Get the facts on low cost health insurance, how Medicaid and Marketplace subsidies can lower your costs, and how to get affordable coverage.
By understanding a few key concepts will give you the knowledge you need to to ensure big savings on health insurance and health care for years to come.
The Basics of Health Insurance
You pay a monthly premium upfront. In return your plan covers a share of costs of specific in-network services. Sometimes those costs are covered before your deductible (copays) and sometimes those are covered after your deductible (coinsurance). Once you reach your out-of-pocket maximum, your plan covers 100% of covered services. If you go outside your network, or get an uncovered service, you’ll pay more out-of-pocket.
How the ACA Affects Health Insurance
The ACA does a lot to limit what factors determine health insurance costs. It also makes cost assistance available to those with household incomes between 100% – 400% of the Federal Poverty Level. In most cases, cost assistance will help to determine your best low cost option, but you’ll still need to shop for plans.
All plans starting after 2014 must have a maximum out-of-pocket cost of no more than $6,600 for an individual and $13,200 for a family for 2015, and must cover at at least ten essential benefits as part of their covered benefits. So under the ACA all plans must protect you in an emergency.
What You’ll Need to Get Low Cost Health Insurance
Getting a low costs health plan will depend upon knowing your income and medical needs. Once you have that you’ll know the right place(s) to shop for coverage. At that point it will all boil down to your ability to compare plans.
Before you shop, you’ll need to gather the following pieces of information:
- Your projected household income for the next year. If your income is below 400% of Federal Poverty Level (FPL) you’ll find your best value through Medicaid or the Health Insurance Marketplace.
- Your projected medical needs for the next year. This includes specialists and drugs you know you need. The more medical services you need, the more cost sharing, networks and covered benefits matter. All major medical plans offer minimum coverage, better plans can offer more beyond the essentials.
- The amount of money you will be able to spend in the worst case scenario. Some plans won’t offer cost sharing until you reach your deductible. On a high deductible plan, an emergency could leave you owing your full deductible.
Where to Get Low Cost Health Insurance
Depending on your income, you’ll get a pretty clear of where to shop and what plans you’ll need to compare. Let’s look at where to shop based on income:
If your projected household income for next year is less than 400% of the Federal Poverty Level (FPL) you most likely qualify for cost assistance!
Medicaid: If your household income is less than 138% of the Federal Poverty Level (FPL), after deductions (and your state expanded Medicaid eligibility), you’ll get the best value from Medicaid. Medicaid is a free to low-cost health insurance type. Typically your premium is free and your out-of-pocket costs are free or very low. The trade-off is that Medicaid is a one-size-fits-all solution. While specific benefits can depend upon the state, it only covers very specific essential benefits. Medicaid is truly “low cost health insurance”. Children use CHIP, which is part of Medicaid. Medicaid may have a specific name in your state. Learn more about Medicaid and CHIP.
Medicare: If you are over 65 you’ll most likely be shopping for supplemental health insurance options. Medicare is it’s own ball of wax, check out our section on Medicare here.
Marketplace Cost Assistance: If your household income, after deductions, is less than 400% FPL you’ll almost certainly find the best value plan on the Health Insurance Marketplace. The Marketplace caps premium costs via Premium Tax Credits for household income less than 400% FPL. If household income is less than 250% FPL Cost Sharing Reduction Subsidies raise the cost sharing value of plans (Silver plans only), lowering the policy holders share of out-of-pocket costs! Learn more about the Health Insurance Marketplace.
Due to the way cost assistance works, we typically suggest a high deductible Marketplace Silver plan that is HSA eligible to people who are unsure of what plan to get.
If your projected household income for next year is more than 400% of the Federal Poverty Level (FPL) you’ll be able to shop for any major medical health plan in your region. However, those with incomes close to 400% should consider a Marketplace plan anyway. If you lose income throughout the year you can claim the tax credit on your annual tax return!
Options Outside the Marketplace: If your household income is more than 400% FPL, you have a lot of choices for finding the best value on a health plan. Plans are offered by providers, and you can go directly to a provider to buy a plan. You can also go to any broker either online or in real life, or call a health insurance agent. There is no shortage of folks selling the same health plans for the same costs. The only way to get the best value is to understand your healthcare needs and then to shop for a plan that will cover your needs at low copay and/or coinsurance amounts. By comparing that against monthly premiums you can derive what plan will have the best value for you and your family. In other words, you’ll want to know what you need and then find a plan that offers that or something close to it.
Comparing Plans to Find the Best Plan
If you only qualify for tax credits you’ll most likely compare marketplace plans. If your income barely qualifies you for tax credits, you may even want to see what your options are outside the marketplace. If you don’t qualify for tax credits, you’ll want to see both your marketplace and non-marketplace options as well.
In some state’s your best option for unsubsidized coverage is the marketplace, in others the best plan for you will be found outside the marketplace.
For a full breakdown on how to compare plans we suggest reading our detailed page on comparing health plans.
For a detailed discussion on plan types, including metal plans on the marketplace, see our Health Insurance Plan types page.
- The cheapest plan isn’t always the best, you also have to consider out-of-pocket costs. If your plan doesn’t offer cost sharing before a deductible, you’ll pay that amount out-of-pocket.
- Only Silver plans qualify for Cost Sharing Reduction Subsidies. If you qualify for these you can only get Silver plans on the Marketplace. You’ll need to compare Silver plans, but it is highly suggested you do get a Silver plan as Cost Sharing Reduction subsidies provide very good value.
- All plans cover you in an emergency at a reasonable out-of-pocket maximum and offer minimum benefits.
First and foremost your income will determine the best plan and best place to shop. While the lowest cost plan isn’t always the one that will save you the most in the long run due to uncovered costs, it’s hard to go wrong with a heavily subsidized Marketplace plan, Medicaid, or CHIP. For those with more coverage options, the only way to get