The Affordable Care Act (ACA) set up certain guidelines for the costs to consumers of the Qualified Health Plans offered in the State Insurance Exchanges.
However, premium prices for the health insurance plans are still highly particular to the state in which the plan is offered.
Background
Along with establishing other Patient Protections, the ACA outlawed health insurance plans practices that altered premiums based on discriminating factors, such as gender and pre-existing conditions and made it extremely costly for many individuals to obtain insurance.
The Qualified Health Plans offered in the state Insurance Exchanges will only be able to adjust premium prices only for the following factors: location (state the plan is sold in), age, family size, and tobacco use.
Plan Structures
All plans offered in the Exchanges must cover certain Essential Health Benefits. However, insurers are allowed to then vary the benefits, costs, and structures of the plans they offer in order to create an array of options for consumers.
Plans will be arranged according to categories, based on their actuarial value. The insurance plan categories are arranged according to low, medium, and high levels of premiums, cost-sharing, actuarial value, and benefits:
- Bronze level: (plan pays 60% of covered medical expenses, lowest premiums)
- Silver level: (plan pays 70% of covered medical expenses, moderately low premiums)
- Gold level: (plan pays 80% of covered medical expenses, moderately high premiums)
- Platinum level: (plan pays 90% of covered medical expenses, high premiums)
The higher the share of covered medical expenses paid by the plan, the higher the premium cost of the plan, and the lower the consumer’s out-of-pocket cost.
A “benchmark premium” is determined based on the area in which an individual lives and is purchasing the insurance.
However, the plan’s premium is not the only cost for the plan. Plans also have various deductibles, co-payments, co-insurance, and other cost-sharing.
Cost Sharing
Plans can vary significantly in the amount of cost-sharing they pass on to consumers.
An annual out-of-pocket maximum is set by the Internal Revenue Service, and after the out-of-pocket maximum is reached, the plans must cover 100% of services for the remainder of the year.
In 2014 the maximum out-of-pocket limit for QHPs was $6,350 for an individual, or $12,700 for a family.
Out of Network Premiums
These limits set by the ACA only apply to in-network cost-sharing. There are no limits for out-of-network cost-sharing.
HIV patients purchasing insurance in the new Insurance Exchanges will need to take into consideration whether their provider in in-network for their insurance plans.
Prescription Drug Coverage
One of the areas in which the cost to consumers of a plan can vary wildly is in the prescription drug coverage formulary.
The prescription drug formulary for a plan must remain compliant with Essential Health Benefits requirements. Affordable Care Act regulations also require every formulary to include (at a minimum) the greater of one drug in every USP drug category and class or the same number of prescription drugs in each category and class as covered by the Benchmark Plan chosen by a state.
Covered drugs in a plan’s formulary may be placed into “tiers” with different amounts of cost-sharing required of the patients at each tier. There is also a “Specialty Tier” for drugs that high extremely high costs where patient cost sharing limits may not apply.
However, insurers are permitted to change their formularies throughout the year, and are not currently required to submit updated drug lists to patients or to HHS on an ongoing basis throughout the year as changes occur.
Tax Credits/Premium Subsidies
Individuals and households with income levels that fall below 400 percent of the federal poverty level are eligible to receive tax credits in the form of Premium Subsidies to help defray the cost of purchasing the plans.
The tax credit available varies based on income.
The Kaiser Family Foundation offers a calculator for subsidy estimates, as well as the following example:
Here is how the calculation might work for a 40-year-old individual making $30,000 a year:
Estimated benchmark premium for a 40-year old = $3,857 per year
(which will vary from area to area)
Person is responsible for paying 8.37% of their income = $2,512
Tax credit = $1,345
The tax credit can be used in any plan offered in the health insurance marketplace, so the person would end up paying less than $2,512 to enroll in the lowest cost silver plan or a lower cost bronze plan, and more to enroll in a higher cost plan.
Learn More: Tax Credit (Premium Subsidies)
Additional Resources
Why Premiums Will Change for People Who Now Have Nongroup Insurance – Kaiser Family Foundation
Health Reform in My State – AAHIVM
Q&A: When will prices be available for Marketplace insurance plans?– Healthcare.gov