Obamacare introduced new changes that greatly benefit individual health insurance. Simply stated, Obamacare has made individual health insurance more affordable and more accessible than ever before.
Additionally, the Health Insurance Marketplaces makes it easier to shop and compare rates for different carriers and coverage levels.
For many, however, navigating health plan choices can feel overwhelming. This section covers tips on how to get the best Obamacare health plan.
While many people get caught up on the monthly premium amount, selecting a health plan solely based on the premium could be a misstep. For example, lower premium prices typically accompany higher-out-of-pocket costs.
The key to choosing the best health plan is to balance the monthly costs of the health plan with anticipated out-of-pocket costs when you receive care. One way to do this is to select the right coverage level. We’ll discuss this next.
In the past, it was hard to understand the coverage levels of plans. That’s no longer the case. As of 2014, individual health insurance plans are categorized in four standardized levels of coverage, called “metallic tiers of coverage.” These categories help you better compare plans “apples to apples.”
For example, all “silver” health plans have a similar out-of-pocket requirement. However, it is helpful to note, that within a category, each plan is unique and will have a different mix of copays, deductibles, and coinsurances.
Which coverage level to choose? If you anticipate using a lot of medical services, select a platinum or gold plan. Although the premiums higher, you will pay less out-of-pocket when it comes time to receive medical care.
If you do not anticipate having a lot of healthcare needs, selecting a silver or bronze plan may save you money. Although there will be higher out-of-pocket costs when you do need medical services, you will pay a significantly lower premium.
Your deductible is the amount paid for covered care before the insurer begins to pay. For example, you may be required to pay $500 out-of-pocket for covered services before the insurance company pays; this would be a $500 deductible.
High deductible health plans are becoming more and more popular. While the appeal of a high deductible plan is the lower monthly premium, some consumers will end up racking up big bills before their health insurance even kicks in. If your employer offers a Health Savings Account (HSA) or a Health Reimbursement Account (HRA) to help lessen the burden of a large deductible, then a high deductible plan may actually work better for your financial needs.
While many lower-tiered bronze and silver plans may have a low monthly premium cost, they may be accompanied by high deductibles.
If you have health needs that require regular doctor visits, such as a chronic illness or pregnancy, you may be better off paying a little more monthly instead of racking up large medical bills.
In addition to the deductible, look at other out-of-pocket costs such as coinsurances and copays.
Coinsurance is the percentage of allowed charges for covered services. For example, health insurance may cover 70% of the charges for a covered hospitalization, leaving you responsible for 30%. This 30% is known as the co-insurance. If the plan has a deductible, the coinsurance for covered services is usually paid after your deductible is met. Co-insurance can significantly affect the price of the insurance premium. Typically, plans with lower co-insurance have higher premium costs.
The copayment is a flat dollar amount paid to the healthcare provider for a covered service. For example, a $30 copayment may be required for each covered visit to a primary care doctor, and $10 for each generic prescription filled. Copayments vary from plan to plan and are sometimes different depending on the type of covered service received.
These out-of-pocket costs can have a significant financial impact, and just like with the deductible, it is important to balance your premium cost with anticipated out-of-pocket costs.
As you browse health plan options, remember to:
Balance your premium with the deductible and other out-of-pocket costs (shopping by metallic tier can be helpful).
Understand how much you would pay for common medical procedures. Look at your medical history from last year as an example, taking into consideration any planned or known medical needs for the coming year (ex: pregnancy or chronic illness care).
Work with a trusted health insurance agent or broker to help understand the different costs and benefits.