- Two Main Types of Costs
- Metal Levels
- Health Insurance “Risk” Decision
- AmaboCare Estimated Values
- Deductible and Max Out-of-Pocket
- Copays and Coinsurance
- Plan Details
- AmaboCare Search Results
- Is My Doctor in the Plan?
- Subsidies (tax credits)
- Cost Sharing Reduction (CSR) plans
- Rules and Requirements for Subsidies and CSR plans
- Tobacco Users
Buying health insurance can be a confusing and difficult decision. AmaboCare’s goal is to help people understand their Obamacare health insurance options so that they can search and compare plans, and choose the best plan that meets their needs.
The Affordable Care Act (Obamacare) has changed health insurance in many different ways. This Learning Center page focuses on explaining important information to understand when choosing a health insurance plan.
Two Main Types of Costs
It is important to understand the two main types of costs associated with your health insurance plan and the medical services you receive:
- Monthly premium cost of your health insurance plan
- Out of Pocket costs (the portion of your medical costs that you are responsible for) VS. the portion that your health insurance company will pay
Obamacare health insurance plans are categorized into metal levels: Bronze, Silver, Gold, and Platinum. The metal levels are based on #2 above – the average portion of medical costs that you are responsible for vs. the portion that your health insurance company will pay:
|Out of Pocket Costs (Average Portion of Medical Costs That YOU are Responsible For)||Average Portion of Medical Costs That the Insurance Company Pays|
Because of these characteristics of the Metal Levels, the Premium prices of the Metal Levels typically vary as shown below:
Note that the Metal Levels ONLY shows the difference in the portion of your expected Out-of-Pocket costs. The Metal Levels have NOTHING to do with the “quality” of the plan. For example, a Gold plan does not necessarily have better coverage benefits than a Silver plan.
Health Insurance “Risk” Decision
Now that you understand the Two Main Types of Costs and the differences in the Metal Levels, think about the “risk” decision you have to make when buying a health insurance plan:
Do you pay a lower premium now and risk having to pay a large portion of your medical costs (if you need medical services)
Do you pay a higher premium now and will have less risk because you will pay a lower portion of your medical costs (if you need medical services)
Everyone is going to have a different answer to their Risk Decision. Some very healthy people may want to buy a low priced Bronze plan and may want to take the risk that if they do get injured, they are going to have to pay a large portion of their medical costs. Other people may not want to take a risk, and they will buy an expensive Platinum plan, and pay less for medical costs if they need medical services. For others, a mid-priced Silver or Gold plan is the best decision.
WARNING from AmaboCare: if you are on a tight budget we do not recommend buying a health plan with a low premium simply because it is cheap. You may be required to pay for a large portion of your medical costs (that’s why the plan is cheap).
AmaboCare Estimated Values
For each health insurance plan, AmaboCare has calculated two estimated values that can help you compare plans and make your Health Insurance “Risk” Decision.
- Amabo Average Out-of-Pocket – the average amount that a person (or family) will have to pay for their portion of medical costs, over the plan year.
- Amabo Average Total Cost – the average total costs a person (or family) will have to pay for their premium and their portion of medical costs, over the plan year. This value is equal to Yearly Premium + Amabo Average Out-of-Pocket.
You can filter and sort your health plan search results by these two values.
For example, you may find a Gold plan with a lower Amabo Average Total Cost than a Silver plan, even though the Gold plan has a higher premium than the Silver plan. You may realize that the Gold plan is the better option for you.
Remember that these two values are averages. Some people will need more medical services and will have higher medical costs. Others will have lower medical costs.
Deductible and Max Out-of-Pocket
The plan’s Deductible and Max Out-of-Pocket are two other important values to understand. These values should also be considered when thinking about your Health Insurance “Risk” Decision.
You may have to pay the full amount for certain medical services until you reach your deductible. Once you reach your deductible level, your health insurance company will cover medical costs (out-of-pocket costs) as defined by your health plan. For example, if a plan has a $5,000 deductible and you need a surgery that costs $3,000 then you will have to pay the full $3,000 cost of the surgery. Once you reach the deductible by paying a total of $5,000 for medical costs, then the insurance company will pay for a specified amount of your future medical costs, as defined by the details of your health plan. Typically, plans with lower Premiums will have higher deductibles.
