Amid health insurance unpredictability, off-exchange plans offer a secret path to stability

There are storm clouds on the horizon for the health insurance market.

As has been widely covered, the "One Big Beautiful Bill Act" passed by Congress earlier this year contained a big disappointment for those who buy their insurance on the individual market: The legislation fails to extend the enhanced premium tax credits established by the American Rescue Plan Act (ARPA) in 2021 and extended through the Inflation Reduction Act of 2022. Without further action, the tax credits will expire at the end of 2025.

If those tax credits are allowed to expire, the cost of health insurance will increase both for those who purchase their own coverage on the individual exchange and those who receive an allowance from their employer to do the same. With the expiration of premium tax credits, young and healthy employees may choose to drop their coverage. This will cause the market to contract, shrinking the risk pool and increasing the likelihood that those with health coverage will have high usage; those who need to use their insurance will keep it regardless of the price increase.As a result, the cost of insurance will increase across the board. Companies who provide coverage through an HRA (QSEHRA for qualified small employers; ICHRA for everyone else) will have to choose whether to increase the allowance they provide their employees or pass on the increased expenses.

And the problem doesn't just extend to the individual market. Some industry observers expect group health insurance rates to increase as much as individual rates, if not more. According to a recent survey from Mercer, more than half of large employers (those with 500 or more employees) "say they are likely or very likely to make plan design changes in 2026 that would shift more cost to employees, such as raising deductibles or out-of-pocket maximums." A recent survey conducted by the Business Group on Health projected that health care costs in 2026 will increase by a median of 9%; Companies that come to our platform at Take Command are facing substantially higher renewals.

As we approach open enrollment, most employers are bracing for impact. However, there may be an alternative. Off-exchange plans — a less common way to purchase coverage directly from an insurance company or licensed broker — currently look like they'll see significantly smaller increases than group coverage and plans on the individual exchange.

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What are off-exchange plans?

Of the millions of Americans who purchase health insurance on the individual market, most do so through a government-run exchange like healthcare.gov or a similar state-specific platform. These are "on-exchange" plans, and they're eligible for government subsidies like premium tax credits and cost-sharing reductions.

"Off-exchange" plans are exactly what they sound like — they're purchased directly from a broker or an insurance company, bypassing the exchange altogether. Off-exchange plans aren't eligible for government subsidies; however, individual buyers can often find off-exchange plans for the same price as a nearly identical plan on the exchange.

Typically, the differences between on-exchange and off-exchange plans would be minimal. Some employers default to on-exchange plans due to convenience: Several ICHRA administrators only allow employees to purchase plans on the exchange.

But with premium tax credits set to expire, the differences between on-exchange and off-exchange plans become much more relevant. Recent industry analysis suggests that off-exchange plans will see much smaller increases in terms of premiums.

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Finding stability off exchange

At Take Command, we recently analyzed the proposed rate increases in the ten largest U.S. states. The differences between on-exchange and off-exchange are striking.

Off-exchange plans won't be impacted by the expiration of premium tax cuts, so it makes sense that they'll see less volatile increases when compared with on-exchange plans. While preliminary rates are subject to change, in every state except Florida, the smallest rate increases are observed in the off-exchange plans. In every state except Georgia, off-exchange plans can be seen to increase less than the expected national average. These are evolving, incomplete data sets, but based on what we see today, the off-exchange view is encouraging. 

What does this difference mean in practice for American insurance buyers? For individuals, it will be worth taking the extra steps to compare plans on- and off-exchange. The result could be significant cost savings — or better coverage for the same price.

For companies that provide coverage through ICHRA, it will be worth finding an ICHRA administrator that allows employees to purchase off-exchange plans. Platforms that only include plans on the ACA marketplace will prevent buyers from seeing the entire slate of options and could end up costing them money or coverage.

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In the next couple of months, expiring tax credits and rate increases are going to put companies in an extremely difficult position. Employers want to do right by their employees and provide them with competitive benefits, but no company can afford to take on a plan that will break their balance sheet.

This is a moment for companies and their HR leaders to focus on optionality: Taking steps to ensure that employees have the maximum amount of choices and avoiding group plans and HRA administrators that will lock them into higher costs. By focusing on plan variety — including the wide range of plans available off-exchange — companies can help their employees find affordable health insurance with below average increases in a rapidly changing and potentially shrinking individual market.