During an open enrollment period, Americans shop on health insurance marketplaces to buy coverage. Many people find this process confusing and complicated. Particularly, those who are using the marketplace for the first time to buy an insurance plan. Perhaps they do not understand what a health insurance marketplace is. They might be unsure of how it works overall. They might have questions about how to get financial help for insurance or what their coverage options are.
If you have similar questions, you have come to the right place. This quick guide will provide you with essential information on health insurance marketplaces. We will discuss how they work, health insurance coverage, and plan options. Also, we will go through the steps of choosing a health plan according to your healthcare needs and budget.
Health Insurance and How it Works
At some point in life, you will get sick and need assistance from the healthcare system. Whether it is an emergency or a routine doctor’s visit, the costs of medical care are often high. That makes it even more unpleasant, especially if you have to pay the whole amount on your own. For example, the average cost of a three-day hospital stay is $30,000. Having health coverage can help protect you from high expenses like these. This is precisely why health insurance exists and why everyone should be covered.
What is Health Insurance?
Health insurance is a type of insurance coverage that pays for medical expenses incurred by the insured. It is a service in which the insured pays monthly payments, called monthly premiums. To return the favor, your insurance company agrees to pay a portion of your covered medical costs. The insurance premiums you have chosen will determine the types of care, treatment, and services your insurance will cover. It will also determine how much they will pay for different treatments and the breakdown of cost sharing.
Why is Health Insurance Important?
When you get injured or sick, your health insurer will pay a share of services covered under your insurance plan. In addition to reduced costs, you can also take advantage of the preventive care services your plan offers. These services help you avoid expensive hospitalizations or acute care. And finally, according to the Affordable Care Act, every U.S. citizen is required to obtain and maintain health insurance coverage. Otherwise, you will have to pay tax penalties.
Where to get Health Insurance?
You can acquire health insurance in many ways. There are government insurance programs, such as Medicare, suitable for people who are 65 or older or people with disabilities. Another government program, Medicaid, is designed for low-income individuals and families. Many people get insurance through their employers while others purchase a plan directly from an insurance company. Since 2014, the health insurance marketplace has been offering access to affordable care. Particularly, to those who cannot afford or obtain health coverage through other means.
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What is the Health Insurance Marketplace?
A health insurance marketplace is also known as a health insurance exchange. It is a platform for eligible individuals, families, and small businesses without health care insurance. Here they can browse, compare, and purchase various insurance plans. The platform is open to all Americans who want to apply for coverage or check if they qualify for savings. People can also make changes to their health plans or check eligibility for other health programs such as Medicaid or the Children’s Health Insurance Program (CHIP). Note that if you qualify for Medicaid or CHIP, a marketplace plan will no longer be available to you. You won’t be able to obtain advance payments of the premium tax credit and savings on out-of-pocket costs as well. The regulations are: if you use Medicaid, you should immediately end marketplace coverage with a premium tax credit.
History of the Health Insurance Marketplace
The Affordable Care Act of 2010 (the ACA, also known as Obamacare) established the health insurance marketplace intending to expand access to health insurance. The ACA also aimed to control costs for consumers so that every American can carry some form of health insurance. During the implementation of this Act, states had a choice to either use the federal marketplace or create their own marketplaces. Thirty-seven states chose to use the federal Healthcare.gov marketplace to shop for health coverage. The remaining 13 states and the District of Columbia decided to build their own marketplaces. They all have different names, such as Washington Healthplanfinder for Washington, or D.C. Health Link for Columbia.
Private health insurance companies list their plans with the marketplace. To be able to do so, they first have to include all essential health benefits into their offer, such as:
- Hospital care
- Preventive care
- Laboratory services
- Prescription drugs
- Mental health and substance abuse services
- Emergency services
- Outpatient/ambulatory services
- Maternity and newborn care
- Pediatric services
- Rehabilitative services
You can compare health insurance options based on price, benefits, quality, and other relevant features before you choose the one to suit your needs and budget. Depending on your income and family size, you can also find health insurance policies that offer subsidies offered by the federal government.
Types of Health Insurance Marketplaces
There are three types of health insurance marketplaces:
- Federal government marketplace
- State government marketplaces
- Private marketplaces
As mentioned previously, during the implementation of the Affordable Care Act (ACA), or Obamacare, some states decided to create their own marketplace. This means that if you reside in a state that runs its health insurance marketplace, you can also use a government one instead. Other states that do not have their own marketplace use the federal government marketplace. Also, people from all states can use a private health insurance marketplace, such as eHealth, to purchase an ACA plan. The program includes the same essential benefits as plans offered at federal or state health insurance marketplaces.
