If you’ve been shopping for health insurance during open enrollment 2018, you may be wondering about the differences you’re seeing. Why does one plan cost more than another of the same metal tier? Are other factors affecting the rates and benefits that you see? In short, the Affordable Care Act (ACA or Obamacare) standardized a lot of things about the health insurance agency, including what insurers could charge more for – and what they couldn’t. But there’s still plenty of leeway in setting prices when it comes to the health plans that you see on and off the marketplace. Here are five things that will affect your coverage and four that won’t.
One of the primary factors used to determine health insurance costs is how old you are when you apply for the policy. The Affordable Care Act (ACA) allows insurance companies to charge premiums of up to three times higher than those offered to younger people. This can mean a significantly higher policy cost if you are older. Insurance companies can decide how much “older” a customer has to be before charging higher premiums. Before Obamacare, insurers could increase rates up to five times the rate of a younger enrollee.
- Where You Live
Insurance companies have different rates based on where you live. In areas where there are multiple insurance options, especially in the ACA marketplace, you may find lower rates than if you live in an area where there are limited options for insurance. Local and state regulations can also make a difference in the rates you’re charged, as can the cost of living in your geographical area. This also means that people living one county apart could see completely different health insurance options – and for higher or lower rates than their neighbors. Pricing and plan availability is usually county-dependent.
- Lifestyle Choices
Under the ACA, smokers can be charged up to 50 percent more in surcharges than non-smokers for the same health policy. This same rule applies to smokeless tobacco, too. Insurance companies may consider your weight or BMI index as well when providing you with a cost for your health insurance. Arguments in support of the surcharge for smoking assert that smoking is an optional lifestyle choice, and an especially expensive one at that. The ACA also requires health plans sold on the marketplace to cover smoking cessation programs.
As for your body mass index (BMI) determining your premiums, experts are split as to whether this idea makes sense. Being overweight doesn’t guarantee that someone is also unhealthy just as weighing less doesn’t guarantee good health. Nevertheless, insurers can charge you more if you smoke or fall on the overweight to obese end of the scale.
In the marketplace, income can have an impact on how much your insurance may cost. If your total household income is between 100 and 400 percent of the federal poverty level, you are eligible to receive assistance with your insurance premiums. You’re only eligible for the tax credits if your employer doesn’t offer coverage or doesn’t offer a plan that’s “affordable” by federal standards. If you earn up to 250 percent of the poverty level, you may also get extra help in reducing out-of-pocket expenses, such as copays or deductibles.
Outside the marketplace, you won’t qualify for cost assistance, so if you think you might qualify based on your income, it pays to stick with the exchanges. If you make less than 138 percent of the federal poverty level, you may be eligible for Medicaid or CHIP depending on the guidelines in your state.
- Type of Enrollment
If you’re enrolling as an individual, your insurance rate will be lower than if you need to cover a spouse or if you have other dependents who need insurance coverage. As you might expect, larger families may have higher premiums than smaller families. Although the size of your family does not necessarily mean you will have higher medical expenses, the number of people on your plan can affect your premium.
Insurance companies charge based on the number of people on the plan, but they may not charge you for everyone you put on the plan. In some cases, the amount charged is based on the age of your children. If you have more than three children under 21, for example, then you might only be charged for the first three children. The ACA allows adult dependents to stay on their family’s health plan up to age 26. Family plans also have higher deductibles and out-of-pocket maximums than plans for individuals.
The five factors outlined above will largely affect how much you pay in premiums. But under Obamacare, all major medical health insurance policies sold after March 23, 2010 (the date the ACA became law) include a host of protections and benefits that don’t depend on your age, income or family size. Here are four things that won’t affect your premiums or coverage.
The 4 That Don’t:
- Metal Tier
Health insurance plans are offered in four metal tiers – bronze, silver, gold and platinum – and one “catastrophic” option, which is reserved for people under age 30 and those who meet certain hardship criteria. Bronze plans typically have the lowest premiums but the highest out-of-pocket costs. Silver are the most popular because they cover a higher percentage of out-of-pocket costs with reasonable premiums. Gold and platinum plans are better for people with chronic medical problems who need a lot of care since these plans have higher premiums but cover a greater portion of expenses.
Regardless of which metal tier you buy a plan from, you’re guaranteed a set of essential benefits. You also will benefit from the ACA’s protections, including the fact that all major medical plans are guaranteed-issue (open to anyone regardless of medical history), that insurers must spend most of their revenue on medical care rather than overhead, that annual and lifetime limits have been eliminated, and that you can’t be dropped from a health plan arbitrarily provided that your premiums are kept current.
- Pre-Existing Conditions
The ACA prohibits any insurance company from denying coverage due to a pre-existing condition or your medical history. Before Obamacare became law, people who enrolled in a health plan were usually subject to approval via medical underwriting. That meant that an insurance company could review your medical history and determine whether to insure you or not, or whether to charge higher premiums based on how much it might have to spend on your care. That’s no longer the case.
What’s more, insurance companies can no longer charge a person with pre-existing conditions a higher premium than they would charge someone who is the same age, who lives in the same geographic area and who meets similar criteria under the company’s rating system.
Before passage of the ACA, women paid up to $1 billion more than men each year for health insurance. The law now prohibits insurers from charging men and women different amounts for the same coverage solely based on sex.
- Plan Type
In order to count as qualifying health insurance under ACA guidelines, healthcare coverage must cover 10 essential benefit categories. These are:
- Emergency services
- Hospitalization and inpatient care
- Outpatient (or ambulatory) services
- Maternity care, including newborn care
- Lab testing
- Mental health services
- Prescription drugs
- Rehabilitative care and equipment
- Preventive care
- Pediatric care, including dental and vision
Although your insurance company may offer additional benefits and features, these 10 categories of benefits must be included. If you do choose additional coverage through your health insurance company, your premiums may be higher than if your policy only covered the minimum. Keep in mind, too, that coverage will still vary among plans. Certain plans might cover a wider variety of prescription drugs, for instance, or different brands of rehabilitative equipment and still meet the requirements of the law. But whichever major medical plan you choose, you’re guaranteed coverage for these benefits.