When Obamacare, officially known as the Affordable Care Act (which includes the Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act), went into effect, Americans were faced with yet another way to find and buy health insurance. The 50 million who didn't get health insurance through their employers or Medicare or Medicaid or on the private market had to start buying it through the new health insurance Exchanges. Those who don’t have health insurance and don’t buy it will face a federal fine. Blue Cross, Cigna (NYSE:CI), Humana (NYSE:HUM) and Kaiser among others will sell insurance to those who don’t already have it. They must follow standards set out in the federal act.
For some who are currently buying insurance on the private market, the exchanges may offer lower premiums and lower out-of-pocket costs. Some employers have already announced they plan to end insurance plans for certain employees and instead send them to the Exchanges. Open Enrollment for 2016 will run from November 1, 2015 to January 31, 2016. Here are five things you should know about the new Exchanges, also called the Health Insurance Marketplace.
The 4 Health Plan Categories – Bronze, Silver, Gold and Platinum
The Marketplace plans are separated into four primary levels: Bronze, Silver, Gold and Platinum.
The different levels are intended to meet various health and financial needs, and are based on the percentage that each plan pays towards health care services. The plan levels also indicate the percentage you will pay towards the health care you receive. Your portion of these costs is in the form of:
- Deductibles – the amount you owe for covered services before insurance kicks in;
- Copayments – a fixed amount you pay for a covered health care service; and
- Coinsurance – your share of the costs of a covered health care service.
For example, assume you have a $1,000 deductible, a $25 copayment and coinsurance of 20%. For some healthcare, such as a visit to your family doctor, you will owe the $25 copayment. For other services, such as a surgery, you must first meet your deductible, after which you will owe 20% of the costs. If the surgery cost $5,000, you would be responsible for the first $1,000 (to meet your deductible if you haven’t already done so) and then 20% of the remaining charges, or, in this example, $800.
This chart shows how much the different plans will pay of your health costs, not including premiums:
|Plan Level||What the Plan Spends||What you Spend|
The lower the amount of coverage, the lower the premium you must pay to maintain coverage. Bronze level plans have the lowest premiums, but also the lowest level of coverage. As the plan levels increase (from Bronze to Silver to Platinum), your monthly premium increases but so does the level of coverage. For example, you will pay a higher premium for a Platinum plan but you will pay less for each doctor visit, prescription, or health care service that you use.
Tip: If you expect to have a lot of doctor visits and require regular prescriptions, you may want to consider a Gold or Platinum plan. If you don’t expect to have a lot of healthcare bills, a Bronze or Silver plan may be appropriate. You will be able to compare plans on the Marketplace to find one that best fits your financial and health needs. Plans and costs vary by state and individual.
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