Health Insurance Marketplace
Now that the Affordable Care Act’s (ACA) Health Insurance Marketplaces are open for business, many people are shopping for insurance for the first time. The variety of options — and even the vocabulary you need to know — can be confusing. So let’s start with the basics.
What types of health insurance plans are available?
In the Marketplace, you may see these kinds of plans:
- HMO (Health Maintenance Organization): These plans generally pay for care only from a specified network of doctors, hospitals and other providers associated with the plan. (Sometimes, even certain pharmacies are specified by your network, meaning you may have to pay more for medications at other pharmacies.) You also need to see your primary care doctor before you can go to a specialist.
- PPO (Preferred Provider Organization): These plans cost more than HMOs, but you have more flexibility. In a PPO, you can see any provider that you want, although you will still likely pay more for those that are out of network. In addition, you don’t have to get a referral from your primary care doctor before going to see a specialist.
- POS (Point-Of-Service, often referred to as a POS HMO): You can select a primary care physician (PCP) and see only those doctors to whom your PCP refers you, in which case this would act just like a normal HMO. However, you also have the option to see specialists without a referral, or go to doctors out of the network. However, if you do so, you will be responsible for a much larger share of the costs (if not the full cost).
- “Catastrophic” health plans: These are the least expensive up-front, but you’ll have much higher out-of-pocket costs if something bad does happen. You may have to pay thousands of dollars before your coverage begins. They also cover less preventive care. In the Marketplace, these plans are available only to people under age 30 and those with other special circumstances.
What are the different kinds of insurance costs?
A mistake many insurance shoppers make is looking only at each plan’s monthly premiums, ignoring the other costs that can add up. As you compare your health plan options, make sure to look at the following:
- Premium: The amount that you pay to keep your insurance, regardless of whether you’re using it or not. Think of it as a monthly (or sometimes quarterly or yearly) fee. One of the benefits of the ACA is that insurance companies have to justify premium increases of more than 10% per year.
- Deductible: How much you have to pay for health care services before your health insurance starts to kick in. As a rule of thumb, the higher your deductible, the lower your insurance premium. Plans with high deductibles may be great for people who don’t expect to have high healthcare costs. But if you do have a healthcare expense, then you’ll have to pick up more of the tab until you reach the deductible.
- Copay: The fixed amount you pay for a healthcare service, usually at the time of service. For instance, you may have a copay of $35 to see your physician, or $15 for a medication. You can often find these amounts on your insurance card. Usually, the copays are lowest for doctors in your network and generic medications, and highest for doctors out of network and brand medications. Usually, these payments do not count toward your deductible, but check with your insurance company.
- Coinsurance: Your share of the cost of a health care service. Usually, this is a percentage you pay after your deductible. So, for instance, if you’ve met your deductible and have 20% coinsurance, for your next $100 healthcare bill, you’d owe $20.
- Out-of-pocket costs: The amount that you pay for your deductible + coinsurance + copayments adds up to your “out-of-pocket costs” for the year.
- Out-of-pocket maximum: After you’ve spent this amount, your insurance will cover 100% of your covered healthcare services. Maximums vary by plan, and some plans don’t count copays, deductibles or coinsurance toward the maximum, so check this closely.
Where can I get insurance?
If you do not currently have insurance, then you can go to the Marketplace to see a wide range of options, including both private and government-offered insurance. To help you sort out your options, the plans are organized by the level of coverage they provide. You can also find out if you’re eligible for any discounts on premiums or out-of-pocket costs. If you need help, an “Insurance Navigator” can guide you through the process. See what you need to know about the Marketplace here.
But the Marketplace isn’t the only way to buy insurance. You can also get coverage through:
- Your employer, if it offers insurance. If you like the coverage offered at your job, you can keep it, or use the Marketplace to see if better prices or plans are available.
- Your parents. Through the ACA, you can now stay on your parents’ plan until age 26 (previously, people were not allowed after age 19).
- An insurance company or broker. You can buy insurance on your own outside the Marketplace, and the plans will generally include the same guaranteed benefits and protections. But you won’t be able to get discounts for which you may qualify.