Types of Health Insurance Plans
The Types of Health Insurance Plans Sold on and Off of ObamaCare's Marketplace
There are four types of health insurance plans available through ObamaCare's marketplace they are Bronze, Silver, Gold and Platinum health insurance plans. These Qualified Health Plans represent four tiers of coverage and are sometimes referred to as "metal plans" due to their quality corresponding to the value of their metal types. In other words a "Gold" plan is better than a "Bronze" health insurance plan. Aside from the 4 basic plan types people under 30 and people with hardship exemptions can buy a "catastrophic" health plan through the marketplace. Catastrophic health plans have a low premium but very high out-of-pocket costs.
Consumers looking to obtain insurance under ObamaCare can also purchase private health plans from a broker or direct from the provider, obtain insurance through their employer or qualify for Government based insurance like Medicaid or Medicare.
Anyone looking into what types of health insurance plans are available to them should make sure to fill out a marketplace application and shop outside of the marketplace so they can know what options are available to them. Remember the health insurance marketplace is the only place to receive cost-assistance for Americans making less than 400% of the Federal Poverty Level.
Make Sure You Understand Your Health Insurance Plan Options
When shopping for a health insurance plan it's important to understand more than what basic "metal plans" are available. To properly compare plans you'll have to understand things like deductibles, premiums, insurer network, HMOs, PPOs, HSAs, and other technical health insurance terms that affect what type of coverage you get and how it works. Make sure to read our guide to buying health insurance to learn more.
Qualified Health Plans on the Health Insurance Marketplace.
Starting October 1st, 2013 Americans without insurance will be able to buy health care plans through the Health Insurance Marketplace. The marketplace is simply an online marketplace for buying Federally regulated and subsidized insurance. Only those making less than 400% of the federal poverty level may be eligible for subsidies but everyone can use the marketplace as a price comparison tool to by health insurance that meets the qualifications of the Affordable Care Act.
Why Buy Health Insurance for 2014?
Most Americans will have to obtain a qualifying health plan ("minimum essential coverage") by January 1st, 2014 or they will face a fine. You don't have to use the marketplace to buy insurance, you can obtain insurance through your workplace, get private insurance outside of the exchange, obtain coverage through a Government healthcare program like Medicaid, CHIP or Medicaid or obtain qualifying insurance many other ways. Below we will break down types of health insurance that count as "minimum essential coverage" in
Ways to Get Health Insurance Plans For 2014
You will need a qualifying health plan, known as minimum essential coverage to avoid the fee in 2014, luckily most common types of health insurance count as minimum essential coverage.
As you know you can get covered through your State's health insurance marketplace by purchasing a private health plan. You can also buy plans through a private broker or directly through a provider. You may also qualify for Government based health insurance like Medicaid or Medicare or obtain coverage from work. Each type of coverage has it's advantages. Take a look at our guide to buying health insurance to learn more about choosing the right plan for you, your family and your business in 2014.
Minimum essential coverage includes the following:
- Employer-sponsored coverage (including COBRA coverage and retiree coverage)
- Coverage purchased in the individual market, including a qualified health plan offered by the Health Insurance Marketplace (also known as an Affordable Insurance Exchange)
- Medicare Part A coverage and Medicare Advantage plans
- Most Medicaid coverage
- Children's Health Insurance Program (CHIP) coverage
- Certain types of veterans health coverage administered by the Veterans Administration
- Coverage provided to Peace Corps volunteers
- Coverage under the Non-appropriated Fund Health Benefit Program
- Refugee Medical Assistance supported by the Administration for Children and Families
- Self-funded health coverage offered to students by universities for plan or policy years that begin on or before Dec. 31, 2014 (for later plan or policy years, sponsors of these programs may apply to HHS to be recognized as minimum essential coverage)
- State high risk pools for plan or policy years that begin on or before Dec. 31, 2014 (for later plan or policy years, sponsors of these program may apply to HHS to be recognized as minimum essential coverage)
Minimum essential coverage does not include coverage providing only limited benefits, such as coverage only for vision care or dental care, and Medicaid covering only certain benefits such as family planning, workers' compensation, or disability policies.
Should I Use the Marketplace to Buy Health Insurance Plans?
