As you are probably aware, the Affordable Care Act (ACA) requires all U.S. citizens and legal residents to have qualified health coverage beginning in 2014, or pay a tax penalty. The penalty will be phased-in according to the following schedule: $95 in 2014, $325 in 2015, and $695 in 2016 for the flat fee or 1.0% of taxable income in 2014, 2.0% of taxable income in 2015, and 2.5% of taxable income in 2016. Beginning after 2016, the penalty will be increased annually by the cost-of-living adjustment. Exemptions will be granted for financial hardship, religious objections, American Indians, those without coverage for less than three months, undocumented immigrants, incarcerated individuals, those for whom the lowest cost plan option exceeds 8% of an individual's income, and those with incomes below the tax filing threshold. Under the new guidance, for plan years beginning in 2015 an applicable large employer's health coverage will be considered affordable under the play or pay rules if the employee's required contribution to the plan does not exceed 9.56 percent of the employee's household income for the year, up from 9.5 percent.
One part of the affordable care act requires every state to either set up a state Healthcare Exchange, (sometimes called a Healthcare Marketplace), or use the federally created Healthcare Exchange. Beginning in 2014 though, you also have another option – the truecoverage marketplace. All healthcare marketplaces offer healthcare plans from one or more insurance or managed care providers, but the truecoverage marketplace offers you additional options such as dental and vision plans that may not be available on the state or federal marketplaces.
The truecoverage marketplace also makes shopping for healthcare simple, with tutorials and tools to help you find the right plan for you. So get started now with a Free Quote.
There are many different types of health insurance plans, but most plans are one of four types:
- HMO (Health maintenance organizations)
- PPO (Preferred provider organizations)
- POS (Point-of-service (POS) plans)
- HDHP (High-deductible health plans)
Different plan types provide different levels of coverage for care you get inside and outside of the plan's network of doctors, hospitals, pharmacies, and other medical service providers. There are other differences between plan types too. The overview below provides a high level summary of plan types, but we strongly encourage you look at the summary of benefits and coverage (SBC) for each plan you are considering purchasing. The SBC provides plan coverage details and explains the costs of different health care services. Plan SBCs are available when you start shopping for plans using our Get A Quote tool.
An HMO typically, but not always, delivers health services through a closed network. With an HMO, you may have:
- To designate a Primary Care Physician to manage your primary care and to refer you to Specialists when necessary
- The Focus on preventive care
- Often the most predictable out-of-pocket costs of all plan types
- The least amount of paperwork compared to other plans.
You can visit any physician in your HMO's network. If you see a doctor who's not in the network, you'll have to pay some or the entire bill yourself -- unless it's a true emergency.
- Lower deductibles than in other plan types
- Copays for each type of care, although some plans also offer co-payments
HMO's typically have reduced paperwork since many or all of your physician visits are pre-authorized.
With a PPO, you may have:
- A greater freedom to choose your health care providers from a list of preferred providers. Compared to an HMO you do not require pre-authorizations for Specialist visits
- You have a greater choice in managing your care
- Your out-of-pocket costs are often higher than those in an HMO
- More paperwork than other plans if you see out-of-network (Non-Preferred) providers
- You can visit any physician in the Preferred Network. If you see a doctor who's not in the network, you'll have to pay some or all of the bill yourself.
- Premium: Your monthly payments based on the negotiated rates PPOs have with their network providers
- Deductible: Some PPOs may have a deductible which you must satisfy. If you see an out-of-network doctor your deductible amount may be higher than visits with in-network physicians
- Copay or coinsurance: A copay (flat fee) you pay to the physician or coinsurance (a percent of charges) you also pay at the time of visit
- Other costs: If your doctor charges more than others in the area do, you may have to pay the additional charges after your insurance pays its portion of the bill
A POS plan blends features of an HMO with a PPO. With POS plan, you may have:
- More freedom to choose your health care providers than you would in an HMO
- Out-of-pocket costs you can control
- A moderate amount of paperwork if you see out-of-network providers
- A primary care physician who coordinates your care when you use network providers
You can visit any In-network physician that you are referred to by your primary care physician. If you visit out-of-network doctors, you'll pay additional costs.
- Premium: With a POS plan, your premium will often be lower if your deductible is high
- Deductible: You pay a higher deductible if you see an out-of-network physician vs an in-network physician
- Copays or coinsurance: Similar to the deductible, your copay or coinsurance cots are typically higher for out-of-network physician visits vs an in-network physician
If you visits an out-of-network physician, you have to pay your medical bill yourself and then file a claim with your POS plan for reimbursement for some or all of the charges.
HDHPs often have the lowest premium costs of the four types of plans described here, but they typically also have the highest deductibles as well.
- HDHP deductibles are defined by the Internal Revenue Service (IRS) and reviewed annually
- Higher out-of-pocket costs than many types of plans, but if you reach the maximum out-of-pocket amount, the plan pays 100% of your covered expenses (these plans are also known as 100% plans)
- A health savings account (HSA) can be paired with qualified HDHPs to help pay for your care with pre-tax funds
- A moderate amount of paperwork
- A primary care provider may or may not be required depending on the plan. Any plan type (HMO, PPO, POS) can be an HDHP plan
The physicians you can visits varies depending on the type of plan selected - HMO, POS, or PPO.