The Maximum Out-of-Pocket is the maximum amount you will ever have to pay for medical costs over the plan year. Once you reach your Max Out-of-Pocket level, you will not have to pay another dollar for medical costs. Max Out-of-Pocket does NOT include the amount of your premium, but does include your deductible. Since the amount you spend towards your deductible counts towards your Max Out-of-Pocket level, you will notice that a plan’s deductible is always less than or equal to its Max Out-of-Pocket.
A plan will list a Deductible and Max Out-of-Pocket for both per individual and per family. For example, a plan may have a Deductible for an individual of $3,000 and a Deductible for a family of $6,000. If your health insurance plan covers your family, your entire family will be subject to the family deductible. However, each person in your family may only be subject to the individual Deductible. If only one person in your family requires medical services, they do not have to hit the larger family deductible, but the medical costs of each family member builds up to the family Deductible and Max Out-of-Pocket. Please contact your insurance company if you have any questions about individual vs. family Deductible and Max Out-of-Pocket.
On AmaboCare.com, if you enter more than one person that will be covered by the health plan, then we display the family Deductible and Max Out-of-Pocket. Click on the “more details” link to see the per individual and per family rates, and additional out-of-pocket information.
Copays and Coinsurance
Your health plan details the amount of medical costs that you are responsible for paying (out-of-pocket costs) using Copays and Coinsurance. A Copay is a flat dollar amount fee, while Coinsurance is a percentage of the cost. For example, the details of your health insurance plan may say that for an X-ray you will pay a $75 copay. This means that each time you need an X-ray, you will pay a flat fee of $75. Another possibility is that instead of a copay, your health insurance plan will say that for an X-ray you will be responsible for 50% coinsurance. This means that if the full price of an X-ray is $200, you will be responsible for paying $100.
Your health plan’s Deductible also may be related to the plan’s Copays and Coinsurance details. For a surgery, your health plan may say you owe a coinsurance of “30% after deductible”. This means that you will be required to pay the full amount of the surgery until you reach your deductible (just like the example shown above in the Deductible section). After you hit your deductible, and if you need another surgery, then you will pay 30% of the cost of the surgery. Remember that the total amount that you would ever have to spend on medical costs is limited by Max Out-of-Pocket of your plan.
It is also possible that for certain medical services you may not be required to hit your deductible. For example, for a Specialist visit your plan details may just say “20% Coinsurance” or “$50 copay”. In this case, you do not have to pay the full cost until you hit your deductible, and will only pay the Copay or Coinsurance amount. If you have any questions about whether Copays and Coinsurance rates are before or after the deductible, please contact the insurance company.
To see additional details of each plan, including Copay and Coinsurance out-of-pocket details, you can click on the “more details” from the AmaboCare search results. Also, the “SBC doc” link leads to the Summary of Benefits and Coverage document, which is an official document from the insurance company that has additional details on out-of-pocket costs for each plan. If a “SBC doc” link is not present for a certain plan, please contact the insurance company and request a SBC document.
AmaboCare believes that it may be difficult for people to compare the Copay and Coinsurance details from plan to plan. For example if emergency room services for one plan is listed at $75 copay and another plan is 30% coinsurance, how is someone supposed to make a comparison unless they know the average cost of emergency room services? Likewise, even if both plans have Coinsurance rates it is difficult to make a comparison. Health insurance companies negotiate different rates for medical services with hospitals and other providers. If a plan from one insurance company has a 40% coinsurance and a plan from a different insurance company has a 50% coinsurance, it does not necessarily mean you will pay more for the medical service under the plan with a 50% coinsurance.
AmaboCare recommends using the “Amabo Average Out-of-Pocket” and “Amabo Average Total Cost” numbers to compare the out-of-pocket costs for different plans. The Amabo Average Out-of-Pocket figure shows the big-picture of out-of-pocket costs and considers all the out-of-pocket factors (deductible, max out-of-pocket, all the copays and coinsurance rates). We believe the Amabo Average Out-of-Pocket number is an easier and more effective way to compare the expected out-of-pocket costs of each plan.
Obamacare requires all plans to have free preventative care. In other words, there is no out-of-pocket costs for doctor checkups, screenings, and immunizations.
