If you’re like millions of Americans, you’re confused about the ins and outs of healthcare coverage. Some employers will provide coverage, but what if you’re one of the many who must buy it on your own? Below, we’ve simplified your insurance options to help make your search for coverage less stressful. Open enrollment for health insurance that takes effect in 2018 begins on November 1, 2017 and ends on December 15, 2017, making now the perfect time to research which type of coverage will work best for you.
The Basics of Insurance
The basis of health insurance is to protect consumers from financial disaster in the unfortunate event that medical bills begin piling up. Though most consumers are familiar with this idea, many become confused when it comes to choosing a specific plan based on their own healthcare needs.
The Patient Protection and Affordable Care Act (ACA or Obamacare), our country’s current healthcare law, requires almost all Americans to have ACA-compliant health insurance. In order to assist those in choosing a plan, the act outlines four main “metal tiers” to choose from: bronze, silver, gold and platinum.
As the tiers progress from bronze to platinum, the amount of healthcare-related expenses covered by insurance will increase. For example, under the bronze coverage, copays and other out-of-pocket expenses are highest but premiums (monthly payments to the insurance provider, not dependent on amount of care received) are lowest.
Along with the intention of simplifying insurance shopping, the metal tiers are also designed to set standardized coverage levels available to individuals and small businesses, and to establish a minimum degree of insurance needed for almost everyone. Under the ACA, bronze is the minimum tier allowed for most people. Those not covered by a compliant insurance plan will face a fine. In 2017, the fine was the greater of 2.5 percent of your household’s taxable income or a flat fee. For next year, the 2.5 percent rate will remain the same but flat fines will be adjusted for inflation.
Metal Tiers
Bronze
The bronze tier is considered the minimum level of coverage allowed for most people under the Affordable Care Act. On this tier, copays and out-of-pocket expenses are highest but premiums are lowest. This plan type is popular among those who are healthy and don’t frequently visit the doctor. However, bronze plans can end up costing you more if you encounter unexpected medical issues. This is typically not a good choice for those being treated for chronic health conditions, such as diabetes, because the copays from frequent doctor trips will end up costing far more out of pocket than you’d pay with a higher-tiered plan. In general, insurance companies will cover 60 percent of healthcare costs with under a bronze plan, leaving around 40 percent the responsibility to enrollees.
Silver
On the silver tier, premiums are a bit more expensive than they are on the bronze, but expected copays, coinsurance and deductibles are lower. For the average population, about 70 percent of healthcare costs will be covered by the plan, which means that silver plan holders should expect to cover about 30 percent of their healthcare costs each year. This may be a good plan for those with stable health such as young people. Silver-level plans are also used as benchmarks in determining cost assistance on the Obamacare marketplaces, a concept we discuss in detail in another article.
Gold
On the gold level, monthly premiums are higher than silver, but out-of-pocket costs will be lower. This plan may be good for those unsure about the stability of their health, or for those who simply prefer lower copays. About 80 percent of healthcare costs are expected to be covered by the insurance plan, leaving the other 20 percent to the plan holder.
Platinum
The platinum plan is considered the most prestigious with 90 percent of healthcare costs covered by insurance, leaving just 10 percent of payments up to the consumer. This prestige comes with a matching price tag. Monthly premiums will be highest for platinum plans, and copays and deductibles will be substantially lower than they are on other tiers. Still, this is an ideal tier for those with chronic health problems or those who think they may need extra care. For many who worry about the stability of their health, platinum plans offer better peace of mind.
Some Services are Always Covered
It’s also important to recognize that no matter which plan you select, the Affordable Care Act requires coverage of 10 essential benefits. These include:
- Preventive care
- Ambulatory (outpatient) care
- Hospitalization
- Emergency care
- Prescription drugs
- Rehabilitation services and devices
- Laboratory testing
- Maternity care before, during and after labor
- Pediatric care, including dental and vision for kids
- Mental health services
Who Doesn’t Have to Purchase Coverage?
Though most Americans must purchase coverage or face a fine, the ACA provides hardship exemptions that allow some qualifying individuals to refrain from purchasing a plan. These exemptions include:
- Being detained or in jail
- The death of a close family member
- Unexpected expenses caring for a sick, elderly or disabled family member
- Not being a legal U.S. resident or citizen
- Ineligibility for Medicaid because your state didn’t expand coverage under Obamacare, and being unable to afford regular premiums either
- Bankruptcy or eviction from your home
- Unexpected disasters, such as a fire or flood
- Being the victim of domestic violence
You need to hold health insurance for nine months out of the year. The government waives up to three months of being uncovered. Beyond that, you’ll need to hold ACA-compliant health insurance in order to avoid paying the penalty.
Bottom Line
There’s no specific “right” answer when it comes to choosing health insurance. For each person, circumstances may make one plan better than the others for any number of reasons. It’s important to note, however, that once you enroll in a plan, you’re locked in for a full year. Just because you feel healthy now doesn’t mean that things can’t change later in the year. Along with differing premiums and out-of-pocket expenses, each plan may offer access to different healthcare providers and medications, which can play a large role in what plan you eventually choose to purchase. Take some time before enrollment starts on November 1 to go over your needs and choose a plan that works for you.
