Do you plan to shop on the health insurance exchanges that are being set up as the result of federal health care reform, also known as Obamacare? If so, you might be wondering how you’ll decide which of the four health insurance plans are right for you.
What are the four Obamacare health insurance plans?
First, let’s take a look at the levels of coverage that will be offered in the health care exchanges. The levels are based on the percentage of health care costs that will be paid by the plan, on average, according to HealthCare.gov:
• Platinum-level plans – will pay 90 percent of a policyholder’s health care costs, on average.
• Gold-level plans – will pay about 80 percent of the costs of health care.
• Silver-level plans– will pay about 70 percent of the costs of health care.
• Bronze-level plans – will pay about 60 percent of the costs of health care.
What do the Obamacare health insurance plans cover?
So, does this mean that if you buy a silver-level plan, it definitely will cover 70 percent of the costs of your health care and you will pay 30 percent? No, says John Rother, president and CEO of the non-profit National Coalition on Health Care. Instead, the percentages are based on what the insurance company expects an average person of your age, in your state, who chooses your level of coverage, will pay in health care costs in a year.
Here’s an example: say the insurance company estimates the average person who is like you would use $8,000 worth of health care in a year. Let’s say the company then adds administrative costs and profits of $2,000. Of the total, $10,000, the company can say the average policyholder who has a silver-level plan would pay 30 percent – or $3,000. That amount would include:
• The health insurance premiums.
• The deductible, which is the amount of health care costs the consumer pays before the coverage kicks in.
• Copays and coinsurance, the part the consumer pays for each doctor visit, health care service, or procedure.
“The problem is, nobody’s average,” Rother says. So, you might have lower or higher health care costs than average, and might end up paying a different percentage of your health care costs.
How much will Obamacare health insurance plans cost?
The prices of the health insurance plans in the exchanges will vary by level. Let’s look at some examples from Vermont, one of just a few states that have published proposed health insurance rates for 2014. In Vermont:
• For a platinum-level plan, a single person would pay, on average, about $610 a month in premiums if they make too much to get a subsidy. A couple would pay about $1,220 and a family with kids would pay about $1,710.
• For a gold-level plan, a single person would pay about $528 with no subsidy, a couple would pay $1,056 and a family would pay $1,484.
• For a silver-level plan, a single person would pay about $441 with no subsidy, a couple would pay about $880, and a family would pay about $1,240.
• For a bronze-level plan, a single person would pay about $365, a couple about $732 and a family about $1,028.
How do you choose the right health insurance coverage for you?
But experts say you shouldn’t focus only on the health insurance premium. So, how do you decide which level of coverage is right for you? Here are four things to consider:
1. How much is the health premium? – The cost of the health insurance premium is one consideration, experts say. If you make up to four times the federal poverty level – or $45,960 or less in 2013 for a single person – you’ll be eligible for a tax credit to reduce your health insurance premium. It’s also important to calculate about how much you’d pay in deductibles, copays and coinsurance, experts say. “If you’re only looking at premium, you’re only looking at part of the picture,” Rother says.
2. How does the health plan work? – All plans sold in the exchanges must show you a summary of benefits and coverage (SBC), a short document that explains in plain language what the plan covers and how cost sharing works in that plan. Each SBC sheet has to show examples with dollar amounts for two scenarios: having a baby and managing type 2 diabetes. Looking at the SBC will give you an idea of how the plan might work for you, says Christine Barber, a senior policy analyst for Community Catalyst, a nonprofit organization that promotes affordable health care.
3. How healthy are you? Since no one can know the future – you might be healthy today and get hit by a bus or diagnosed with cancer or heart disease tomorrow – it’s impossible to know how much health care you’ll use in the future, experts say. But in general, it might make sense for an older person or someone who has a serious health problem to pick a platinum-level plan. And it could make sense for a young, healthy person to pick a bronze-level plan, Barber says.
4. How good is the health plan network? It’s very important to check the network of any health plan you’re considering. While plans sold in the exchanges are required by law to include benefits in 10 categories, insurance companies can cut costs by drastically limiting the number of doctors and hospitals in the network, Rother says. So, check the network before deciding on a plan, he says.