AmaboCare Search Results
Below is an example AmaboCare health insurance plan listing that you see in your search results. Each piece of information has been numbered with an explanation.
- Plan Name – the name of the health insurance plan given by the health insurance company
- Health Insurance Company – the health insurance company offering the plan
- Premium – the cost of the health insurance plan. It is the amount of money you will have to pay each month for your health insurance plan. Your health insurance plan is usually a year-long contract. Your yearly premium cost = monthly premium x 12
- Deductible - You may have to pay the full amount for certain medical services until you reach your deductible. Once you reach your deductible level, your health insurance company will cover medical costs as defined by your health plan.
- Max Out-of-Pocket - The maximum amount you will ever have to pay for medical costs over the plan year. Once you reach your Max Out-of-Pocket level, you will not have to pay another dollar for medical costs. Max Out-of-Pocket does NOT include the amount of your premium, but does include your deductible. Your Max Medical Cost will always be greater than or equal to your deductible.
- Metal Level - Obamacare health insurance plans are categorized into metal levels Bronze, Silver, Gold, and Platinum (there are also Catastrophic plans for individuals under 30). The metal levels are based on the amount of money you will have to pay for medical services vs. the amount your health insurance company will pay. Metal levels have NOTHING to do with the “quality” of the plan. For example, a Gold plan does not necessarily have better coverage benefits than a Silver plan.
- Plan Type – there are several types of health insurance plans: HMO, PPO, EPO, POS, HDHP. They mainly differ by access to care. For an HMO plan you may have to use in-network doctors and you may need a referral from your primary care doctor to see a specialist. For PPO, EPO and POS plans you can typically see out-of-network doctors, but you may have to pay more. If you have questions about a plan’s “type” please ask your insurance company for more details.
- Amabo Average Out-of-Pocket - This is an estimate calculated by AmaboCare.com. It is the average amount a person (or family) will have to pay for out-of-pocket medical costs over the plan year. This amount does NOT include your premium. Also remember that it is an average – some people will have more medical costs, others will have less.
- Amabo Average Total Cost - This is an estimate calculated by AmaboCare.com. It is the average total cost a person (or family) will have to pay for this health insurance plan and out-of-pocket medical costs. It is equal to the Yearly Premium + Amabo Average Out-of-Pocket.
- More Details Link – this link will take you to more details about the plan, including deductibles, out-of-pocket costs, copays, and coinsurance rates.
- SBC Doc Link – this link will take you to the Summary of Benefits and Coverage (SBC) document provided by the insurance company. The SBC contains more details on the benefits and medical coverage of the health insurance plan
- Doctor Lookup Link – this link will take you to the insurance company’s website where you can search to see if a doctor or hospital is included in the plan’s network.
- Drug List Link – this link will take you to the insurance company’s website where you can search to see if a specific prescription drug is covered by the plan.
Is My Doctor in the Plan?
Another question to consider when selecting a plan is: Does my doctor or hospital accept this health insurance plan?
A plan’s Network Size refers to the number of doctors and hospitals that will accept patients with that plan or insurance company. Some health insurance plans have a small network size on purpose. If your local hospital or favorite doctor is included in the plan’s network, then you may not care if the plan has a small network size.
To see if a doctor or hospital is included in a plan’s network, click on the Doctor Lookup link in AmaboCare’s search results. The link will lead you to the insurance company’s search tool where you can search for a doctor or hospital.
For some plans, you may be about to go outside the network to receive medical services, but you will likely have to pay more and the Deductible and Max Out-of-Pocket may not apply.
Subsidies (tax credits)
Check AmaboCare’s Subsidy Calculator to see if you may be eligible for, and the $ amount, a government subsidy (tax credit) that can be used to purchase health insurance from your state’s exchange.
If your family’s income is below a certain amount (400% Federal Poverty Level), you may be eligible for a subsidy. You can choose to use your tax credit “in advance” each month to purchase an Obamacare health insurance plan on your state’s exchange, or you can just receive your tax credit at the end of the year when you file taxes. Another option is to only “take” part of your tax credit each month, and then receive the remaining portion at the end of the year when filing taxes.
