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Primer for health insurance costs: Lowest premium may not prove cheapest

Health insurance is one of those topics that can make your head spin — whether you've had it for years or never at all. Next year, most Americans will need to have coverage. What's less clear is how many people will be able to make their new insurance work for them.

Just two weeks remain until the deadline to purchase Marketplace coverage that takes effect Jan. 1. For those purchasing coverage — and those who are mystified by the coverage they have — here's a brief primer.

What's a deductible?

The amount you must spend on medical services before insurance starts to pay a share of costs. So a $1,500 deductible means you must pay $1,500 out of your own pocket before your plan pays. Deductibles have been growing for individual and employer-based plans as more responsibility for costs shifts to consumers.

Why would I want a high-deductible plan?

Because they tend to come with cheaper premiums, which you pay each month for coverage. Premiums are the price tags you see on each plan. Generally, the cheapest plans take less out of your wallet initially — but they're often not the best deal for those who need significant care.

How do I decide what's right for me, high or low deductible?

Think about how often you typically see a doctor. Do you have a chronic health condition such as asthma or diabetes? Need certain medications? If you're healthy and just get an annual checkup, you may want to go with a lower-premium, higher-deductible plan. But you're taking some risk if you end up needing more than basic care. Say you have a $3,000 deductible. Could you afford to spend that much out of pocket before your insurance starts helping out?

What's coinsurance and copayment?

Two different things. Coinsurance is the portion of the bill not covered by the health insurance policy. You'll see it expressed as a percentage, such as 20 percent coinsurance. A copayment is a flat amount, such as $50 per office visit.

Copayments are more predictable than coinsurance. Make sure you check what your coinsurance obligations are, particularly for your prescription drugs, which vary widely from plan to plan, said Mark Rukavina, a principal in Massachusetts-based Community Health Advisors.

"Coinsurance might be something new and unpleasantly surprising for people," he said.

What's an out-of-pocket maximum?

The annual limit on how much you must pay in deductible, coinsurance and copayments. Premium payments don't count toward the maximum. The Affordable Care Act sets new limits on the most consumers have to pay in a year. In the past, many individual plans had no limits at all. In 2014, it's $6,350 for an individual and $12,700 for a family policy. That amount also includes what you spend on prescription drugs, noted Sarah Lueck, a senior policy analyst with the Center on Budget and Policy Priorities.

What about in-network vs. out-of-network? How important is visiting a doctor in the plan's network?

Very. In-network prices, which insurers negotiate with providers, are much lower. Some plans won't pay anything for out-of-network care other than emergencies. Other plans do pay, but not much, and set a higher deductible for out-of-network care. So while you may have a $3,000 in-network deductible, you may have to spend far more if you go out of the network before your plan starts contributing.

I can't find my doctor on the Marketplace plans I'm looking at.

Numerous plans have very narrow networks; this is one way insurers are controlling costs. Check the plan's provider network and call your doctor or hospital to double-check they're in it. But here's the crucial part: Be specific and provide not only the insurer but also the name and type of plan. It's not enough just to know a provider accepts, say, Aetna or Blue Cross. You must know that they accept your Aetna or Blue Cross plan.

I'm looking at plans on What are these "metals" by the plan names?

Those metal labels indicate how much that plan pays, on average, for medical costs. Bronze plans, the cheapest, pay about 60 percent of costs. Silver plans pay 70 percent. Gold plans pay 80 percent. Platinum plans pay 90 percent.

So if I get a bronze plan, it'll pay 60 percent of my medical bills?

No. Those metal levels are based on complicated calculations called "actuarial value," not your actual costs. Lueck said the metal levels are just estimates to help consumers compare one plan to another. Better predictors of your costs for medical care are deductibles, coinsurance and copayments.

What kind of financial assistance can I get?

People with incomes up to 400 percent of the poverty level may qualify for federal subsidies that will be used to reduce their premiums. These are "advance" credits, meaning consumers gets it applied to their premium up front, not at tax filing season.

You may also qualify for help paying deductibles, copayments and coinsurance if you pick a "silver" plan. These "cost sharing reductions" are available up to 250 percent of poverty level, less than $28,725 for an individual and $58,875 for a family of four.

Because Florida has not chosen to expand its Medicaid program, no financial assistance is available to people who make less than 100 percent of the poverty level but do not qualify under existing Medicaid rules.

I've heard is getting better, but I still can't get through. What do I do?

If you tried applying earlier and your application got stuck due to the website problems, now has a button that lets you cancel the old application and start fresh. There also is a new feature labeled "See Plans Before I apply," which lets you look at each plan's costs, based on your age and ZIP code, as well as a summary of benefits.

Jodie Tillman can be reached at [email protected] or (813) 226-3374.

Cheapest premium no guarantee of lowest cost

Humana Connect Bronze 4850/6350 planCoventry Silver $10 Copay planFlorida Blue gold plan (Blue Care Everyday Health 1487)
Annual premiums$2,244$3,492$3,384
Out-of-pocket costs$5,351$4,800$ 3,000
Consumer's total$7,595.$8,292$6,384

This chart shows how total health spending can vary according to a consumer's age, insurance plan, income-based subsidies and health conditions. We used a routine childbirth and a year's worth of diabetes management in our examples, since those are the two conditions for which insurers must provide calculations for comparison shopping. Bottom line: Plans that appear cheapest can sometimes cost you more. And in one case, the premiums for a gold plan were cheaper than those for a silver plan.

A 35-year-old woman in Tampa who is having a baby. Estimated cost of a routine birth: $7,540. Her $30,000 income qualifies her for a $23 monthly insurance subsidy.

Humana Connect Bronze 4850/6350 planCoventry Silver $10 Copay planFlorida Blue gold plan (Blue Care Everyday Health 1487)
Annual premiums$2,244$3,492$3,384
Out-of-pocket costs$5,351$4,800$ 3,000
Consumer's total$7,595.$8,292$6,384

A 60-year-old St. Petersburg man with Type 2 diabetes. His prescriptions, office visits, equipment and lab tests cost about $5,400. His $60,000 income is too high to make him eligible for a subsidy.

Humana Connect Bronze 4850/6350 planCoventry Silver $10 Copay planFlorida Blue gold plan (Blue Care Everyday Health 1487)
Annual premiums$5,592$7,464$8,484
Out-of-pocket costs$2,310$2,940$480
Consumer's total$7,902$10,404$8,964

A 22-year-old New Port Richey man whose $20,000 income makes him eligible for a monthly subsidy of $111. He gets only a routine checkup and a flu shot, which is covered with no cost sharing.

Humana Connect Bronze 4850/6350 planCoventry Silver $10 Copay planFlorida Blue gold plan (Blue Care Everyday Health 1487)
Annual premiums$732$1,752$1,740
Out-of-pocket costs$0$0$0
Consumer's total$732$1,752$1,740

Source: Kaiser Family Foundation's subsidy calculator

Primer for health insurance costs: Lowest premium may not prove cheapest 12/08/13 [Last modified: Sunday, December 8, 2013 7:10pm]
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