices.

When you can enroll

Open enrollment is the annual window when anyone can sign up or switch. On HealthCare.gov it has opened on November 1 in recent years, with the close date and the cutoff for January 1 coverage varying. Because these dates can change, check HealthCare.gov or our open enrollment dates guide before you plan around them.

Outside open enrollment you can enroll only if you qualify for a Special Enrollment Period after a life event, such as losing job-based coverage, moving, getting married, or having a baby. You generally have 60 days from the event. Our guide to Special Enrollment Period qualifying life events explains each one.

Medicaid and the Children's Health Insurance Program (CHIP) accept applications all year. In Texas, CHIP and Children's Medicaid cover many children in working families even when the parents do not qualify.

How financial help works

The Marketplace offers two kinds of help. Both are calculated from the same application.

Premium tax credits

A premium tax credit reduces your monthly premium. The amount depends on your expected household income for the coverage year, the number of people in your household, and the cost of the benchmark Silver plan in your county. You can take it in advance each month or claim it when you file taxes. Most people take it in advance and then reconcile on their federal return, so an accurate income estimate matters.

The income ranges and formulas can change from year to year. Use the current figures on HealthCare.gov rather than a number you remember from a previous year.

Cost-sharing reductions

If your income falls in a lower range, you may also qualify for cost-sharing reductions, which lower your deductible, copays, and out-of-pocket maximum. They apply only if you pick a Silver plan. For many Texans who qualify, a Silver plan with cost-sharing reductions is a better deal than a Gold plan with a similar premium.

The Texas coverage gap explained

The Affordable Care Act assumed every state would expand Medicaid to cover adults with low incomes, and premium tax credits were designed to begin where that expanded Medicaid would end. Texas has not expanded Medicaid. As a result:

• Adults without dependent children generally cannot get Texas Medicaid regardless of income, unless they qualify through disability, pregnancy, or age.
• Parents can qualify for Texas Medicaid only at very low income levels.
• Marketplace premium tax credits generally start at the federal poverty level.

People whose income is below that level and who do not fit a Texas Medicaid category fall into the coverage gap: too little income for Marketplace subsidies, and not eligible for Medicaid. KFF tracks which states have expanded and which have not.

If you think you are in the gap, a few things are worth checking:

1. Your income estimate. Premium tax credits are based on expected income for the coverage year, not last year's. If you expect your income to rise, say so on the application. Estimate honestly; the credit is reconciled at tax time.
2. Household members. Children may qualify for CHIP or Children's Medicaid, and a pregnant household member may qualify for Medicaid.
3. Catastrophic plans. If you receive a hardship exemption, you may be able to buy a catastrophic plan with a low premium and a very high deductible.
4. Community health centers. Federally funded clinics across Texas charge on a sliding scale and can bridge the gap for primary care.

The Marketplace application screens for Medicaid and CHIP automatically, so apply even if you are unsure.

Plan types you will see in Texas

Every Marketplace plan belongs to a metal tier, which describes how you and the plan share costs on average. It says nothing about quality of care.

Within each tier, Texas plans are mostly HMOs and EPOs, which require you to stay in network except in emergencies, with fewer PPOs. Network size varies widely. In the big metros, one insurer may build its network around a specific hospital system, so a plan that looks cheap may not include your doctor.

What to check before you pick a plan

• Your doctors and hospital. Use the plan's provider directory, then call the office to confirm they accept that specific plan for the coming year.
• Your prescriptions. Check the plan's formulary and the tier each drug is on.
• Deductible and out-of-pocket maximum. These matter more than the premium if you use care.
• Network type. HMO, EPO, or PPO, and whether referrals are required.
• Whether the plan is on or off the Marketplace. Premium tax credits apply only to plans bought through HealthCare.gov.

For a step-by-step walkthrough of the application itself, see the ACA open enrollment guide.

Other options Texans ask about

• Employer coverage. If a job offers affordable coverage that meets minimum standards, you generally cannot get a premium tax credit, even if you decline the job plan.
• COBRA. Continuing an old employer plan is an option after a job loss, but a Marketplace plan with a tax credit is often cheaper. See health insurance when you lose your job.
• Short-term plans. Texas allows short-term, limited-duration plans. They are not Marketplace plans, do not have to cover pre-existing conditions or essential health benefits, and do not qualify for tax credits. Read the exclusions closely.
• Self-employed. Your income estimate is net profit after expenses. Our self-employed health insurance options guide covers the details.
• Turning 65. Once you are eligible for Medicare, Marketplace tax credits generally end, and you should transition to Medicare.

How a licensed agent helps

Agents and brokers who are registered with the Marketplace can help you apply, estimate income, compare plans, and enroll. They are paid by the insurance companies, so your premium and tax credit are identical whether you use an agent or not. Agents must get your consent before working on your application, and you can look them up in the Marketplace's Find Local Help tool and through the Texas Department of Insurance.

An agent is most useful when you want someone to check your doctors and drugs against every plan in your county, work out whether a Silver plan with cost-sharing reductions beats a Gold plan, or handle a mid-year income change. You can browse health insurance agents in Texas, including agents in Houston, Dallas, San Antonio, and Austin. Free application help is also available from Marketplace Navigators, who cannot recommend a specific plan but can walk you through the process.

Talk to a licensed agent for free

Health insurance agents are paid by the insurance carriers, so you pay nothing extra for their help, and your premium and subsidy are the same whether you enroll through an agent or by yourself. A licensed, Marketplace-registered Texas agent can check your doctors and prescriptions, help you estimate income correctly, and make sure you enroll before the deadline. When you are ready, you can find a licensed health insurance agent near you at no cost.