In addition to many market reforms that directly affect group health plans, the Affordable Care Act (ACA) required each state to establish, by January 1, 2014, a health insurance exchange (also known as a "marketplace") to assist individuals in purchasing qualified health plans (QHPs). ACA exchange coverage was intended to help individuals satisfy the related ACA requirement to maintain minimal health coverage (known as the "individual mandate") (see Practice Note, Affordable Care Act (ACA) Overview: Individual Mandate and Affordable Care Act (ACA) Toolkit). For states that chose not to implement their own exchange, the federal government was required to establish and operate an exchange in the state.

The ACA health insurance exchanges have been the topic of regulations and other guidance from the administrative agencies, on issues including:

Open enrollment for exchange-based coverage began in October 2013, although the launch of the federal government's exchange website was hindered by software crashes and resulting delays.

In June 2015, the US Supreme Court ruled that premium tax credits offered to subsidize coverage under the ACA health insurance exchanges (that is, under Section 36B of the Internal Revenue Code (26 U.S.C. § 36B)) are available in both states with a state-run exchange and those with a federal exchange (King v. Burwell, 576 U.S. 473 (2015); see Legal Update, Supreme Court Upholds ACA Subsidies).

Tax reform legislation enacted in December 2017 reduced to zero the payment for violating the ACA's individual mandate, effective beginning in 2019 (Tax Cuts and Jobs Act (TCJA), Pub. L. No. 115-97 (2017); see Legal Update, Tax Reform Is Enacted, With Significant Implications for Executive Compensation and Employee Benefits). In December 2018, a Texas district court concluded that, because of this TCJA provision, the individual mandate could no longer be upheld as a valid exercise of Congress's taxing power and was therefore unconstitutional (see Legal Update, ACA Individual Mandate Is Unconstitutional and ACA Is Invalid: Texas District Court). In December 2019, the Fifth Circuit affirmed the district court's individual mandate ruling, though the Fifth Circuit remanded the case for further consideration of the district court's severability analysis (see Legal Update, Fifth Circuit Affirms Ruling That ACA's Individual Mandate Is Unconstitutional, But Orders Do-Over of District Court's Severability Analysis).

On appeal (in June 2021), the Supreme Court held that the state and individual plaintiffs in the case lacked Article III standing to challenge the constitutionality of the ACA's individual mandate and severability of the remaining provisions (Cal. v. Tex., 141 S. Ct. 2104 (2021); see Legal Update, Supreme Court Rules Plaintiffs Lack Standing to Challenge ACA's Individual Mandate). The Court therefore reversed and remanded with instructions to dismiss the case.

Federal legislation enacted in August 2022 extended changes that expanded the availability of premium tax credits (PTCs) for ACA exchange coverage—which were first enacted under COVID-19 relief legislation from 2021 (Inflation Reduction Act, Pub. L. No. 117-169 (2022)). For example, the 2022 legislation extended a change that removed the upper income qualifier limit for PTCs, thereby expanding the range of households that are eligible for PTCs. These changes will remain in place through the end of 2025 (see Legal Updates, Inflation Reduction Act Extends Changes to ACA Subsidies: Extension of ARPA-21 Premium Tax Credits Provisions and IRS Announces 2024 COLAs for Health and Welfare Plans: ACA Premium Tax Credit).

In early 2024, the Biden administration announced that well over 20 million individuals had enrolled in ACA exchange coverage for 2024 since the start of the most recent marketplace open enrollment period, which began on November 1, 2023 (Fact Sheet (Jan. 10, 2024); CMS Press Release (Jan. 24, 2024)).

Against this backdrop of recent litigation, this toolkit provides resources to assist employers and their advisors in understanding various aspects of the ACA exchanges.