6 Things You Need to Know About Buying Health Insurance (That Your State Exchange, HealthCare.gov May Not Tell You)

In the age of Obamacare, buying health insurance means visiting your state’s exchange website, finding a plan at a price you can afford and filling out an application, right? Buying the right health insurance, however, may not be so simple.

Health insurance under the Affordable Care Act may look the same at its core, but there are some things you should know before you decide on a plan or keep the coverage you have another year—things your state’s exchange and HealthCare.gov probably won’t tell you. When open enrollment nears, re-asses your current health insurance and look at additional options. As you do, consider the following:

1. The lowest price plan may not be the best for you.

A low monthly premium may feel manageable from month to month, but it often translates into a high deductible and high out-of-pocket expenses. This may work well if you typically visit the doctor for preventive services covered by the Affordable Care Act and little to nothing else. However, if you have an ongoing medical condition, tend to be ill and need medical care several times throughout the year, or have small children who need to see the doctor frequently, choosing the plan with the lowest monthly cost may not be your savviest move.

According to HealthPocket.com, in 2014, the average deductible amounts for individual and family health insurance plans sold on 34 state exchanges were as follows1:

  • Bronze plan – $5,081 (individual) | $10,386 (family)
  • Silver plan – $2,907 (individual) | $6,078 (family)
  • Gold plan – $1,277 (individual) | $2,846 (family)
  • Platinum plan – $347 (individual) | $698 (family)

Average monthly premiums by metal plan—before any applicable subsidies—for 40-year-old individuals in the same 34 states were as follows2:

  • Bronze plan – $295.51
  • Silver plan – $319.42
  • Gold plan – $377.63
  • Platinum plan – $388.29

Using the data listed above, the 40-year-old individual could pay $286.92 more per premium annually for a Silver plan and reduce his or her deductible by $2,174—that’s 8 percent more in premium for a nearly 43 percent decrease in annual deductible. Furthermore, the cost-sharing breakdown between a Bronze plan and a Silver plan are as follows:

  • Bronze – the plan pays 60 percent of covered medical expenses; the consumer pays 40 percent
  • Silver – the plan pays 70 percent of covered medical expenses; the consumer pays 30 percent

Do you see how a Bronze plan might not be such a great bargain for individuals and families who visit the doctor more often than not?

As you shop for health insurance, consider the following: How often do you use medical services? Do you typically see the doctor for preventive care? What is your total budget for health insurance when factoring in premium, deductible, copays, coinsurance and out-of-pocket expenses? What are the deductible, copay, coinsurance and out-of-pocket cap for each plan you are considering? The answers can help you determine which health insurance plan is the best fit for both your health care needs and budget.

2. Some carriers offer low prices the first year and then increase rates; others are more stable.

Enrollment impacts health insurance premiums. Insurance companies need to ensure there are enough healthy enrollees to balance the cost of sicker enrollees. When setting their rates in 2014, health insurance carriers had to make predictions about their enrollee demographics as the Affordable Care Act’s individual mandate and other major provisions took effect. They based their rates on the projected risk pool. Since insurance companies could no longer deny applicants coverage or charge them more based on health history in 2014, the market took on several previously uninsured individuals. If companies lost money in 2014, they may need to increase rates in 2015. Rate proposals were due to state insurance departments as early as May 2014 in some to places. At that point, little data was available on the insured individuals and their health insurance use.

Findings from The Kaiser Family Foundation’s June 2014 Survey of Non-Group Health Insurance Enrollees showed that individuals with ACA-compliant health insurance plans are “more likely than those with non-compliant plans to report their health as ‘only fair’ or ‘poor.’”3 The report’s conclusion stated, “This suggests that people in new, ACA-compliant plans are somewhat sicker than those in the non-group market previously, some of whom have been able to retain their non-compliant coverage under transition policies.”4Whether individuals purchase health insurance on or away from the exchanges, they are lumped into the same risk pool.

3. Your provider network is always changing.

Just because your preferred doctor, clinic, hospital or specialist participates in your health plan’s network does not mean that will always be the case. Networks change from year to year. Some health care providers and facilities will no longer participate. When the time comes to renew your health insurance plan or select a new one, check the network and be sure you still have access to the care you’ve been receiving.

Furthermore, many insurers use narrow networks on exchange-based plans to make them more affordable; that means the providers and hospitals considered in-network may be limited. Don’t wait until you have coverage to learn you will need to drive 30 minutes to get to urgent care or that the doctor you’ve seen for many years is no longer in-network. Investigate the network before you buy.

4. You may need to switch your medication to a different brand or generic version.

The medication you take now may not be covered next year, even if your plan currently covers it. Prescription drug formularies change from year to year. You may be forced to take a similar name brand medication or the generic version.

5. Unless you pay, you have no coverage.

It may sound basic, but many people get their ID card, sign up to have their premiums automatically withdrawn from their bank account and then never check to see if the payments are being made. Unfortunately, there have been glitches in the enrollment systems for both state-based and federally facilitated health insurance exchanges. Some people who made their first monthly premium payment and received enrollment materials are going to use their coverage and finding out they have none.

The Wall Street Journal’s Stephanie Armour reported on July 7, 2014, that “Months after the sign-up deadline, thousands of Americans who purchased health insurance through the Affordable Care Act still don’t have coverage due to problems in enrollment systems”5 The article noted that “there are no hard numbers,” and the problem has impacted a “tiny fraction” of the 8 million enrollees. However, for those who go to use their coverage, it is a big deal.

6. Unless you are getting a large subsidy, the plans you compare on HealthCare.gov or your state exchange may not be the best option.

Health insurance plans sold away from the state-based and federally facilitated health insurance exchanges may be cheaper—and they offer the same benefits. All health insurance plans considered minimum essential coverage must adhere to the same Affordable Care Act provisions. That means essential health benefits must be included, certain preventive services must be covered at no additional cost, and applicants cannot be denied or charged more based on health history, to list a few.

Only plans sold on state-based and federally facilitated exchanges qualify for premium tax credits and cost-sharing subsidies. However, if your income makes you ineligible for financial assistance or the credit and/or subsidy you would receive is minimal, you might consider checking rates for health insurance plans sold in the private marketplace. Again, even if the rate is comparable or even a bit more, check the network. Networks are one factor that may vary significantly from on-exchange coverage to off-exchange coverage.

As you prepare for the next open-enrollment period, spend time carefully considering the next year’s coverage. If you need help, contact a health insurance agent or broker who can answer your questions and assist you in selecting the best coverage for your situation.

1 HealthPocket.com. “Deductibles, Out-Of-Pocket Costs, and the Affordable Care Act.” Dec. 12, 2013. Retrieved from http://www.healthpocket.com/healthcare-research/infostat/2014-obamacare-deductible-out-of-pocket-costs

2 HealthPocket.com. “Healthcare Usage & Choosing the Least Expensive Affordable Care Act Plan.” Dec. 19, 2013. Retrieved from http://www.healthpocket.com/healthcare-research/infostat/medical-use-age-obamacare-plan-choice

3 Hamel, Liz, et al. “Survey of Non-Group Health Insurance Enrollees: Conclusion and Implications.” The Henry J. Kaiser Family Foundation. June 19, 2014. Retrieved from http://kff.org/health-reform/report/survey-of-non-group-health-insurance-enrollees/

4 Ibid.

5 Armour, Stephanie. “Some Still Lack Coverage Under Health Law.” The Wall Street Journal. July 7, 2014.