On December 29, 2015, HealthCare.gov released a new commercial that can be viewed on TV as well as YouTube. The title of the commercial is “Better Health Care, Better Savings” and it encourages individuals and families to sign up by January 15 in order to have coverage start February 1. The commercial states that financial help is available for insurance plans sold through HealthCare.gov and many individuals who sign up for coverage find “low premium plans for less than $75 a month.”
Based on our experience, this is certainly true. Depending on the income situation for those who are interested in signing up for a marketplace plan, federal subsidies can make a huge impact on the monthly rates that individuals or families pay. The advertisement illustrates this by showing a monthly premium of $22 for a lady in Georgia and a premium of $405 per month for a family of 4 from New Jersey.
The ad continues to state that “there are quality plans that include coverage for doctor visits, no cost preventive services, and prescription drugs.”
“Quality” can be a subjective term, so we wanted to take a moment to point out a few things that the commercial isn’t telling us:
- A good percentage of the marketplace plans that are offered are HMO (health maintenance organization) plans as opposed to PPO (preferred provider organization) plans. In general, HMO plans have more restrictive networks, offer no out-of-network coverage, and offer no coverage without a referral from your primary care physician. We have seen countless times where individuals were considering HMO plans until they realized that their primary care physician wasn’t in the plan’s network. That’s almost always a deal-breaker.
- Another sizeable portion of the plans that are offered are HSA’s (health savings accounts). These are qualified high-deductible plans that are designed to be used in conjunction with a health savings account that is set up through a financial institution. Usually there are no copays and HSA customers pay the full cost of doctor’s office visits, prescription drugs, and hospital services from the health savings account until their deductible is reached.
- The lowest cost plans have the highest deductibles and annual out-of-pocket maximums. It is quite common to see individual plans being offered at with deductibles of $6,850 and family plans with deductibles of $13,700. Savings on out-of-pocket costs is available only for those who fall into certain annual income ranges. Otherwise, monthly premiums might be reduced in the form of a subsidy but individuals and families will still be on the hook for the entire amount of the deductible and out-of-pocket maximum that their plan carries.
- Prescription drug coverage on some of the marketplace plans might not be what you think. Many of us are accustomed to tiered copays for prescriptions and a lot of the marketplace plans have copays for only the low-cost prescriptions. These plans will then charge you a flat coinsurance amount (such as 40%) for non-preferred brand drugs or specialty drugs – provided that the drugs are even on the formulary at all. If your prescriptions aren’t on the formulary, you will face significant out-of-pocket costs since there is essentially no insurance coverage for your medications.
If you still need to purchase coverage for 2016, be sure to do your homework. Here are a few key steps to consider:
- Investigate the insurance plan networks to ensure your doctors and preferred hospitals are in-network. If they aren’t, you could be looking at substantial costs.
- Make sure you understand the type of plan(s) you are considering. All plans are required to have a summary of benefits and coverage, so take a look at them so that you don’t encounter any surprises. Know the out-of-pocket exposures you will face so that you can plan accordingly.
- Research prescription drugs to see if your drugs are covered and, if so, what you will be paying for them.
Your best bet is to find an independent agent who has completed his or her Federally Facilitated Marketplace (FFM) training and registration. They can help guide you through the health insurance maze and simplify things for you so that you know what you are purchasing.
Health insurance isn’t like other online purchases, as there are very real financial consequences for choosing the wrong type of coverage. “Quality” plans exist in the marketplace but you need to do your due diligence to find them. Finally, keep in mind that quality health insurance might cost more than you are led to believe.