Which Health Insurance Plans Are Most Affordable?

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If you’re wondering which health insurance plans are the most affordable, the answer is it depends. Unfortunately, there is not a simple answer to the question. Every person has a different situation and there are many variables. But there are two main considerations when you are looking for affordable health insurance—what are my health needs and how much flexibility do I want? Having an idea about these two factors is the key to finding the best solution for you.

What is cheap health insurance?

Again, the answer to this question depends on your situation. If you qualify for Medicaid, you can get free or low-cost health insurance. Medicaid provides health insurance for low-income people, families, pregnant women, and disabled individuals. But what if you aren’t eligible for this coverage?

The first thing most people look at is the cost of a plan’s monthly premium, and there’s a good reason for that. Premiums—the amount you pay to have the insurance—have continued to rise over the last 10 years. In 2019, the average monthly premium for a single adult with job-based insurance was $599. For a family, it was $1,715. So, many people naturally look for plans with low premiums. But does this make insurance affordable?

If you are someone who does not use healthcare very often, a low-premium plan may be the most affordable choice. However, there are other costs to consider. All plans have out-of-pocket costs. This includes deductibles, copays and, sometimes, coinsurance. The more you use healthcare, the more these costs can add up. Also, low-premium plans usually have higher deductibles and other out-of-pocket costs. This is where it pays to know your needs and do your homework.

When comparing plans, consider the following for yourself and your family:

  • Are you likely to meet your deductible? If so, your costs will decrease for the rest of the year.

  • What is your copay for a doctor visit? How often do expect to see a doctor in the coming year?

  • What is your copay for prescription drugs? How many medicines do you currently take? Does the plan cover them on their formulary—list of preferred drugs—or will you pay more for your specific drugs?

  • Does the plan offer any free services, such as wellness programs?

  • Does your employer offer any financial incentives to participate in specific benefits?

  • Are HSAs (health savings accounts) or other pre-tax programs available to you?

The answers to these questions can help you decide if a low-premium plan will ultimately cost you more. Or if a higher premium with lower out-of-pocket costs will end up saving you money. Knowing your claim history from last year can help you answer these questions. So, save those explanation of benefits documents!

How do I find affordable healthcare?

Most people have options when it comes to choosing a healthcare plan. This is true for employer-based plans and for plans on the Health Insurance Marketplace (created under the Affordable Care Act). In most cases, the choice is among different types of managed care plans. 

Managed care plans have networks of providers that deliver services. To control costs, managed care plans limit how you use their network. Some require you to stay strictly in-network. Others allow you to see providers outside the network at a higher cost. So, the amount of flexibility you want in choosing doctors and providers can affect affordability. An HMO (health maintenance organization) is often the most affordable option because it is the most restrictive. PPOs (preferred provider organizations) tend to be the most expensive, but are the most flexible. 

Employer-based health insurance

If your employer offers health insurance, you will likely be able to choose from a few plans from the same company. Since employers usually pay a portion of your premium, enrolling in one of these plans is likely your most affordable option. Buying insurance on your own—even through the Marketplace—will mean you pay the full price of your premium.

Individual health insurance

If you don’t have employer-based insurance, then shopping around is the key to finding a plan that meets your needs and your budget. The Marketplace is one option for comparing and buying plans. Marketplace plans fall into four categories based on how you will share costs with the plan. 

The “metal plans” are as follows:

  • Bronze plans cover 60% of eligible healthcare costs and you pay 40%.

  • Silver plans cover 70% of eligible healthcare costs and you pay 30%.

  • Gold plans cover 80% of eligible healthcare costs and you pay 20%.

  • Platinum plans cover 90% of eligible healthcare costs and you pay 10%.

You can find different managed care options within the different metals. The metals only define how costs are split, not with how your coverage works. The type of plan—HMO, PPO, etc.—will determine whether the portion you pay is weighted towards the premium or out-of-pocket costs.
When you apply through the Marketplace, it will automatically tell you if you qualify for federal tax credits. These credits apply to your premium. Your income must be between 100% and 400% of the federal poverty level (FPL) to qualify. In 2019, a person making up to $49,960 could qualify for the premium tax credit. A family of four making up to $103,000 could also qualify. 

You can find out if your income qualifies you for cost-sharing reductions as well. If so, you will also save money on out-of-pocket costs for medical services. However, you must enroll in a silver metal plan in order to use these extra savings. So, once again, your needs and projected use of healthcare in the coming year will help you decide if it makes sense to buy a silver plan.

All of this can be very confusing, but there is help. You can find local people and organizations on the Marketplace site (HealthCare.gov) to guide you through the process. 

You can also go outside the Marketplace to shop for plans. Agents and brokers can help you compare plans. Or you can work directly with an insurance company. There are also online ‘finder sites’ that let you compare plans outside the Marketplace. In fact, HealthCare.gov provides a service called Plan Finder that does just that. Just be aware that you can’t get the premium tax credit or cost-sharing reductions on plans outside the Marketplace.

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  1. 2019 Employer Health Benefits Survey. Kaiser Family Foundation. https://www.kff.org/report-section/ehbs-2019-summary-of-findings/ 
  2. 3 Things to Know Before You Pick a Health Insurance Plan. Centers for Medicare and Medicaid Services. https://www.healthcare.gov/choose-a-plan/comparing-plans/ 
  3. Average Marketplace Premiums by Metal Tier, 2017-2019. Centers for Medicare and Medicaid Services. https://www.kff.org/health-reform/state-indicator/average-marketplace-premiums-by-metal-tier/?currentTimeframe=0&sortModel=%7B%22colId%22:%22Location%22,%22sort%22:%22asc%22%7D 
  4. Cost-Sharing Reductions. Centers for Medicare and Medicaid Services. https://www.healthcare.gov/lower-costs/save-on-out-of-pocket-costs/ 
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  9. Income Levels and Savings. Centers for Medicare and Medicaid Services. https://www.healthcare.gov/lower-costs/ 
  10. Managed Care. U.S. National Library of Medicine. https://medlineplus.gov/managedcare.html 
  11. Plan Finder. Centers for Medicare and Medicaid Services. https://finder.healthcare.gov 
  12. Plan Types. U.S. Office of Personnel Management. https://www.opm.gov/healthcare-insurance/healthcare/plan-information/plan-types/ 
  13. Poverty Guidelines. U.S. Department of Health and Human Services. https://aspe.hhs.gov/poverty-guidelines 
  14. Subsidized Coverage. Centers for Medicare and Medicaid Services. https://www.healthcare.gov/glossary/subsidized-coverage/ 
  15. Types of Health Insurance Plans. American Cancer Society. https://www.cancer.org/treatment/finding-and-paying-for-treatment/understanding-health-insurance/types-of-health-insurance-plans.html 
  16. Your Total Costs for Health Care: Premium, Deductible & Out-of-Pocket Costs. Centers for Medicare and Medicaid Services. https://www.healthcare.gov/choose-a-plan/your-total-costs/
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