Cutting Your Cost for Marketplace Health Insurance

Love it or hate it, it looks like the health insurance marketplace is here to stay. As of late 2018, the key piece of the health reform law known as Obamacare may still be your best bet to get adequate health insurance if you're not covered by an employer, a spouse's or parent's plan, or some other source. And if you're getting by on a low income, browsing the marketplace is a must: You may well be eligible for a federal subsidy that will cover a big part of the monthly cost of your coverage.

You have to act fast: The open enrollment period for coverage for 2019 has shrunk to just six weeks, from Nov. 1, 2018, to Dec. 15, 2018.

Even if you don't qualify for a subsidy, the marketplace may be a good place to start your search for decent coverage that you can afford. The plans listed there are required to offer the basic routine and emergency care that you and your family may need. These include:

• Addiction treatment
• Ambulatory patient services
• Care for newborns and children
• Chronic disease treatment (such as diabetes and asthma)
• Emergency services
• Hospitalization
• Laboratory services
• Maternity care
• Mental health services
• Occupational and physical therapy
• Prescription medications
• Preventive and wellness services (such as vaccines and cancer screenings)
• Speech-language therapy 

One important point: If you qualify for a subsidy you must buy your plan through the marketplace. During the enrollment process, you'll learn whether you're eligible for a subsidy and how much it will be, how much you will owe and how to pay it.

To get started, www.healthcare.gov or to your state's version of the site, if it has one. As of this date, about half of the states have a version of the exchange, and at least four more are considering introducing one. Whether your state has one or not, the federal marketplace will do.

The marketplace allows a quick side-by-side comparison of the plans that are available to you. Health insurance in the U.S. has become highly Balkanized: The plans you are able to buy and the costs of them may vary even by zip code. 

The database allows you to choose from four tiers of health insurance: Bronze, silver, gold and platinum. Bronze is the least expensive but requires the highest co-pays and deductibles for some services. Platinum may have more bells and whistles than you want or can afford.

When you browse the marketplace, you'll find that your choices come from private health insurance companies, including big names such as Blue Cross, Cigna and Kaiser. The mix you get depends on where you live. 

Each company offers the full range of healthcare plans in each of those four metallic levels. The levels indicate the percentage of costs that the plan will pay towards your healthcare services:

Bronze plans, for example, provide the lowest level of coverage (60%) but have the lowest monthly premiums. As the plan level increases so does the coverage and your monthly premium.

Even within the same metallic level you will still have a number of coverage options from which to choose. These options affect both your premiums and out-of-pocket costs for deductibles, copayments and coinsurance. Compare these two hypothetical silver plans for a 35-year-old non-smoker:

As the table shows, Plan A will cost you more up front for your monthly deductible, but your out-of-pocket expenses will be much lower. Conversely, Plan B will cost less each month, but you will pay more for healthcare expenses because of the higher deductible, copayment and coinsurance amounts.

Depending on your modified gross adjusted income and family size, you may be eligible for subsidies to reduce your healthcare costs. The Cost-Sharing Reduction is a discount available on silver plans only; it can help lower your out-of-pocket costs for:  

• Deductibles – the amount you owe for covered services before insurance kicks in
• Copayments – a fixed amount you pay for a covered healthcare service
• Coinsurance – your share of the costs of a covered healthcare service

As an example, say you visit the doctor and are charged $100. With your particular silver plan, you normally have a co-pay of $25. Because you qualify for Cost-Sharing Reductions and you chose a silver plan through the Marketplace, your co-pay may be as low as $5. Similarly, if your plan has a $3,500 deductible, it may be lowered to $500 with Cost-Sharing Reductions. Essentially, you pay for a silver plan, but receive the increased coverage of a higher metallic level plan, reducing your out-of-pocket expenses.

Cost-Sharing Reductions are available only to people:

• Who are ineligible for public coverage such as Medicaid or the Children’s Health Insurance Program
• Who are unable to get qualified health insurance through an employer
• Whose incomes fall between 100% and 250% of the Federal Poverty Level

Tip: In order to receive Cost-Sharing Reductions, you must enroll in a Silver plan through the Health Insurance Marketplace and apply for the subsidy. And it’s important to note, the cost-sharing subsidies only apply to in-network expenses, so you have to be mindful about where you receive healthcare.

