What Are the Different Types of Health Insurance under Obamacare?
There are many different types of health insurance plans and knowing how they differ from one another can help you understand which might best meet your personal coverage needs. All the standard major medical health insurance plans available for enrollment today comply with the rules of the Affordable Care Act (the health reform law known more commonly as “Obamacare”), but there are some other related insurance products available that do not.
In this article we’ll look at many of the different types of health insurance under Obamacare that are available to consumers – how they’re organized into different plan types, and what those types mean. We’ll also look at some of the other health insurance products available which some consumers still purchase but which may not meet all your coverage needs and won’t meet the coverage requirements under Obamacare.
Obamacare health insurance plans – different types of coverage
The Obamacare law reformed the individual and family health insurance market – that is, health insurance plans sold directly to individuals and families by health insurance companies. Obamacare is not a health insurance plan itself – it’s simply a law that changed the way health insurance works and how it’s bought and paid for in the United States.
Obamacare health insurance plans – major medical coverage
All Obamacare health insurance plans are “major medical” health insurance plans. That means they’re traditional health insurance plans that are designed to cover both minor and major medical issues.
All Obamacare health insurance plans cover the “10 essential health benefits” defined by law, including office visits, prescription drugs, hospital care, maternity care, pediatric care, and preventive medical care, among others.
With an Obamacare-compliant health insurance plan you cannot be turned down based on a pre-existing medical condition or your personal medical history. However, you may be restricted to enrolling during the annual open enrollment period or when you experience a qualifying life event that triggers a special enrollment period.
Obamacare health insurance plans – different types of insurance
You may be familiar with the acronyms “PPO” or “HMO.” These terms are used to describe specific types of health insurance. While these plan types have been around for a long time, they are still used to refer to different types of health insurance plans under Obamacare. Generally speaking, these terms have to do with which doctors you can see and how they’re covered.
Here’s a summary of the more common health insurance plan types:
- HMO plans: HMO stands for “health maintenance organization.” An HMO plan is one that typically limits you to a specific network of doctors and hospitals. You may not have coverage when seeing medical providers outside this network. With an HMO, you’re typically required to choose a primary care physician who will then refer you to specialists on an as-needed basis.
- PPO plans: PPO stands for “preferred provider organization.” PPO plans typically have a network of doctors that you should stick with if you want to get the highest level of coverage for your medical care. Coverage may be available outside this network, but it’s often not as robust. You are not generally required to pick a primary care physician with a PPO plan and referrals are generally not required if you want to see a specialist.
- EPO plans: EPO stands for “exclusive provider organization.” EPO plans are similar to PPO plans but may be somewhat more restrictive when it comes to your network of doctors and hospitals. EPO plans typically do not provide you with coverage outside your network, except in emergencies.
- POS plans: POS stands for “point of sale.” A POS plan is usually described as a hybrid of a PPO and an HMO plan. You may be required to choose a primary care physician under a POS plan but you may still have some coverage when visiting doctors and hospitals outside your network.
- HSA-eligible plans: These may be PPO, POS, EPO or HMO plans, but they are designed specifically for use with Health Savings Accounts, which allow you to save money on a pre-tax or tax-deductible basis to pay for qualifying medical expenses. HSA-eligible plans tend to have higher annual deductibles than some other plans.
Obamacare health insurance plans – different metal levels
While Obamacare retained the old plan type descriptions listed above, it introduced new terms to describe health insurance plans too. Specifically, it gave every major medical health insurance plan a metal-level designation. These metal levels are used to describe different aspects of a health plan than the terms “HMO” or “PPO” do. So, for example, PPO plans may be available at different metal levels.
The metal level of a plan helps you understand how much you might expect to pay out of your own pocket (in the form of copayments, deductibles and coinsurance) when you receive medical care under that plan.
Let’s look at the different metal levels assigned to health insurance plans under Obamacare:
- Platinum plans: Platinum plans tend to have the highest monthly premiums and the lowest out-of-pocket costs. Platinum plans are designed so that the average enrollee will pay about 10% of his or her covered medical expenses, while the insurance company pays about 90%.
- Gold plans: Gold plans are designed to cover about 80% of the covered medical costs for an average enrollee, while the policy holder will pay an average of about 20% (again, that means in the form of deductibles, copayments, or coinsurance).
