Read the Spanish version: Cómo contratar un seguro de salud individual

The Affordable Care Act (ACA) created the marketplace that allows you to compare individual health plans. The law also requires plans must provide certain coverage. 

The ACA, sometimes called Obamacare, changed the health insurance landscape. It also gives most Americans multiple individual insurance options. 

Let's take a look at individual health insurance and the ACA marketplace. 

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Health insurers can't reject you

Health insurance companies can't turn you down for coverage or charge you sky-high premiums because you're sick or have a health condition, such as diabetes and heart disease. Before the ACA, people with health problems faced higher premiums to cover a pre-existing condition or couldn't qualify for an individual health plan at all.

Health plans also have to offer a comprehensive set of 10 essential benefits, including:

  • Emergency
  • Mental health
  • Prescription drug
  • Outpatient
  • Prenatal and maternity care
  • Hospitalization
  • Preventive care
  • Lab tests
  • Rehab services
  • Vision and dental for children

And they can't cap the dollar amount of benefits you receive in a year or over a lifetime. However, insurers must cap your maxium out-of-pocket costs for the year. 

On top of that, you may qualify for premium discounts in the form of tax credits or subsidies to lower your out-of-pocket health insurance costs if your income is low or moderate. The ACA provides tax credits to help pay for a marketplace plan for people who are up to 400% of the federal poverty level. That's $51,040 for a single person, $68,960 for a couple and $86,880 for a three-person family. California further expanded the eligibility to 600% of the federal poverty level.

Subsidies can save you hundreds of dollars a month. The Centers for Medicare and Medicaid Services estimated a 27-year-old at 150% of the federal poverty level would pay on average $57 per month for the lowest cost Silver plan. That's a savings of more than $300 per month if the plan didn't have subsidies. 

People with incomes below 138% of the federal poverty level may be eligible for Medicaid. That's $17,609 for an individual and $36,156 for a family of four. The ACA allowed states to expand Medicaid for more people. Thirty-eight states have expanded the program, which allows more people to get Medicaid. 

Choosing a health plan

When selecting a health plan, you need to assess your healthcare needs, review the options, crunch the numbers and choose the plan that makes the most sense for your finances and your health. 

Ask yourself some questions to determine your needs:

  • How often do you see the doctor?
  • What types of healthcare will you need in the next year?
  • What prescription drugs do you take?
  • What hospitals and doctors do you want to see?

Here are ways to get coverage: 

  1. Group health insurance: Your employer selects the plan(s) and health insurance companies. You enroll at work, usually in the fall during your employer's open enrollment period.
  2. Individual health insurance: This is a plan you buy on your own. An individual plan can cover just one person or a family. You can buy directly from the best health insurance companies or from your state’s health insurance marketplace, also called an exchange.
  3. Medicaid and the Children’s Health Insurance Program (CHIP): These federal-state plans have low-income requirements.
  4. Medicare: Mostly for people age 65 and over.
  5. Catastrophic health plans: These plans are only available to people under 30 and those who are facing severe financial problems. The plans have low premiums, but high out-of-pocket costs. They also offer all the benefits found in a standard ACA plan. 
  6. Short-term insurance: These low-cost, low-coverage plans are available to most people (a handful of states forbid them). They're not technically considered health insurance since they usually don't cover many services that are basic in health insurance plans. For instance, they often don't include mental health and maternity care. 

Do your research before open enrollment

You can buy an individual health plan that meets government standards for coverage only during the annual open enrollment period, unless you have a special circumstance. For instance, losing your job, getting married or having a baby creates a special enrollment period. So, you can make changes at that time. However, if you don't have a qualified life event, open enrollment is the only time you can make changes. 

Don't wait until the last minute. Give yourself plenty of time to research options and apply. 

Investigate health plans on your state marketplace

The federal government's HealthCare.gov website has links to state health insurance marketplaces. These plans offer subsidies to reduce your costs if you meet income requirements. 

If your income qualifies you for discounts or lower out-of-pocket costs, you can fill out the application to see if you're eligible for assistance and to compare health plans from private insurance companies in your area.

Health plans sold in the marketplaces are categorized according to how much of the health care costs the insurer pays and how much the consumer pays. Generally the higher the out-of-pocket costs -- the more you pay in deductibles, coinsurance and copayments -- the lower the premium.

