Prior to the Affordable Care Act (ACA), also known as ObamaCare, health insurance options were more limited. For the most part, the only way that an individual without work-based health coverage could find health insurance was by buying private insurance (which could often be costly) on an individual basis. In addition, insurers could deny coverage due to pre-existing conditions, refuse to cover certain health needs such as maternity care, and charge higher rates because of gender or pre-existing condition.
Private insurance in the individual market is more expensive than a group plan because the risk of high health needs is not spread out over multiple individuals. Fortunately, the health insurance marketplace allows individuals to buy insurance on a basis that is similar to other group coverage by combing the health risk with other citizens of their state.
The ACA’s Changes to All Individual Health Insurance Plans
ObamaCare made changes to how health insurers inside and outside the marketplace do business and charge for plans.
- Comprehensive Benefits – Individual plans purchased inside and outside of Marketplaces must offer plans offer essential benefits.
- No Cost-Sharing for Preventive Services.
- Coverage cannot be denied, or rates raised, due to existing health conditions. All health insurance plans have the same limitations on rating factors, and cannot increase rates for individuals based on existing health conditions or gender.
Differences in Insurance Plans Purchased Inside and Outside the Exchange
The Health Insurance Marketplace offers a way for individuals to compare and apply for private health insurance plans. Plans found in the marketplaces offer:
- Premium tax credits and cost-sharing assistance. This is the biggest difference between plans purchased in a marketplace and those purchased outside. Individuals and families who have income between 100% and 400% of the federal poverty level will be eligible to receive financial assistance of some kind with insurance premiums. Additionally, those earning between 100% – 250% of the federal poverty level may be eligible for assistance with cost-sharing, such as deductibles and copayments. In 2013, the federal poverty level was $23,500 for a family of four. For more information on what incomes and household sizes qualify for credit, visit the Healthcare.gov Quick Check Chart.
- Insurance sold in tiers named after metal values to make plans easier to compare. The tiers are Platinum, Gold, Silver, and Bronze. The different levels refer not to quality of coverage, but rather to the amount of cost-sharing and monthly premium each plan requires. A Gold plan will have a higher monthly premium with lower cost-sharing. A Bronze plan will have more cost-sharing with a lower monthly premium.
- Potentially limited networks. As with individual private insurance, which doctors are covered will vary based on the insurance plan chosen. Some plans on the exchanges are offering plans with smaller physician networks. It is important to review your current doctors and choose a plan that works best for your current health situation.
- Multiple ways to apply. Federal and state marketplaces give you the option to apply online, over the phone, or in person. For more information on how to apply, visit the Healthcare.gov application site.
The Health Insurance Marketplace offers private insurance plans through which people may be eligible for tax credits. Individuals can also take advantage of a more group-based rating system, and be automatically reviewed for Medicaid or CHIP eligibility.