Your tax credit is a flat amount that can be applied to any health plan offered on your state’s exchange. Simply subtract your tax credit amount from the premium to see how much you will have to pay each month for the health insurance plan. Your tax credit will not affect the amount of your Deductible, Max Out-of-Pocket, Amabo Average Out-of-Pocket, or Amabo Average Total Cost.
If your family’s expected income next year is below the following amounts (400% FPL), you may be eligible for a tax credit (your household size is the total number of family members you declare on your taxes):
400% Federal Poverty Level Table
|Household Size||48 Contiguous States + DC||Alaska||Hawaii|
|Each additional person add||$16,240||$20,320||$18,680|
Cost Sharing Reduction (CSR) plans
AmaboCare’s Subsidy Calculator will also tell you if you may be eligible for cost sharing reduction (CSR) plans.
If your family’s income is below a certain amount (250% Federal Poverty Level), you may be eligible for both a tax credit subsidy AND CSR plans. Cost sharing refers to the Deductible, Max Out-of-Pocket, Copays, and Coinsurance of a health plan. If you are eligible for CSR plans, the exchange will offer you special Silver plans that have been modified with lower Deductibles, Max Out-of-Pocket, Copays, and Coinsurance.
AmaboCare.com does not show these CSR Silver plans. These plans will be the same as the regular Silver plans shown, but with lower Deductibles, Max Out-of-Pocket, Copays, and Coinsurance. Also, the plan’s Amabo Average Out-of-Pocket and Amabo Average Total Cost will be lower.
If your family’s expected income next year is below the following amounts (250% FPL), you may be eligible for CSR plans (your household size is the total number of family members you declare on your taxes):
250% Federal Poverty Level Table
|Household Size||48 Contiguous States + DC||Alaska||Hawaii|
|Each additional person add||$10,150||$12,700||$11,675|
Note: cost sharing reduction rules are different for Native Americans and Alaskan Natives
Rules and Requirements for Subsidies and CSR plans
To be eligible for a subsidy (tax credit), your income must be between 100% FPL and 400% FPL.
To be eligible for CSR plans, your income must be between 100% and 250% FPL.
(you can be eligible for BOTH subsidies and CSR plans if you meet the income requirements)
Beyond income requirements, the government subsidy (tax credit) and CSR plans have the same eligibility requirements. For each member of your family to be eligible for a subsidy or CSR plan he/she must:
- Be covered by a health plan through their state’s health insurance exchange or healthcare.gov
- Not be eligible for government sponsored health insurance, such as Medicaid, CHIP, Medicare, or Tricare.
- Not have access to an “affordable” health insurance through an employer. The employer’s health plan is considered affordable if the employee’s portion of the premium for self-only coverage is less than 9.5% of the employee’s salary.
- File taxes or be claimed as a spouse or dependent on taxes. Married couples are required to file taxes jointly.
- Not be incarcerated
- Be legally present in the United States
Other Points to Note
- Native Americans have different income requirements and eligibility for CSR plans
The formal name of the subsidy is the “Advance Premium Tax Credit” (APTC). It is a tax credit that you are able to receive “in advance” each month to help pay for health insurance. The amount of your tax credit is based on the income you expect to earn during the plan year.
- At the end of the year when you file taxes, there will be “reconciliation” on your taxes. If you make more income than initially expected, you will have to pay a some of the tax credit back on your taxes (there is a max limit of how much you will have to pay back). And vice-versa, if you make less income than initially expected, you can receive an additional amount of tax credit at the end of the year.
- You are not required to take the full amount of the tax credit “in advance” each month. In fact, you can take none of your tax credit “in advance” and instead receive the full lump sum at the the end of the year when filing taxes. For example, if your state’s exchange determines that you are eligible for a tax credit of $100 per month, you are allowed to only take $75 each month and receive the remaining amount at the end of the year when filing taxes. This may be helpful to avoid any difficulties and to provide a “buffer” during the reconciliation if your income fluctuates.
In some states insurance companies are allowed to charge a higher premium to people who use tobacco products. The Obamacare law allows insurance companies to charge up to 50% more to tobacco users.
To avoid confusion, AmaboCare does not show premium rates for tobacco users. When purchasing a health insurance plan, if you indicate that you are a tobacco user, you may have to pay a higher premium.