- Silver plans: Silver plans are typically a bit more affordable in terms of monthly premiums, but they require more from you in out-of-pocket costs when you receive medical care. Silver plans are designed so that the average enrollee will have to pay about 30% of his or her covered medical expenses while the insurance company pays about 70%.
- Bronze plans: Bronze plans are designed to cover about 60% of the average enrollee’s covered medical expenses. The enrollee will be expected to cover about 40%. Because you typically pay more out of pocket when you get medical care, your monthly premiums tend to be less costly under a bronze plan.
- Catastrophic plans: Technically not a “metal level” designation, catastrophic plans cover many of the same health insurance benefits as other Obamacare plans but may require you to pay more for your medical care. Premiums are lower with these plans but they tend to come with higher deductibles. Catastrophic plans are only available to people under age 30 or those who meet other special requirements. You cannot use Obamacare subsidies to help pay your premiums under a catastrophic plan.
Obamacare health insurance plans and government subsidies
Obamacare makes government subsidies available to qualifying consumers who earn no more than 400% of the federal poverty level (that is, about $47,000 for a single person or $97,000 for a family of four in 2016). These subsidies can make your monthly health insurance premiums a lot more affordable.
While all Obamacare-compliant plans will protect you from a tax penalty (assuming you have no significant gaps in coverage during the year), not all Obamacare plans are eligible for purchase with a subsidy.
Government-run health insurance marketplaces can help match consumers with Obamacare plans that are eligible for purchase with an Obamacare subsidy. Depending on where you live, private health insurance marketplaces may also be able to help you enroll in these same plans and apply for a subsidy. Some private marketplaces may also be able to show you other Obamacare-compliant plans that are not eligible for purchase with a subsidy and not available through government-run marketplaces.
Employer-based health insurance plans
Employer-based health insurance plans are also typically major medical plans, and they tend to provide you with the same kind of coverage that is available under individual and family Obamacare plans. When you have coverage through an employer’s group health insurance policy, you are typically protected from paying the Obamacare tax penalty, so long as you experience no significant coverage gaps during the year.
Government health insurance plans
Government-run health insurance programs such as Medicare, Medicaid, CHIP and others will also meet your coverage requirements under Obamacare.
Non-Obamacare health insurance plan types
While all major medical health insurance plans are now officially “Obamacare” plans, there are other health insurance plans and products available that do not meet the coverage requirements of Obamacare. These products may leave you exposed to an Obamacare tax penalty if you go without Obamacare-compliant coverage for more than two consecutive months in a single year.
However, these non-Obamacare products do meet the temporary coverage needs of some consumers, and some of them can be used in conjunction with an Obamacare plan to provide additional coverage and protection.
Let’s look at a few of these:
- Short-term health insurance: Short-term health insurance plans are designed to provide you with a level of protection against unexpected medical bills for a limited period of time. They typically do not cover preventive medical care, maternity care, or pre-existing medical conditions, and they may not cover prescription drugs. You can be turned down for short-term coverage based on your medical history. However, short-term plans are relatively affordable and can be purchased year-round.
- Dental insurance: Dental insurance provides you with coverage for certain dental services on an annual basis. Dental insurance is typically not included in Obamacare health insurance plans.
- Vision insurance: Vision coverage is typically not covered by Obamacare plans. Vision insurance typically provides you with coverage for an annual vision check-up and for glasses or contacts once every year or two.
- Accident insurance: Accident insurance pays you directly if you experience a qualifying injury. You can then use the money to pay for medical bills, your mortgage, or for whatever you want.
- Critical Illness insurance: Critical illness insurance pays you directly if you are diagnosed with a qualifying serious medical condition. You can then use the money to pay for medical bills, your mortgage, or for whatever you want.
- Travel insurance: Travel insurance plans are temporary insurance plans designed to help you pay for medical expenses while traveling overseas.
The right type of Obamacare coverage for you
Everyone’s health insurance needs are different, and everyone’s finances are different too. The right type of health insurance plan for your friend isn’t necessarily the right type of plan for you. When shopping for Obamacare coverage it’s important to know the different types of health insurance plans available, but it’s just as important to look at your personal medical needs and your budget when selecting a new Obamacare plan.