Additionally, if you are entitled to federal subsidies, you will get the same amount of support when purchasing insurance on the private marketplaces as you would on the government marketplaces. The same goes for health insurance premiums. Your premiums will be identical on the federal, state, and private health insurance exchanges. However, people may pay different prices for their marketplace plans. The only reason for this is because premiums will vary based on the state, household income, and family size. But, the price will not differ from one site to another for the same plan.
Types of Health Insurance Plans on the Marketplace
At the health insurance marketplace, there are four tiers of qualified health plans:
A qualified health plan is a plan that meets the minimum requirements of the Affordable Care Act. One requirement is that it includes the ten essential health benefits. These categories are also called metal levels. Each group offers better benefits and less cost-sharing. For each level plan and year, you cover a different percentage of your healthcare expenses. The insurance company takes care of the rest. Total annual payments include premiums, deductibles, and out-of-pocket costs like copayments and coinsurance. Deductibles are the amounts you have to pay for covered services before your insurance starts to payout. Out-of-pocket costs are expenses that the insurance company does not cover, and you have to pay on your own.
The bronze plan is the most basic plan. It pays 60% of your health care bills and costs, while you cover 40%. It has the lowest monthly premiums, high deductibles, and the highest copays and coinsurance amounts. Bronze plans are suitable for individuals who are generally healthy and do not use medical services often. The average bronze plan for 2019 costs $339 in monthly premiums.
The silver plan pays 70% of the cost for the benefits that the policy covers. That leaves you to pay about 30%. These plans can make your health costs lower through cost-sharing reductions. However, if you qualify for cost-sharing reductions, you must pick a Silver plan to get the extra savings.
The monthly premiums and costs are about halfway between the least and most expensive options. If you think you will need reasonable medical care throughout the year, then a silver health plan is ideal for you.
The gold plan pays, on average, 80% of covered health care expenses while you spend 20% of health care expenses. With this plan, you pay higher premiums to have your health insurer pay a higher percentage of your health care costs. If you think you will need medical care regularly throughout the year, consider a gold plan.
The platinum plan pays 90% of covered health care expenses and leaves 10% of health care expenses to you. A platinum health plan typically has the highest monthly premium and lowest costs when you get medical care. It also has the lowest deductible out of all of the arrangements. If you can pay high monthly premiums and expect to need a lot of medical care, consider a platinum plan.
What is a Catastrophic Health Plan?
A catastrophic plan is a budget way to secure yourself from unforeseen scenarios, such as an unexpected and prolonged illness or injury. It is suitable for young individuals who want to pay low monthly premiums. These plans also have very high deductibles. For 2019, the deductible for all catastrophic plans is $7,900. Only after you spend that amount, your insurance company pays for all covered services.
Only individuals under 30 and individuals of any age with a hardship exemption or affordability exemption are eligible to buy a catastrophic plan. All catastrophic plans cover the same ten essential health benefits that are offered by other marketplace plans. Besides that, they include three primary care visits per year before you have met your deductible.
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Enrollment in the Health Insurance Marketplace
If your employer doesn’t offer health benefits or another form of health coverage, you could shop for health insurance during an open enrollment period. That is the time each year in which you can sign up for a health plan for the first time. You can also amend health plans through health insurance exchanges. The open enrollment period is between November 1-December 15.
Unfortunately, you are no longer able to enroll in the 2019 period. However, you still have a chance to enroll in a Marketplace health insurance plan. That is only in case you qualify for a special enrollment period (SEP). The particular enrollment period is defined as time outside the yearly open enrollment period when you can get health insurance. SEP is open to people for 60 days after specific life changes. These changes include moving, getting married, having a baby, adopting a child, or losing health coverage.
Who is Eligible to use the Marketplace?
You need to meet specific eligibility requirements to enroll in health coverage through the marketplace. To qualify, you:
- Must be a U.S. citizen or national
- Must live in the United States
- Cannot be incarcerated
Additionally, to be eligible to use the marketplace to buy a health or dental plan, you must not have Medicare coverage.
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Who is eligible for a health insurance subsidy?
