The Affordable Care Act promises to expand access to health care by providing affordable coverage to millions of Americans. But finding a policy that meets your health care needs and your budget requirements can be daunting.
Now the good news: Shopping for health insurance is about to get easier.
For starters, the new state-based health insurance marketplaces created by the Affordable Care Act provide consumers with a "one-stop shopping experience to easily compare the costs and benefits of plans," says Kevin Lucia, senior research fellow at Georgetown University's Center on Health Insurance Reforms. These marketplaces will offer tax credits and subsidies to people with low and moderate incomes.
To ease the shopping experience, insurers must now provide a summary of benefits and coverage along with a standardized glossary of medical terms. "When comparing plans, think about the health care services you use or anticipate using and the financial ramifications of not having access to the services and providers you want," said Lucia.
Among the factors to keep in mind when shopping for an affordable plan:
Consider "cost sharing" expenses
Many consumers focus on premiums, but out-of-pocket expenses (also know as "cost sharing") can turn what at first appears to be an affordable plan into a financial burden. While cost sharing charges vary from plan to plan, the Affordable Care Act caps out-of-pocket costs at $6,350 for individuals and $12,700 for a family in 2014. (Out-of-pocket maximums for some employer-based health insurance plans won't start until 2015.)
Determining your potential out-of-pocket expenses can be tricky because "the language of cost sharing - deductible, copayment, coinsurance - can be confusing," said Susan Pisano, spokesperson for America's Health Insurance Plans. "But taking the time to calculate these costs is worthwhile."
The deductible is the sum you must pay up front for health care services before your policy's coverage kicks in. For example, a $1,000 deductible means you'll need to spend $1,000 before the plan starts paying for covered services. You are entitled to preventive care – such as annual checkups, immunizations, mammograms, colonoscopy and blood pressure screenings - at no additional cost whether or not you have met the deductible .
Ellen Pryga, director of policy at the American Hospital Association, advises consumers to consider their money management style when deciding between a plan that has a low premium (but high deductible) or a slightly higher premium (but lower deductible). "Some people have no trouble establishing a savings account to cover the deductible. For other people, savings is more difficult. They may be better off paying the slightly higher premium so they aren't tempted to touch that savings account for other reasons."
The copayment is the flat fee ($20, for example) you pay each time you access care, such as visiting the doctor. "Those little things can add up depending on how you use services," said Pisano. For instance, copayments can multiply quickly if you take several medications prescribed by various specialists who all require a visit to the doctor's office to renew a prescription.
Coinsurance refers to the percentage of the cost of a covered health care service that you must pay. Let's say your plan comes with a 20 percent coinsurance. An office visit that costs $100 leaves you with a 20 percent coinsurance payment of $20. These costs can add up quickly, too, when you consider that 20 percent of an emergency department visit or a lengthy hospital stay can lead to thousands of dollars in coinsurance payments . For example, the average cost for non-complicated pregnancy and newborn care can total more than $32,000.
Look beyond the cost of premiums
Avoid the temptation to automatically select the policy with the lowest premium because you may pay more for your health care in the long run. Premiums refer to the annual cost of an insurance plan (usually paid in monthly installments), regardless of whether you access health care services. Plans with low premiums usually have high out-of-pocket expenses to cover deductibles, copayments and coinsurance, so you may be saddled with bills you weren't expecting.