Types of marketplace health plans

Here are the health plan categories in the ACA marketplace, going from those with the least to most expensive premiums:

Type of planPercent of health care costs the insurer paysWhat you pay
Bronze60%40%
Silver70%30%
Gold80%20%
Platinum90%10%

Bronze plans have the lowest premiums, but the most out-of-pocket costs when you use health care service. Platinum has the highest premiums, but lowest out-of-pocket costs. 

Keep in mind these are general categories. The projected out-of-pocket costs are averages. Plans in the same metal category might achieve the cost split in different ways. Two Bronze plans, for instance, might have different deductibles and co-insurance levels. However, their overall out-of-pocket costs are about the same. 

Plans in the same metal level might also be structured differently. One Bronze plan might be a health maintenance organization, and another might be a preferred provider organization. Depending on the type of plan, you might have free access to any provider in your network or you might need to get a referral from a primary care physician. 

Nearly half of individual health plans are health maintenance organization (HMO) plans. Exclusive provider organization (EPO) plans make up one-third of individual plans. PPOs, which are the most common type of plan in the employer-sponsored market, only make up a small portion individual plans, according to eHealth

Here are the average monthly premiums for individual and family coverage by metal level, according to eHealth:

Metal levelIndividual coverageFamily coverage
Bronze$448$1,041
Silver$483$1,212
Gold$559$1,437
Platinum$732$1,610

The most popular metal level is Bronze. Forty-two percent of people have a Bronze plan, which has the lowest premiums but highest out-of-pocket costs. Silver is the second most popular (34%). Fourteen percent have Gold plans. Only 2% have a Premium plan. 

You can buy marketplace plans over the phone, through paper applications or online. Some states also hold enrollment fairs.

In addition, short-term health plans, also called catastrophic health plans, are available for most Americans. Some states don't allow these plans, which have low premiums and low coverage. Short-term plans don't have to cover basics found in regular health plans, such as maternity, prescription drug and mental health coverage. 

Can I buy health insurance that is not Obamacare? 

There are plenty of health plans available directly from insurers, without going through a marketplace. In fact, some insurers only sell policies outside the marketplace in some states.

Plans sold outside the marketplace are still categorized by metal tiers, and they still must offer the same minimum benefits to qualify as sufficient coverage under the ACA. But you might find a plan with a wider network or a better price. Remember, though, you can't qualify for tax credits or subsidies for premium discounts or lower out-of-pocket costs when you buy outside the marketplace.

So, if your family income is below 400% of the federal poverty limit, you may want to stick with the ACA marketplace. 

Understand and compare how health plans are structured

Know the differences between a health maintenance organization (HMO), preferred provider organization (PPO), exclusive provider organization (EPO), point of service (POS) plan and high-deductible health plan with a health savings account.

  • With an HMO, you choose a primary care physician who coordinates your care. You're generally limited to a network of doctors and hospitals. You typically pay a low copayment for each office visit. The plan generally doesn't cover care outside of the network except in special circumstances.
  • A PPO gives you more flexibility than an HMO. You can see specialists without a primary care physician referral. You pay less to see in-network doctors, but you do have the opportunity to get care out-of-network. However, it usually costs more. 
  • An EPO is a policy that's similar to a PPO in one sense, but an HMO in another. EPOs require members to stay within the plan's provider network. That's similar to an HMO. EPOs also let you see specialists without getting a primary care provider referral. In that case, it's similar to a PPO. 
  • A POS plan is a little of both. It operates like an HMO if you stay within the network, but gives you the option of using out-of-network doctors. Typically a POS plan requires you to get a referral to see a doctor outside of the network.
  • A high-deductible health plan paired with a health savings account (HSA) features a high deductible before the insurer pays for health care services. You can use money from the HSA for out-of-pocket medical expenses. Contributions you make to the account are tax deductible and unused money rolls over to the next year. You get to keep the account even if you change health plans, and you can use the money for non-medical expenses in retirement.

Dig into the details of what the health plans cover. For instance, how will the plan cover the prescription drugs you take? Make sure the healthcare providers you want to use are in the plan's network. Otherwise you will pay more out of pocket or may not have coverage to see them.

In addition to reviewing the premium you'll pay for the plan, estimate how much you'll pay out of pocket for the amount of healthcare you expect to use in the next year.

If you rarely need medical care, it probably makes more sense to choose a plan with a higher deductible and lower premium than to pay a high premium for a plan with a low deductible. However, if you have a family and expect will need at least some health care services, a lower deductible could be the best choice. 

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