Health insurance is confusing. As can the public exchange for health insurance. There is no getting around it. There are so many things to consider: deductibles, premiums, coinsurance, max out of pocket, prescription coverage, etc. And it can be even more confusing when you don’t have an HR rep at your work to walk you through the different options. So if you are self-employed or don’t have health insurance offered at your place of work, this article is for you.
(1) What is the Public Exchange?
The public exchange is often nicknamed Obamacare. It was created as part of the Affordable Care Act passed under President Obama.
It is a group of insurance providers who offer health insurance coverage to those people who do not have coverage or do not have affordable coverage through their employer.
The public exchange is sometimes called “The Marketplace” for health insurance.
To access the public exchange, simply go to this website, fill out some information and you will get to pick your health insurance coverage during the open enrollment period which happens in October of every year.
Once you have logged on (during open enrollment) you will be able to see several different health insurance companies and plans that are available for you to purchase.
(2) State Regulations
The health insurance marketplace is run and controlled by the federal government. And because health insurance is regulated by the federal government, there are several rules that the federal government imposes on health insurance, health insurance regulators, and health insurance companies. I won’t go into detail on those because that would be an entire article by itself (or maybe a book).
However, although the federal government regulates health insurance, each individual state can impose further rules and regulations that only apply to that respective state. Because of this, I cannot go into detail on all 50 states in this article (and that would be really boring for you to read).
For example, some insurance providers do not operate in all 50 states. So someone in one state may have the option to purchase health insurance from a particular company while someone in a different state may not.
Just know that someone in Iowa may have somewhat different rules than someone in California but they will all follow the federal requirements at a minimum.
(3) Different Plans on the Public Exchange
When you log onto the public exchange and fill out all of the required information you will get a list of all of the different health insurance providers and plans that are available to you. You will likely have dozens of plans to choose from from several different insurers.
You might have four options from Blue Cross Blue Shield, 5 options from Aetna, 6 options from United Health Care, etc.
All of these options are broken down in four main categories:
- Bronze
- Silver
- Gold
- Platinum
The main distinction in different healthcare options on the public exchange is between these four options.
The difference between these plans has to do largely with the amount of cost sharing that you will have with the insurance company.
Just because you have health insurance doesn’t mean that you won’t have to pay medical bills!
As a general rule, you will have to pay 60% of all of the medical bills (above your deductible and up to your maximum out of pocket amount) with the Bronze Plan.
As a general rule, you will have to pay 70% of all of the medical bills (above your deductible and up to your maximum out of pocket amount) with the Silver Plan.
As a general rule, you will have to pay 80% of all of the medical bills (above your deductible and up to your maximum out of pocket amount) with the Gold Plan.
As a general rule, you will have to pay 90% of all of the medical bills (above your deductible and up to your maximum out of pocket amount) with the Platinum Plan.
It looks something like this:
At first glance, it might seem that the Platinum Plan is the way to go. After all, it splits the cost of health insurance 90/10 with you! Who doesn’t want that?
But there’s a catch. The Platinum Plan is the most expensive per month. (It has the highest premium.)
Likewise, the Bronze Plan has the lowest premium per month. But in exchange for paying a lower premium, you will have to cover a larger percentage of any medical bill that you get until you meet your annual maximum out of pocket amount.
So as you can see, it’s a trade off. You have to decide which plan is best for your situation.
(4) Rules of Thumb When Choosing Health Insurance Coverage
When you are choosing health insurance coverage there are a lot of things that you should take into account.
Here is an article with a big list of them.
But one of the major things that you should consider (aside from your own health) is the deductible amount.
For the most part, the Bronze and Silver Plans are considered High Deductible Health Insurance Plans. This means that you are able to have an HSA with them (which can be a really big deal).
So, as a rule of thumb, if you are in good health and only go to the doctor for your annual checkup and if you were to have a big emergency (such as a car accident or surprise cancer scare) then you might want to go with the Bronze or SIlver Plan.
This is because you will probably benefit more from having the decreased premiums and increased deductibles that those plans have to offer because you don’t have hospital bills very often (if at all).
However, if you are in poor health and have to go to the doctor, hospital, etc. on a regular basis and routinely meet your annual maximum out of pocket amount, you should probably go with the Gold or Platinum Plans.
This is because they typically have a lower deductible and maximum out of pocket amount. And if you are in poor health you will meet those each year much faster and more often than a healthy person.
Final Thoughts
When you are choosing your health insurance plan, there are a number of considerations that you should think about. It’s not as simple as just choosing the cheapest plan or the plan that covers the most stuff.
Here is an article on how health insurance works for more details.
This is a confusing topic. I know. I have been confused by it for much of my adult life as well.
But I am here to help you now that I understand it better than I used to!
I will do whatever I can to help give you the tools that you need to succeed with your money!
You can do this!
Until next time!
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