Advanced Premium Tax Credit
The federal government offers two kinds of subsidies for individual health insurance plans. The first financial assistance is the advanced premium tax credit. That is federal tax credit offered to individuals using a health insurance exchange who have an income ranging from 100% to 400% above the Federal Poverty Level. Premium tax credit subsidies lower your monthly payments or premiums. Note that if you have taken more premium tax credit in advance than you are due, you need to return the excess. You do that when you file your federal income tax return at the end of the year. If you use less premium tax credit, you will receive the difference.
The second type of financial assistance is a cost-sharing reduction. It reduces the out-of-pocket costs you pay during the policy period for health care services you receive, including copays, deductibles, and coinsurance. Cost-sharing reductions are often called extra savings. Individuals with income up to 250% of the poverty line are eligible for a cost-sharing reduction. They need to enroll in the Silver plan through the health insurance marketplace in their state and are eligible for a premium tax credit.
Additionally, examples of subsidized coverage include Medicaid and the Children’s Health Insurance Program (CHIP).
How to Apply?
Consumers can apply for coverage online (www.healthcare.gov), by mail, or in-person with the help of a qualified consumer assister. After you set up an account, you apply through a website by filling out an application. You will need to provide information like yearly and monthly earnings, size of your family, existing health coverage, etc.
The marketplace uses this information to find options that meet your needs and enable you to see all the available health plans for which you qualify in your area. You can compare health coverage options, including private insurance programs and free and low-cost coverage ones using Medicaid and the Children’s Health Insurance Program (CHIP). You can also use those above to check if you are eligible for subsidies.
Need Help Applying?
If you need help to complete your application, there are telephone helplines (1-800-318-2596) and online chat options available 24/7. Certified application counselors will help consumers, small businesses, and their employees complete their eligibility and enrollment forms. They also provide assistance regarding their health coverage options through the marketplace.
If open enrollment is over, see if you can apply for a particular enrollment period due to a qualifying life event.
How to Apply for Medicaid and CHIP through Marketplace?
Some individuals and families who apply for coverage through the marketplace are eligible for Medicaid or the Children’s Health Insurance Program (CHIP). Low-income people, children, pregnant women, the elderly, and people with disabilities can use Medicaid and CHIP. These services provide free or low-cost coverage and introduce many benefits, including prescription drugs, hospital care, and doctor services.
You can apply for Medicaid or CHIP through the health insurance marketplace. To do so, visit the marketplace website and fill out an application. The marketplace uses your application to see if you or anyone in your household is eligible for Medicaid or CHIP. There is also the option to apply directly to your state Medicaid or CHIP agency. The good news is that you can apply for Medicaid and CHIP any time of year. These programs do not have open enrollment periods.
Medicaid and CHIP Overview
As mentioned above, low-income people, families, children, pregnant women, the elderly, and people with disabilities qualify for Medicaid and the Children’s Health Insurance Program. However, in some states, the programs cover other people below a certain income level. With that said, you may qualify for Medicaid if you make up to $12,060 a year for one person or $24,600 for a family of four. However, your eligibility depends on the state where you live. You may qualify for these programs in some states even if your income is higher than the required amounts, depending on medical needs.
How to Choose the Best Health Insurance Plan on the Marketplace
As a consumer, you should do your research before choosing the appropriate health insurance plan.
First, you need to determine which coverage services you will want. To do this successfully, you need to assess your family’s health history. Look at the current state of your health. And then, think about your extended family group to check if hereditary conditions or genetic disorders run in your family. You might also want to consider risk tolerance because even healthy people can get sick and have accidents.
Second, you need to evaluate your household income and create a budget for costs related to health care. You should determine how much you can pay each month for your health care needs. Consider also any financial assistance or potential discounts. Pay attention to potential deductibles, copayments, and coinsurance incurred. These can be applied when paying for medication or visiting a hospital or other medical facility.
Finally, evaluate and compare the plans on the health marketplace website. Make sure you understand what each plan type offers and how their terms will apply to you. This will help you find affordable coverage that is the best fit for your financial situation and health care needs. It is time to consider what you want. Broad health coverage and higher premiums or possibly lower premiums and more formidable out-of-pocket costs? For instance, choose a bronze plan if you are healthy most of the time and do not expect to need costly medical services often. If, on the other hand, you have a medical condition and you know you will need care, choose a gold or platinum plan. These medical plans pay more of your medical costs, and you can receive the added value of your health insurance plan.
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