Which Health Insurance Plans Are Most Affordable?
The Affordable Care Act was designed to make health insurance exactly that: affordable. Since its passage, millions of previously uninsured Americans have been able to find a healthcare plan that works for them.
But the word affordable means different things for different people. And other words like premium, deductible, co-insurance or co-payment can make finding a budget-friendly plan confusing.
Defining Health Insurance Terms
Before you start looking for a deal on plans from the Marketplace, take a moment to learn some of the different terms you’ll see and how they relate to one another—and your wallet.
Premium: This is the amount you pay for insurance every month. Typically, the lower your premium, the less your insurance will cover. That means your "out-of-pocket costs" (explained below) will be higher at the doctor’s office or hospital when you need care.
Deductible: You need to pay a certain amount of your healthcare costs before the insurance company steps in. That amount is called the deductible. If you pay a higher monthly premium, you can usually get a lower deductible. The deductible doesn't apply to everything, though. Preventive care, for example, is usually covered without needing to pay the deductible.
Co-insurance: Once you meet your deductible, you’ll still have to pay a certain percentage of your healthcare costs. This is your co-insurance, and the percentage you pay depends on your plan:
Bronze plans: You pay 40%; the insurance company pays 60%.
Silver plans: You pay 30%; the insurance company pays 70%.
Gold plans: You pay 20%; the insurance company pays 80%.
Platinum plans: You pay 10%; the insurance company pays 90%.
Co-payment: For some healthcare services, such as doctor visits, you'll need to pay a set amount, called the co-payment, or copay for short. Like your deductible and coinsurance, your copay amount can go up or down depending on your monthly premium and the type of plan you have.
Out-of-pocket costs: This is a general term that includes your deductible, co-insurance and co-payments—anything that isn’t covered by your health insurance. Under the Affordable Care Act, there’s a limit to how much you’ll have to pay out-of-pocket in any given year. For individual plans in 2015, the cap is $6,600; for families, it's $13,200. Once you reach that amount, your insurance will cover 100% of your costs for the rest of the year.
Silver Plan Offers Unique Cost Savings
When you sign up for health insurance, you'll need to provide information about your income and family size. Depending on your answers, you could get help paying your out-of-pocket costs. This kind of assistance is called a "cost-sharing reduction," and it's available only if you sign up for a silver plan through the Marketplace.
If you qualify, cost-sharing reductions allow you to pay a lower premium and lower out-of-pocket costs. It's like having the benefits of a gold or platinum plan at the cost of a silver plan.
Consider Your Network
Your insurance company works with a network of certain doctors, hospitals, and other providers. When you're looking at plans in the Marketplace, you'll see a breakdown of your out-of-pocket costs for both in-network and out-of-network providers.
Some plans will cover a portion of care from out-of-network providers. Other plans don't cover any of that cost. The different plan types include:
Preferred provider organization (PPO): These plans allow you to use providers outside the network without a referral but at a higher cost.
Health maintenance organization (HMO): These plans typically do not cover care from out-of-network providers except in emergencies. You may also be required to live within a certain service area.
Exclusive provider organization (EPO): Like HMOs, out-of-network providers are not covered with these plans except in emergencies, but you don’t have to live in a certain service area.
Point of service (POS): POS plans cover care from in-network providers and require a referral from a primary care physician before you can see a specialist.
If you select a Marketplace plan with a narrow network of providers, such as an HMO or EPO, your monthly premium might be lower. You may find, however, that your choice of doctors is limited.
For more information about the different plan types and ways to save money on your health insurance, visit www.healthcare.gov.
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- Half of U.S. adults fail ‘Health Insurance 101,’ misidentify common financial terms in plans. American Institute of CPAs. (http://www.aicpa.org/press/pressreleases/2013/pages/us-adults-fail-health-insurance-101-aicpa-survey...
- Summary of benefits and coverage–Blue PPO Gold 002. Blue Cross Blue Shield. (http://www.bcbsil.com/PDF/sbc/36096IL0760002-00.pdf)
- Narrow provider networks in new health plans: balancing affordability with access to quality care. The Center on Health Insurance Reforms, Georgetown University Health Policy Institute. (http://www.rwjf.org/content/dam/farm/reports/issue_briefs/2014/rwjf413643)
- How to keep your doctor. Healthcare.gov. (https://www.healthcare.gov/choose-a-plan/keep-your-doctor/); Out-of-pocket costs (How to choose Marketplace insurance). Healthcare.gov. (https://www.healthcare.gov/choose-a-plan/out-of-pocket-costs/)
- Marketplace insurance categories. Healthcare.gov. (https://www.healthcare.gov/choose-a-plan/plans-categories/)
- Type of plan and provider network. Healthcare.gov. (https://www.healthcare.gov/choose-a-plan/plan-types/)
- Monthly premiums. Healthcare.gov. (https://www.healthcare.gov/choose-a-plan/premiums/)