If you make less than 400% of the Federal poverty level than it is a no brainer, using the Health Insurance Marketplace could mean big savings for you and your family. Signing up for the marketplace to see if you qualify for cost-assistance in the form of premium tax credits only takes a few minutes. (Check out our Health Insurance Marketplace Guide for details on signing up). The less you make, the better your chances are of finding the right insurance on the marketplace for you and your family. Let's take a look at some of the reasons why using the marketplace makes sense.
You should use the marketplace if:
You make less than 400% of the Federal poverty Level
You want to limit the amount of homework you do. The process of using the marketplace is simple and it walks you through purchasing insurance.
You may not want to use the marketplace to buy health insurance plans if:
You make close to or more than 400% of the Federal poverty level. Health care companies are charged a fee to sell health plans on the exchange. This means that unsubsidized insurance can cost slightly more off of the exchange. Also be aware that even insurance purchased from a traditional broker off the exchange includes a broker fee. Also be aware that the competition of the marketplace helps to drive the cost down.
Other factors to take into consideration:
There are different levels of plans on and off of the exchange. If you and your family will use a lot of medical services you are going to want to focus on benefits just as much as you are price. In some instances it may make sense for you to shop outside of the marketplace. We will talk about the Bronze, Silver, Gold and Platinum Qualifying Health Plans sold on the exchange in just a moment.
Cheap Health Insurance: Are Health Care Plans Cheaper on the Marketplace?
Those looking for cheap health insurance will want to check their State's Health Insurance Marketplace first. In many cases equivalent healthcare plans sold on the marketplace will have very similar price tags to those sold off of the marketplace. If you don't qualify for subsidies in some cases buying insurance from a broker or directly from a health insurance company can be your best bet. If you make under 400% of FPL and could qualify for subsidies then it makes sense to purchase your insurance through the marketplace. No matter what you decide to do you can always shop around for quotes. How you obtain health insurance is your choice!
Types of Health Insurance Plans Sold on the Health Insurance Marketplace
The new Qualified Health Plans sold on the health insurance marketplace are sometimes called "metal plans". The reason for this is that they are named after different types of metals Bronze, Silver, Gold and Platinum. A Bronze plan is the lowest level of standard qualifying health plan while platinum is the highest. The better the plan, the higher the premium, but the lower the out-of-pocket costs.
All Qualified Health Plans sold on the marketplace can be purchased with subsidies, potentially resulting in lower premium and out-of-pocket costs for you and your family. All plans sold on the marketplace are guaranteed to meet the standards of ObamaCare and include the minimum essential benefits and free preventative services. All cost sharing is of out of pocket costs. Please see ObamaCare health benefits for services that are covered at no out of pocket charge on all plans.
The same insurer may offer multiple plans within each tier, featuring different combinations of deductibles, co-pays and other coverage options. But each bronze plan requires the insurer to pay at least 60 percent of covered expenses.
ObamaCare Metal Plans
There are four types of Metal plans you can choose from in your State's Health Insurance Marketplace as well as a catastrophic health plan.
1. Bronze plans split covered expenses 60-40.
Bronze plans are the cheapest because insurers pay only 60 % of a your covered health expenses, and the policy holder must come up with the other 40 %. In other words a plan with 60% actuarial value covers 60% of your out-of-pocket costs. Bronze plans also have the most basic benefits and most limited networks of doctors and hospitals. This is a good choice for those who don't plan on using many medical services. Many low-income Americans may qualify for free or very low-cost Bronze plans, but out-of-pocket expenses should be considered as out-of-pocket cost assistance can be considerably higher for only a slightly higher monthly charge on "the marketplace standard" Sliver plan.
2. Silver plans split covered expenses 70-30.
Silver plans are "the marketplace standard" meaning that premium caps are based on the cost of Sliver plans. A sliver plan on the marketplace can't cost more than 9.5% of your income if you make less than 400% of the Federal Poverty Level. The less you make, the lower your premium cap is. A sliver level plan is a good choice for individuals and families who use a few basic health services but don't have any serious health problems.
3. Gold plans split covered expenses 80-20.
Gold plans cost a little more, but the lower deductibles and better out-of-pocket cost sharing coverage means that families won't have to worry about health care costs stopping them from their families getting the care they deserve. Even if your premium is capped you'll have to pay more to make up the difference if you want a gold plan.
