Health Insurance: Which ACA Tier is Right for You

Planning to buy health insurance on the state-based marketplaces? Find out which "metal" tier is right for you.

Young couple doing paperwork

Which health insurance plan is right for you?

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Consumers looking to maximize tax credits and subsidies should consider silver plans, experts say. Individuals who earn up to 400 percent of the federal poverty level ($45,960 for individuals and $94,200 for a family of four in 2013) can apply for tax credits to offset premium costs. "The size of your tax credit is based on your income and the cost of the second-lowest silver plan in your area," says Miller. "The tax credit remains same regardless of tier. It will cover a greater share of your premium if it's a silver plan, less if you select a gold or platinum plan."

Subsidies to help with out-of-pocket expenses are available to individuals who earn up to 250 percent of the federal poverty level ($28,725 for individuals and $58,875 for a family of four in 2013). "But they must enroll in a specified silver plan to receive the subsidy," Miller points out.

Think twice about the lowest premium

Some consumers, especially those with limited incomes who do not qualify for tax credits or subsidies, might consider bronze plans that have low premiums. "But these plans are also going to offer the least comprehensive coverage, that means higher deductibles and up front costs before your coverage begins," says Mitts. "Consumers have to be prepared to pay the full cost of their health care that they need."

The same holds true for catastrophic plans. People under the age of 30 and individuals with very limited incomes can purchase catastrophic plans designed to cover worst-case scenarios. Although these plans have low monthly premiums, you must pay high deductibles and out-of-pocket expenses before the insurer begins paying for covered services. Consumers who purchase catastrophic plans cannot apply for tax credits or subsidies to help with costs. "The catastrophic plan was developed for young adults to encourage them to buy some health insurance rather than sit on the sidelines," says Kominski.

Examine the details for each plan within a tier

Once you have settled on a tier, carefully review the details of each health insurance plan offered in that category, including the cost of monthly premiums, deductibles, copayments and coinsurance. Insurers must provide an easy-to-read summary of benefits and coverage to help consumers compare plans. "Even within a tier, there could be differences in out-of-pocket expenses depending on the health services you need," says Volk. "A plan may work differently for you, even though your neighbor has the same plan, because of the services you use."

Standardized plans ease the process

Some states, such as California, have made comparison-shopping even easier by standardizing the plans that insurers can sell in the new marketplaces, says Kominski. "The deductible, coinsurance, copayments are all the same in standardized plans. The main difference is in the network of providers. Now you can decide: Which plan is better for me? Which provides better coverage and access in my area? Does the plan with a premium that is $50 cheaper provide adequate access to care where I live? It will be easier to make those comparisons."

Look for value-based elements

Dr. A. Mark Fendrick, director of the Center for Value-Based Insurance Design at the University of Michigan, urges consumers to look for health insurance plans that provide incentives for using preventive measures, medical procedures and medications that have been scientifically proven to be effective. These types of plans "make all the tiers better by lowering cost sharing for services that produce a lot of health and, if necessary, raising cost sharing for services that should not be used," he says. "Consumers get more for their money." For example, a value-based plan may waive the $20 copayment for a doctor's office visit if the patient is getting a diabetic foot check, which can prevent more serious and costly problems in the long run.

While no one can predict how consumers will respond once the marketplaces open, health advocates such as Kominski remain hopeful. "There is a lot of reason for optimism that consumers are going to be better off."



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