- Premium: The premium is the lowest for a HDHP compared to other plans
- Deductible: The deductible is high – over $3,000 a year for one adult and $6,000 a year for a family. These amounts are often revised upwards annually by the IRS. With an HDHP, though, your preventive care is free even if you haven't met the deductible
- Copays or coinsurance: The type of health plan you select -- HMO, POS, or PPO -- determines which one you pay
With an HDHP, your out-of-pocket spending is capped. For instance, if you have insurance only for yourself, the most you have to spend in a year is $6,350 (2014 amount). If your insurance plan is for your family, your maximum expense in a year is $12,700 (2014 amount). The totals include your deductible. If you reach this amount, the HDHP pays 100% of your care afterwards.
The amount of paperwork varies, depending on whether you get care from a PPO, HMO, or POS plan. Keep all your receipts so you can document when you've met your deductible.
Make sure to note the type of each plan you're considering and remember to get details about any plans you wish to enroll in. Other information that may also be important in selecting a plan includes the plan Physician network, sometime called a provider directory, and a list of covered drugs. If you plan to stay with your current doctors, check to see if they're included in the provider directory before choosing a plan.
A comparison of the 2016 and 2015 limits is shown below:
|Contribution and Out-of-Pocket Limits for Health Savings Accounts and High-Deductible Health Plans|
|For 2016||For 2015||Change|
|HSA contribution limit
(employer + employee)
|Individual: no change
|HSA catch-up contributions
(age 55 or older)*
|HDHP minimum deductibles||Individual: $1,300
|Individual: no change
Family: no change
|HDHP maximum out-of-pocket
(deductibles, co-payments and
other amounts, but not
|* Catch-up contributions can be made any time during the year in which the HSA participant turns 55.
** Unlike other limits, the HSA catch-up contribution amount is not indexed; any increase would require statutory change.
|ACA out-of-pocket limits for HDHPs||Individual: $6,850
|IRS out-of-pocket limits for HSA-qualified HDHPs||Individual: $6,550
- If you expect a lot of doctor visits or need regular prescriptions: You may want a plan with higher monthly premiums, but lower deductibles, and pay more of your costs when you need care
- If you don't expect to use regular medical services and don't take regular prescriptions: You may want lower cost, higher deductible plan. These plans cost you less per month, but pay less of your costs when you need care
- If you're under 30 or have a hardship exemption and want low monthly premiums: You may want to choose a catastrophic plan designed to protect you from worst-case scenarios, like serious accidents or diseases. These types of plans have strict rules about who can join based on age or financial status. They offer only limited coverage compared to other plan types
While it's impossible to predict all your Health Care needs for the year ahead, you can find a plan that best fits your budget and meets your family's expected needs for the coming plan year.
There are several important things to consider when you compare Health plans.
Monthly premiums: This is the amount you pay your insurance company for your plan, usually monthly, whether you use medical services or not. Monthly premiums are important, but they're not all you need to think about. Picking a plan only because its premium is low may not be the best decision for you.
- If your plan has a lower monthly premium, your out-of-pocket costs may be higher when you need care
- If your plan has a higher premium, your out-of-pocket costs may be lower when you need care
Generally speaking, the lower your monthly premium the higher your out-of-pocket costs will be. It's important to keep this in mind when you compare plans.
Out-of-pocket costs: These include the costs you pay before your insurance begins to pay its share (your deductible, copayments, coinsurance, and your out-of-pocket maximum). It's important to know how much you have to pay out of your pocket for services when you get care. You pay these out-of-pocket costs in addition to your monthly premiums.
The category of plan you choose affects how much you spend on out-of-pocket costs. Generally, lower cost plans have higher out-of-pocket costs when you need care while higher cost plans have out-of-pocket costs.
Type of insurance plan and provider network: Some types of plans allow you to see almost any doctor or Health Care facility. Others limit your choices to a network of doctors and facilities, or require you to pay more if you use providers outside the network. If you have a specific physician you want to visit, make sure they are in the network you purchase using the truecoverage marketplace Doctor Finder.
Along with the requirement that everyone have health care coverage, the ACA also expands what expenses health plans are required to cover. These changes include:
- No Pre-Existing Condition Exclusions for Children: Health plans can no longer limit or deny benefits to children under 19 due to a pre-existing condition
- Young Adults can stay on parent health plans longer: If you are under 26, you may be eligible to be covered under your parent's health plan
- New Policy Cancellation Rules: Insurers can no longer cancel your coverage just because you made an honest mistake
- Guaranteed Right to Appeal: You now have the right to ask that your plan reconsider its denial of payment
- No Lifetime Limits on Coverage: Lifetime limits on most benefits are banned for all new health insurance plans
- Limits on administrative expenses: Your premium dollars must be spent primarily on Health Care – not administrative costs
- No Cost Preventive Care: You may be eligible for recommended preventive health services. No copayment
- Your Choice of Doctors: Choose the primary care doctor you want from your plan's network
- Emergency Services: You can seek emergency care at a hospital outside of your health plan's network