By Kyle Maziarz
It’s Open Enrollment for the Affordable Care Act’s Marketplaces, and the deadline to sign up for coverage that begins January 1 is fast approaching. This week, we’re spotlighting frequently asked questions (FAQs) from our Navigator Resource Guide about how to compare benefits and out-of-pocket costs across Marketplace plans.
What is the difference between a premium and a deductible? If I want to save the most money possible, should I just pick a plan with the lowest premium?
A premium is the amount you pay for your health insurance every month. A deductible is the amount you pay for covered health care services before your health insurance plan starts to pay. With a $2,000 deductible, for example, you pay the first $2,000 of covered services yourself (with the exception of benefits that are covered pre-deductible—for example, many recommended preventive services are covered before you meet your deductible under most private health plans). After you meet your deductible, you usually pay only a copayment or coinsurance for covered services. Your insurance company pays the rest.
Before enrolling in a plan, you should check its provider network for your preferred doctors or facilities, and check the formulary for your medications. Often, if you receive services from an out-of-network provider, those charges will not be counted towards your deductible.
You should also consider how often you use health care services and how much you would be able to pay out of pocket amidst an expensive unexpected emergency. It is important to find a reasonable balance between an affordable premium and also a deductible that would be manageable to pay out of pocket throughout the year or all at once in the instance of an unexpected medical event. A plan with the lowest premium may not necessarily be the most financially beneficial plan to choose if you have a medical condition that requires prescription drugs or visits with your provider throughout the year.
Will covered benefits under all Marketplace plans be the same? How can I compare?
In general, Marketplace health plans are required to cover the 10 categories of essential health benefits. However, insurers in many states will have flexibility to modify coverage for some of the specific services within each category. Any modifications must be approved by the Marketplace before plans can be offered. Also, your cost-sharing for various services is likely to vary from plan to plan. All health insurance Marketplace health plans must provide consumers with a Summary of Benefits and Coverage (SBC). This is a brief, understandable description of what a plan covers and how it works. The SBC will also be posted for each plan on the Marketplace website. The SBC will make it easier for you to compare differences in health plan benefits and cost-sharing.
Plans might differ in other ways, too. For example, the network of health providers might be different from plan to plan.
Insurers in the federal Marketplace, HealthCare.gov, and some state-run Marketplaces are required to offer standardized plans. For these plans, the covered benefits will have the same fixed deductible, out-of-pocket costs and cost-sharing amounts for certain services within a metal tier. In particular, certain services—such as primary care, generic drugs, and some specialty care services for plans sold on HealthCare.gov—may be covered without you needing to meet your deductible. (45 C.F.R. §§ 147.200(a)(2)(i)(G), 156.110, 156.115, 156.200, 156.230; Patient Protection and Affordable Care Act, HHS Notice of Benefit and Payment Parameters for 2024, 88 Fed. Reg. 25740 (Apr. 27, 2023).)
I notice Marketplace plans are labeled “bronze,” “silver,” “gold,” and “platinum.” What does that mean?
Plans in the Marketplace are separated into categories—bronze, silver, gold, or platinum—based on the amount of cost-sharing they require. Cost-sharing refers to out-of-pocket costs like deductibles, co-pays and coinsurance under a health plan. For most covered services, you will have to pay (or “share”) some of the cost, at least until you reach the annual out-of-pocket limit on cost-sharing. One exception is for recommended preventive health services, which health plans must cover entirely.
In the Marketplace, bronze plans generally have the highest deductibles and other cost-sharing. Silver plans will require somewhat lower cost-sharing, but this may not always be the case. If you are deciding between a bronze and silver plan, you will want to determine what the cost-sharing amounts are for the services you would use under each plan. Gold plans will have even lower cost-sharing. Platinum plans will have the lowest deductibles, co-pays and other cost-sharing. If you qualify for cost-sharing reduction subsidies, you’ll have your deductible and/or other cost-sharing reduced, but you must enroll in a silver plan to receive those benefits. (45 C.F.R. §§ 147.130, 156.130, 156.140.)
In most states, Open Enrollment runs through January 15, and the deadline to sign up for coverage that begins January 1 is December 15. Keep an eye on CHIRblog for more FAQs of the week throughout Open Enrollment, and check out the Navigator Resource Guide for hundreds of additional FAQs, state-specific enrollment information, and other helpful resources.