Couvillier Advisors

Health Insurance

Health insurance is a product that covers your medical expenses if you get sick or injured. Health insurance also covers preventive care, such as doctors visits and tests before you get sick. Health insurance is offered on the exchange through the Affordable Care Act (ACA) and also off the exchange through short-term plans. Health insurance doesn’t always cover 100% of your costs. In fact, it’s designed to share costs with you up until a certain point, called the out-of-pocket limit. After you hit the out-of-pocket limit, health insurance will pay 100% of your health care costs. There are a few ways that health insurance companies might share costs with you, and they make up major features of your health insurance plan that you need to be aware of: your deductible, co-payment, co-insurance, and your out-of-pocket limit.

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Health Insurance

What's New for Healthcare 2023

Enrollment Dates - Open enrollment for Marketplace health insurance runs every year from November 1 through December 15. For 2023, Open Enrollment has been extended until January 15, 2023. When you enroll in a plan during the Open Enrollment period, that plan will be effective on January 1st of the following year. For plans enrolled in between January 1 and January 15, plans will be effective on February 1, 2023.

Annual Cost Sharing Limits - The maximum annual limitation on cost sharing for the 2023 plan year will be $9,100 for individuals and $18,200 for families, an increase of $400 and $800 respectively.

Tax Credits - Due to the Inflation Reduction Act, expanded subsidies that were put in place for 2021 and 2022 were expanded through 2025. This means there is no income cap to qualify for subsidies, and the amount anyone pays for premiums is limited to 8.5% of their income as calculated by the exchange. Before the changes, the aid was generally only available to households with income from 100% to 400% of the federal poverty level.

Family Glitch - The so-called family glitch fix means the dependents of a worker with access to employer-sponsored health insurance are now eligible for premium subsidies on ACA plans if the family premium under the employer coverage exceeds 9.5% of the family’s income in 2022. Previously, family member eligibility was determined by the single employee premium alone.

Key Terms

Premium - It’s easy to think of your premium as your monthly bill. Every month, you pay a premium to a health insurance company in order to access a health insurance plan. As we’ll get into in a second, while your monthly premium may be how much you pay for health insurance, it’s not equivalent to how much you pay on health care services. In fact, choosing a plan with lower premiums will likely mean that you’ll pay more out-of-pocket if you need to see a doctor.

Deductible - A deductible is how much you need to pay for health care services out-of-pocket before your health insurance kicks in. In most plans, once you pay your deductible, you'll still need to pay co-pays and coinsurance until you hit the out-of-pocket max, after which the plan pays for 100% of services. Plans with lower premiums tend to have higher deductibles.

Note that the deductible and out-of-pocket maximum describe two different concepts: the deductible is how much you’ll pay for a covered procedure before your insurance starts to pay, and the out-of-pocket maximum is the total amount you’ll pay for care including the deductible.

Co-payment - Often referred to as "copay," is a fixed amount that you pay for a specific service or prescription medication. Co-payments are one of the ways that health insurers will split costs with you after you hit your deductible. In addition to that, you may have co-payments on specific services before you hit your deductible. For example, many health insurance plans will have co-payments for doctor's visits and prescription drugs before you hit your deductible. You will pay co-payments until you hit your maximum out-of-pocket amount.

Coinsurance - Coinsurance is another way that health insurers will split costs with you. Unlike a co-payment, coinsurance isn't a fixed cost. It's a percentage of the cost that you pay for covered services. For example, if you have a coinsurance of 20%, you'll pay 20% of the cost of covered services until you reach your out-of-pocket maximum.

Maximum out-of-pocket amount - The maximum out-of-pocket amount, also called the out-of-pocket limit, is the most you’d ever have to pay for covered health care services in a year. Payments made towards your deductible, as well as any co-payments and coinsurance payments, go toward your out-of-pocket limit. Monthly premiums do not count.

Note that the maximum out-of-pocket is a consumer protection enacted under the ACA; previously plans didn’t have to cap what a person would be required to spend on health care services. This often meant that insured people who had to undergo very expensive treatments (e.g., for cancer or lifesaving surgery) could face unlimited medical bills.

Types of Plans

Health Maintenance Organization (HMO) - HMO plans are the most restrictive type of plan when it comes to accessing your network of providers. If you have an HMO plan, you’ll be asked to choose a primary care physician (PCP) that is in-network. All of your care will be coordinated by your PCP, and you’ll need a referral from your PCP to see a specialist. HMOs do not cover any out-of-network health care costs. HMO plans typically have cheaper premiums than other types of private health insurance plans.

Preferred Provider Organization (PPO) - PPO plans are the least restrictive type of plan when it comes to accessing your network of providers and getting care from outside the plan’s network. Typically, you have the option between choosing between an in-network doctor, who can you see at a lower cost, or an out-of-network doctor at a higher cost. You do not need a referral to see a specialist, though you may still choose a primary care physician (some states, like California, may require that you have a primary care physician). PPO plans typically have more expensive premiums than other types of private health insurance plans.

Exclusive Provider Organization (EPO) - EPO plans are a mix between HMO plans and PPO plans. EPO plans give you the option of seeing a specialist without a referral. However, EPO plans do not cover out-of-network physicians. EPO plans typically have more expensive premiums than HMOs, but less expensive premiums than PPOs.

Point of Service (POS) - POS plans are another hybrid of HMO and PPO plans. You’ll have a primary care provider on an HMO-style network that can coordinate your care. You’ll also have access to a PPO-style network with out-of-network options (albeit at a higher cost). The HMO network will be more affordable, and you will need to get a referral to see HMO specialists. POS plans typically have more expensive premiums than pure HMOs, but less expensive premiums than PPOs.

On-Exchange Plans vs. Off-Exchange Plans

On-Exchange Plans are health insurance plans purchased through a state or federal marketplace exchange. Off-exchange plans are purchased directly from health insurance carriers. On-Exchange plans are also known as Affordable Care Act (ACA) or Obamacare plans. Off-exchange plans are often referred to as short-term medical plans. Below is a comparison of some of the differences between the two types of insurance plans:

Enrollment Period - ACA plans can only be enrolled during the Open Enrollment Period from November 1st through December 15th, unless you qualify for a Special Enrollment Period (SEP). Short-term plans can be enrolled in at anytime.

Tax Credit Eligibility - Depending on income, ACA plans are potentially eligible for tax credits, while short-term plans are not.

Premium Cost - Unless you are receiving a tax credit for an ACA plan, premiums are typically cheaper on short-term plans.

Coverages - Under the Affordable Care Act, a set of 10 categories of medical service must be covered on all ACA plans. Short-term plans are not required to cover specific medical services.

Underwriting - There is no medical underwriting on ACA plans. Carriers cannot deny coverage, charge higher premiums, or exclude pre-existing coverages from plans. Short-term plans do require medical underwriting. Carriers can deny applications for coverage on short-term plans. Typically carriers will exclude treatment for pre-existing conditions on new policies for a specified period of time.

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