Many more people qualify for Advanced Premium Tax Credits, a type of subsidy that lowers monthly premiums of coverage bought through the marketplace. Like the Cost-Sharing Reductions, you must be ineligible for public coverage and unable to get qualified health insurance through an employer in order to qualify. While you can choose any metallic level plan in the marketplace, your income must fall between 100 and 400% of the federal poverty level.

For 2019, you must make below the following amounts in order to be eligible for a subsidy: $45,960 for an individual, $62,000 for a couple, $78,000 for a family of three or $94,200 for a family of four. In each case, that number represents four times the federal poverty rate for 2019.

Advanced Premium Tax Credits are sent directly from the government to your health insurer to reduce your monthly premium. If you qualify, you can decide how much advance credit payments will be applied to your premium each month, up to a maximum amount. You will receive a refundable credit when you file your federal income tax return if the amount of advance credit payments is less than the tax credit you should have received. Conversely, you will have to repay any excess advance payments with your tax return if your advance payments for the year are more than the amount of your credit.

The exact subsidy you qualify for may not be quite as simple as the match above. The Kaiser Family Foundation calculator is an online tool that shows the subsidy you might receive based on your expected 2019 income, the number of adults and children enrolling in coverage, their ages and whether any of them use tobacco. 

Tip: In order to receive this subsidy, you must apply for Advanced Premium Tax Credits on the Health Insurance Marketplace. This subsidy is not automatic. If you qualify, you can take advantage of both Cost-Sharing Reductions and Advanced Premium Tax Credits to reduce both your monthly premium and out-of-pocket costs.

When you fill out an application online, you will see catastrophic plans listed among your plan options only if you qualify for them. If you do qualify for and choose a catastrophic plan, you will not be eligible for either Cost-Sharing Reductions or Advanced Premium Tax Credits.

A catastrophic health plan covers three primary care visits per year before the deductible is met. It also covers preventive services at no cost to you.

The premium you pay each month should be considerably lower than for other plans, but the out-of-pocket costs (deductibles, co-payments and co-insurance) are generally much higher.

You may be eligible for a catastrophic plan if you are under 30 years old or if you qualify for a “hardship exemption,” because you are unable to afford health coverage. This is determined during the application process and is based on your family size and income.

Depending on your income and family size, you may qualify for Medicaid, a program that provides health coverage for eligible:

• Low-income individuals, families and children
• Pregnant women
• People with disabilities

Each state has its own rules about who qualifies for Medicaid. Under the Affordable Care Act, Medicaid eligibility expanded in many states, and an increased number of people qualified for benefits. If you are eligible, you can get free or low-cost coverage and you won’t need to buy a marketplace plan.

Many states also have a separate program, the Children’s Health Insurance Program (CHIP), which provides health insurance for uninsured children in low-income families who do not qualify for Medicaid but cannot afford private coverage. You can fill out an application on the Health Insurance Marketplace to find out if you are eligible for Medicaid or CHIP benefits. You can also visit your state’s Medicaid website to apply and find out if you qualify.

Many individuals and families will be able to compare and purchase their 2016 health coverage through the Health Insurance Marketplace. After you fill out an application online, you can see if you qualify for Medicaid, CHIP, Cost-Sharing Reductions and/or Advanced Premium Tax Credits. You will also find out if you are eligible for a catastrophic plan that charges lower premiums but higher out-of-pocket costs.

In addition to Essential Health Benefits, all marketplace and many other health plans must cover a set of preventive services such as shots and screening tests at no cost to you, meaning you will not have to pay a copayment or coinsurance. This is true even if you haven’t met your annual deductible. Preventive services include (but are not limited to):

• Alcohol misuse screening and counseling
• Blood pressure screening
• Cholesterol screening
• Colorectal cancer screening
• Depression screening
• Diabetes (Type 2) screening
• Diet counseling
• HIV screening
• Immunization vaccines
• Obesity screening

To find additional information regarding the Health Insurance Marketplace and subsidies, as well as state-specific information and how to apply in your state:

• Visit www.healthcare.gov
• Call 1-800-318-2596
• Follow twitter.com/HealthCareGov
• Contact your current health insurance company