4. Platinum plans split covered expenses 90-10.
Platinum plans have the lowest out-of-pocket costs and the highest monthly premiums. This is the right choice for anyone who wants "the best coverage" for them and their family and is a smart buy for those who are sick or who have dependents who are likely to use costly health services. Even if your premium is capped you'll have to pay more to make up the difference if you want a Platinum plan.
5. Catastrophic Coverage
Catastrophic coverage is available to some people under 30 and those with hardship exemptions. Catastrophic plans only cover the bare minimum health benefits and has a very limited network. You'll have high out-of-pocket costs and a high deductible but this type of plan will protect you in a worst case scenario and will ensure that you avoid paying the shared responsibly fee for not having health coverage.
The Silver Standard: How Premium Caps Work
ObamaCare caps the amount of your income you have to spend on health insurance based on your income. If your premiums exceed a certain percent of your income, you'll be eligible for "premium subsidies" to help reduce your monthly premium costs. For example, if your income is between 300 percent and 400 percent of the federal poverty level, you can't spend more than 9.5 percent of your income on premiums. So, if your premiums can cost only a fixed percent of your income, why wouldn't you just go straight for a platinum-level plan?
The premium caps are based on the silver health plan. According to the Congressional Budget Office, subsidy levels in each market are tied to the premiums of the second cheapest silver plan. So, if you go with the second cheapest silver-level plan available in your market and you make between 300 percent and 400 percent of the federal poverty level, you won't have to spend more than 9.5 percent of your income on premiums. However, if you opt for a gold or platinum plan, you'll have to make up the difference in costs between that plan and the silver plan.
Buying Health Plans: Group Health Plans
Employers can use the exchange to shop for group health plans. Group health plans also use the metal system. Group health plans will not always be the same as individual and family health plans. Employers will use a section of the marketplace called the SHOP to purchase group health care plans for employees.
Medicare, Medicaid and CHIP Health Plans on the Marketplace
When you apply for the marketplace you will be made aware if you or a family member qualifies for cost assisted plans like Medicare, Medicaid or CHIP.
Buying Health Plans: Catastrophic Health Plans
Aside from the four metal plans sold on the health insurance exchange young people making under a certain amount of the Federal poverty level may be eligible for bare bones catastrophic health plans. These plans have low actuarial value, a high deductible and limited network but the monthly rates are very low. When you sign up for the marketplace you will be made aware if you or a family member qualifies for a catastrophic health plan.
Please be aware that while catastrophic plans are offered to some low income young people who cannot afford Bronze Plans tax subsidies cannot be used to reduce its premiums.
Buying Health Plans: What is a Qualified Health Plan?
Starting in 2014, an insurance plan that is certified by the Health Insurance Marketplace, provides essential health benefits, follows established limits on cost-sharing (like deductibles, copayments, and out-of-pocket maximum amounts), and meets other requirements. A qualified health plan will have a certification by each Marketplace in which it is sold.
Qualified Health Plans: What is Actuarial Value
The four new metal health plans each have their own unique benefits and "actuarial value." Actuarial value refers to the average amount of insurance expenses that would be paid for by the plan. The higher the actuarial value of a plan, the lower the out-of-pocket costs for the plan member. With respect to the plan names, the more expensive the metal, the higher the actuarial value. For example, a Platinum Plan covers 90% of covered medical expenses while a Bronze Plan only covers 60%.
Actuarial value is the amount of costs your insurance company covers. The higher actuarial value a plan has the less cost-sharing / out-of-pocket costs you are responsible for.
How to Sign Up For The Health Insurance Marketplace
There are four ways to sign up for your State's Health Insurance Marketplace.
1) Find your State's marketplace website.
2) Get in person help. You can find inperson help by going to LocalHelp.Healthcare.gov.
3) Call the 24/7 marketplace helpline 1-800-318-2596.
4) Mail in a paper application. bit.ly/PaperApplication. (read these instructions first)
Compare and Buy Health Insurance Plans Now
You can go and compare health insurance plans now by finding your State's Health Insurance Marketplace or you can find a broker or provider who you think is right for you, your family or your business. We have plenty more information on buying health insurance and comparing health plans on our site. Make sure to sign up for our mailing list for updates on shopping for health plans.