Why Marketplace Health Insurance Might Not be The Best Deal

The health insurance open enrollment season is nearly upon us, and analysts are excitedly wringing their hands, waiting to see final announcements of 2016 health insurance rate increases for every state. Some states have already announced how much health insurance costs will escalate next year, giving us a foreshadowing of what is to come. Charles Gaba of ACASignups.net is predicting a 12.2%-14.4% average increase in rates for 2016, although he admits that 15% is very likely once more states announce final determinations. And the numbers are all over the board at this point – Tennessee is looking at a 28.2% average increase while Indiana is keeping rates nearly even, with just a 0.7% average increase.

In addition to the cost of health insurance going up, there are two things you need to keep in mind while shopping for a new healthcare plan for 2016:

  1. Provider networks are going to get smaller on marketplace plans. In a recent article, Jeff Smedsrud pointed to three states, Illinois, Texas and Pennsylvania, which are stripping residents of their larger-network plans. To contain rising healthcare costs, health insurance companies are limiting the networks individuals have access to. If you purchase a different health plan for 2016, even if it’s with the same insurance company, contact customer service and verify that your doctor or preferred urgent care clinic and hospital are still in-network. 
  2. Deductibles continue to go up at an alarming rate. In the last five years, health insurance deductibles has risen 67%, while wages have only increased 10%. Don’t be surprised if your deductible options look slightly higher than they were in 2015. While paying for medical care up to your deductible is less risky for the healthy, unexpected accidents or serious illnesses can happen to anyone. 

On-Exchange vs. Off-Exchange

Two terms you should familiarize yourself during this open enrollment period are “on-exchange” and “off-exchange” plans. They are not as heavily discussed, but important to know about.

What you know as a “marketplace plan” is also known as an on-exchange plan, which is sold on state exchanges and the federal marketplace. On-exchange plans are eligible for a tax subsidy, providing cost assistance to Americans who qualify for a reduced rate on their health insurance. However, the provider networks available can be narrower since they are marketplace coverage.

Off-exchange plans are qualifying healthcare plans, just like on-exchange plan, and can be purchased through insurance companies directly or website entities like HealthCare.com. On average there are 15% more health insurance plans available off-exchange than on-exchange, giving consumers greater choice (see chart below). They also do not have the narrow networks on-exchange plans do, making them a better option for individuals who want to keep their current doctor or require specialty care.

Off-exchange plans do not qualify for cost assistance in the form of a tax subsidy, making them most ideal for individuals who are not entitled to receive financial assistance from the government because their income exceeds the 400% Federal Poverty Level. They are also excellent options for individuals with chronic illness who need larger networks to see a variety of doctors. And the higher level of metal plan (Bronze, Silver, Gold or Platinum), the more stable the costs become between on- and off-exchange plans. {CHART: On-exchange and off-exchange health insurance pricing in the marketplace shows price and plan differences.}

It is smart to shop your options every enrollment period and find the best health insurance plan that fits your budget and your medical needs. By providing HealthCare.com with a few details about your yearly health history, the site’s recommendation tool can provide the best plan options based on how much you utilize doctors, urgent care, prescription drugs and more.

Open enrollment begins November 1, 2015, and runs through January 31, 2016. The first deadline to have coverage effective at the beginning of the year is December 15. It’s never too early to start shopping ahead and looking to see what plans might be the best fit for you or your family. Just keep in mind the overall out-of-pocket expenses that can incur during the year when you add together the total cost of a plan and the deductible, versus how much you estimate you will pay out for medical bills. It pays to research and plan ahead.

NOTE: The views expressed here are those of the author and do not necessarily represent or reflect the views of Healthcare, Inc. and HealthCare.com.


Search and compare health insurance plans on HealthCare.com.
Colleen McGuire: Colleen McGuire is an independent consultant who has spent most of her career writing about healthcare and the health insurance industry. For fun she blogs, travels and takes a lot of pictures along the way.

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