How Health Insurance Works – Understanding ACA Insurance
Making sense of health insurance plans can be very confusing as there are many different products to choose from. There are ACA health plans, short-term medical plans, supplemental health insurance including hospital indemnity, cancer and accident insurance. There are also the Christian health share ministries and medical cost sharing communities with no faith requirements.
What does your plan cover?
When the Affordable Care Act (ACA) took full effect in 2014 it was mandated that all plans offered in the Marketplace must cover the following services:
- Ambulatory patient services, also called outpatient care you get without staying in a hospital.
- Emergency services.
- Pregnancy, maternity, and newborn care.
- Mental health and substance abuse services inclusive of counseling and psychotherapy.
- Laboratory tests and services.
- Prescription drugs.
- Rehabilitation services.
- Pediatric services which include dental and vision (adult vision and dental are not considered essential health benefits).
- Preventative and wellness services including chronic disease management.
What are the plan costs?
Your health insurance costs are affected by:
- Your monthly premium
- Out-of-pocket expenses – deductibles, coinsurance and copays.
There are four types of plans offered to individuals with different combinations of premiums and out-of-pocket expenses:
- Bronze Plans – have the lowest premiums but highest out-of-pocket expenses. The insurance company will typically pay 60% of covered healthcare expenses while the remaining 40% has to be paid by the individual. By purchasing Supplemental Health Insurance you can eliminate most of the 40% costs.
- Silver Plans – cover 70% of covered healthcare expenses with the remaining 30% paid by the individual.
- Gold Plans – are required to cover 80% of covered healthcare expenses with the remaining 20% paid by the individual.
- Platinum Plans – these plans have the highest premiums but the lowest out-of-pocket expenses. The carrier will pay 90% of covered healthcare expenses with the remaining 10%. paid by the individual.
Out-of-pocket expenses or “cost sharing” does not include your monthly premium. These costs have to be paid by the individual policyholder. The provisions of these costs are not standardized and can vary from insurer to insurer, again emphasizing the need to get expert advice when considering options.
Only when you reach the out-of-pocket limit will you be fully covered for further expenses.
A high deductible plan would leave you most exposed to these out-of-pocket costs should you or your family become ill or require more expensive treatment. Of crucial importance, however, is that you cannot be denied coverage with these plans, and cannot be denied coverage for preexisting conditions.
If you are in good health and have generally been healthy, as an alternative, you could decide to get covered with a short-term major medical plan. These plans are generally more affordable, however, enrollees will be subject to a tax penalty. Coverage can be denied for preexisting conditions as underwriting is required and the plans are not renewable or guaranteed.
Health Insurance Subsidy
There is a government assistance program to help with health insurance costs. You may be eligible for a subsidy that is granted on the basis of income and need.
Tax credits are obtained during the application process. It is advisable to talk with one of our experts during this process who can advise you on the most affordable plans to choose from and guide you.
Are your preferred doctors and hospitals in the plan?
All health insurance plans have a network of providers including doctors, hospitals, pharmacies, and laboratories.
If you have doctors who are not in your network (the plan you have chosen), your insurance company may not cover your bill, or, you may have to pay a much higher share of the cost. When enrolling in a plan, you will be able to see if your doctor is in the plan network. The enrollment process allows you to search for doctors and hospitals. This can be frustrating as the directories are not standardized.
In order to reduce costs, many insurance providers have smaller or reduced networks. To be absolutely sure that your doctor is in the health plan you want, it may be best to check with their office before finalizing enrollment.