A state-based exchange (SBE) is a health insurance marketplace that an individual state builds and operates instead of relying on the federal HealthCare.gov platform. These exchanges were created under the Affordable Care Act, which gave every state the option to run its own marketplace or let the federal government handle it. For Plan Year 2026, 21 states (plus Washington, D.C.) run their own state-based exchanges, while most other states use the federally facilitated exchange at HealthCare.gov.
The plans sold through a state-based exchange follow the same federal rules as plans on HealthCare.gov. You still get the same metal tiers (Bronze, Silver, Gold, Platinum), the same essential health benefits, and the same premium tax credits based on your income. The difference is in who runs the shopping experience, sets the enrollment calendar, and decides which insurers can participate.
How State-Based Exchanges Work
When a state operates its own exchange, it takes on every major marketplace function: building and maintaining the enrollment website, determining eligibility for subsidies, certifying which health plans can be sold, and running consumer outreach and assistance programs. States like California (Covered California), New York (NY State of Health), and Colorado (Connect for Health Colorado) each have their own branded websites where residents shop for coverage. You won’t use HealthCare.gov if your state has a full SBE.
To fund operations, state exchanges charge insurers a user fee on each plan sold. These fees are typically baked into premiums, so consumers don’t pay them directly. The federal exchange charges insurers 2.5% for 2026, while the hybrid state-federal model charges 2.0%. Fully state-run exchanges set their own fee rates, and many come in lower than the federal rate, which can translate to slightly lower premiums for consumers.
The Three Marketplace Models
Not every state fits neatly into “state-run” or “federal.” There are actually three models:
- State-based exchange (SBE): The state handles everything, including its own enrollment website. Consumers shop on the state’s platform, not HealthCare.gov. Twenty-one states use this model for 2026.
- State-based exchange on the federal platform (SBE-FP): A hybrid. The state still certifies health plans, runs outreach programs, and manages consumer assistance, but it uses HealthCare.gov for the actual enrollment and eligibility functions instead of building its own website. Three states currently use this model.
- Federally facilitated exchange (FFE): The federal government runs essentially everything. Consumers enroll through HealthCare.gov, and HHS handles eligibility, plan certification, and most other marketplace functions. The remaining states fall here.
The hybrid SBE-FP model exists because building a fully independent enrollment system is expensive and technically complex. States using this approach get more control over their insurance market without the cost of maintaining their own technology infrastructure.
What’s Different for Consumers
The most noticeable difference is where you shop. If you live in a state with a full SBE, you’ll use your state’s website rather than HealthCare.gov. That means the look, feel, and customer service experience varies by state.
Beyond the website, state-based exchanges have more flexibility in several areas that directly affect you. States can set their own open enrollment periods, and several SBE states extend their enrollment windows well beyond the federal deadline. Some states have added special enrollment periods that don’t exist on HealthCare.gov, giving residents more chances to sign up for or change coverage after major life events.
States also control their own navigator and consumer assistance programs. Navigators are trained counselors who help people compare plans, apply for subsidies, and complete enrollment. In SBE states, the state decides how many navigators to fund and where to place them, which allows targeting of communities with low insurance rates or limited English proficiency. In FFE states, navigator funding is controlled at the federal level and has fluctuated significantly depending on the administration in power.
SBE states can also layer on state-specific subsidies. Several have created their own premium assistance programs that stack on top of federal tax credits, reducing costs further for residents who qualify. States on the federal platform generally can’t customize the subsidy structure this way.
Why States Choose to Run Their Own Exchange
Control is the primary motivation. A state-based exchange lets the state tailor the marketplace to its population, negotiate more directly with insurers, and respond faster to local coverage gaps. If a region has too few plan options, the state can adjust certification standards or recruit new insurers without waiting on federal action.
There’s also a financial incentive. SBE states collect their own user fees from insurers rather than sending that revenue to the federal government. That money stays in-state and funds the exchange’s operations, outreach, and assistance programs. Over time, this can create a self-sustaining system that’s less dependent on federal budget decisions.
The tradeoff is cost and complexity. States must build and maintain technology systems, hire staff, and meet ongoing federal standards. The process of transitioning from the federal exchange to a state-run one takes at least 21 months for a full SBE. States must submit a formal declaration of intent, then file a detailed blueprint application at least 15 months before their first open enrollment period. That blueprint must demonstrate the state has the legal authority to operate the exchange, certify health plans, generate revenue through user fees, and establish a governance board. For the lighter-touch hybrid model, the timeline is shorter: about 9 months from declaration of intent, with the formal application due just 3 months before open enrollment.
How to Know Which Type Your State Uses
The simplest test: go to HealthCare.gov and enter your state. If the site redirects you to a different website with your state’s branding, you’re in an SBE state. If you stay on HealthCare.gov to browse plans and enroll, your state uses either the federal exchange or the hybrid SBE-FP model.
Regardless of which model your state uses, the financial assistance works the same way. You’ll answer the same income questions, and premium tax credits are calculated using the same federal formula. The plans must cover the same set of essential health benefits, and insurers can’t deny you coverage or charge more based on pre-existing conditions. The exchange model affects who’s running the system behind the scenes, not what protections you’re entitled to as a consumer.