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How does health insurance work? – Understanding the Affordable Care Act

In order to choose coverage that meets your needs there are some important issues to consider.

In the middle of a personal or family health issue, or crisis, the last thing we want to think about is are we covered, and are we covered adequately! This is why, given the high costs of healthcare, it is so important to take care of your insurance and understand how it works from the get-go. Taking the time to be prepared for these inevitable eventualities will allow you to focus your mind on what's most important - how to get the best care for you and your loved one's.

This step-by-step guide will help you make sure you've got all the bases covered.

What does your plan cover?

When the Affordable Care Act (ACA) took full effect in 2014 it was mandated that all plans offered in the Marketplace must cover the following services: 

  • Ambulatory patient services - care you get without being admitted to a hospital. heart-care-1040229_1920
  • Emergency services.
  • Hospitalization.
  • Pregnancy, maternity and newborn care.
  • Mental health and substance abuse services inclusive of counseling and psychotherapy.
  • Laboratory tests and services.
  • Prescription drugs.
  • Rehabilitation services.
  • Pediatric services which include vision and dental care (adult dental and vision is not considered as essential health benefits).
  • Preventative and wellness services including chronic disease management, for example, diabetes.

What are the plan costs?

Your health insurance costs are affected by:

  • Your monthly premium

AND

  • Out-of-pocket expenses - deductibles, coinsurance and copays.

Premiums

There are four types of plans offered to individuals with different combinations of premiums and out-of-pocket expenses:

    • Bronze Plans - have the lowest premiums but highest out-of-pocket expenses. Typically the insurance company will pay 60% of covered healthcare expenses while the remaining 40% has to be paid by the individual. By purchasing Supplemental Health Insurance you can eliminate most of the 40% costs.

 

    • Silver Plans - typically cover 70% of covered healthcare expenses with the remaining 30% paid by the individual.

 

    • Gold Plans - these plans are required to cover 80% of covered healthcare expenses with the remaining 20% paid by the individual.

 

    • Platinum Plans - these plans have the highest premiums but the lowest out-of-pocket expenses. The insurer will pay 90% of covered healthcare expenses and the individual will have to pay the remaining 10%.

 

Out-of-pocket expenses

Out-of-pocket expenses or "cost sharing" does not include your monthly premium. These costs have to be paid by the individual policy holder. The provisions of these costs are not standardized and can vary from insurer to insurer, again emphasizing the need to get expert advice when considering options.

Only when you reach the out-of-pocket limit will you be fully covered for further expenses.

A high deductible plan would leave you most exposed to these out-of-pocket costs should you or your family become ill or require more expensive treatment. Of crucial importance however, is that you cannot be denied coverage with these plans, and cannot be denied coverage for preexisting conditions.

If you are in good health and have generally been healthy, as an alternative, you could decide to get covered with a short term major medical plan. These plans are generally more affordable, however, enrollees will be subject to a tax penalty. Coverage can be denied for preexisting conditions as underwriting is required and the plans are not renewable or guaranteed. 

 

Health Insurance Subsidy

In terms of the ACA there is a government assistance program to help offset health insurance costs. These subsidies provided in the form of tax credits, are granted on the basis of income and need. 

Tax credits are obtained during the application process. It is advisable to talk with one of our experts during this process who can advise you on the most affordable plans to choose from and guide you.

 

Are your preferred doctors and hospitals in the plan?

DoctorAll health insurance plans have a network of providers including doctors, hospitals, pharmacies and laboratories.

If you have doctors who are not in your network (the plan you have chosen), your insurance company may not cover your bill, or, you may have to pay a much higher share of the cost. When enrolling in a plan, you will be able to see if your doctor is in the plan network. The enrollment process allows you to search for doctors and hospitals. This can be frustrating as the directories are not standardized.

In order to keep costs low and under control, many insurance providers have smaller or reduced networks. To be absolutely sure that your doctor is in the health plan you want, it may be best to check with their office before finalizing enrollment.