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Note: The terms and definitions used in these FAQs are common ones. Definitions and terminology may vary by insurance company.
Your costs involve a combination of premium payments, deductibles, copays, and coinsurance. It’s this stew of different
ways you have to pay that can make health insurance seem confusing. Put simply:
What you pay per month to have a health plan.
How much you have to pay toward covered expenses before the insurance company starts paying.
Fixed prices determined by your health plan for specific health services. For example, a doctor’s visit under your plan may have a copay of $35.
This is the percent of covered expense you pay after you’ve met your deductible. So, once you’ve met your deductible, if your coinsurance is 20%, then for every $100 of covered expenses, you pay $20 while your insurance company pays $80.
You should also pay attention to your plan’s annual out-of-pocket maximum. Once you’ve spent that amount through a combination of deductible and coinsurance payments, your insurance company takes over paying 100% of covered expenses. (Note: Usually premiums and copays don’t apply toward the out-of-pocket maximum.)
Generally speaking, MEC means the health plan covers the 10 essential health benefit (EHB) areas the ACA outlines.
Am I required to have health insurance?
Yes. According to the individual mandate of the Affordable Care Act (ACA), also known as Obamacare, you must have a health plan that meets minimum essential coverage (MEC) standards outlined in the ACA or potentially face a tax penalty for each month you are without coverage.
There are some exemptions that apply in specific cases, but for most the choice is get a health plan that provides MEC or pay the tax penalty.
Under the ACA, your income level could make you eligible for cost savings on your insurance in a few different ways:
That’s why it’s so important to have your accurate income information ready when you apply for your health plan—so you can find out if you are eligible for any of these tax credits or cost reductions.
While the premium tax credit applies to any metal category of plan, the reduced deductibles copays, coinsurance rates and out-of-pocket maximums apply only if you choose a Silver plan.
Health Savings Accounts (HSAs) are tax-favored savings accounts where you can set aside money to pay for your own health care costs. Unlike the money you put in similar accounts in the past (often called Flexible Savings Accounts or FSAs), the money in an HSA doesn’t disappear at the end of year. This money is yours, just like in a regular savings account, and continues to grow and earn interest.
If you have a high deductible health care plan, you’ll often be eligible to open a Health Savings Account. These accounts are a smart move because you may be able to get tax benefits three different ways. Consult a tax advisor for details.
First, any money you put into the HSA (up to the legal limit) is set aside before taxes.
Second, interest grows in the account tax deferred.
And third, any money you withdraw to pay for your eligible medical expenses is not taxed.
In 2016, for not having a plan that meets ACA standards, you pay the greater of the following:
You face a penalty of a part of that total fee for each full month a family member has no coverage. In 2016, the total tax penalty a family can pay is $2,085.
Going forward, the 2.5% penalty will stay the same, but the flat fees will adjust for inflation.
These abbreviations really refer to the type of network a health plan has. A network is a list of doctors and other health care facilities your carrier provides. These doctors and facilities have agreed to charge lower rates to participants in a given health plan. If you use one from the list, you are getting “in-network” care for eligible services. If you go to a doctor or facility not on the list, you are going “out of network,” and may end up paying more out of pocket.
The answer to each of these questions is, it depends. Your health plan’s network determines:
The metal categories have nothing to do with how “good” a medical insurance plan is. They are used by the federal government to give consumers general information about how a given health plan shares the costs between the insurance company and the insured. Learn more about the ACA metal plan categories.
Catastrophic health plans qualify as coverage under the ACA. However, to get this type of medical insurance, you have to be under 30 or get a hardship exemption from the government (based on your income).
They do have lower premiums than other ACA plans, but they also cover far less, usually just 3 primary care visits a year and some preventive care. Beyond that, you are responsible for all health care costs until you reach the plan’s deductible, which was $6,850 in 2016.
Premium tax credits and cost reductions of your deductibles, copays, coinsurance and out-of-pocket maximum don’t apply to Catastrophic health plans. If your income makes you eligible for a Catastrophic plan, you are likely eligible for those credits and cost reductions, too. Check to see if a Bronze or Silver plan might cost you less or give you more of the coverage you need when you take those credits and reductions into account.
Yes, prescription drug coverage is one of the essential health benefits required by the ACA. The ACA health plan you choose will have, as a component, some prescription drug coverage. The type of coverage varies by plan, so read carefully what each plan you’re considering covers.
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