Millions of uninsured and underinsured Americans may now purchase better and more affordable health insurance. For the first time in history, they can do so without the threat of being denied.
The process for purchasing insurance is different from state to state, however. Some states have opted to create their own insurance exchange. Others are relying on a federal insurance exchange. Here, we’ve outlined how the insurance exchange marketplace works, what you need to know when you’re shopping for insurance, and how you can pick the best option for you.
What’s the Marketplace?
The Health Insurance Marketplace, also known as the Exchange, opened October 1, 2013. The Marketplace should be your first stop when you begin looking to purchase health insurance. At the Exchange, you can apply for insurance, review your options, and purchase insurance.
You can fill out an application at the Marketplace website. Your application will be processed, and you will receive a list of health insurance plans you are eligible to purchase. Private health insurance companies provide these health insurance plans. Your application results will also tell you if you qualify for your state’s Medicaid program. You may qualify for lower-cost premiums or lower out-of-pocket costs, too. Also, officials use your application to determine if you are eligible for an exemption.
What do I need to have before I begin shopping?
You need to gather some important information before you begin your application. First, you need to know your household income. You may qualify for Medicaid or lower-cost insurance if your income falls into a specific category.
Secondly, you need to know how much you can afford to pay for insurance each month. Create a budget and determine your upper limit for the insurance premium expense. The options available to you in the Exchange may vary widely. You need to know what you can safely pay each month for your insurance before you are ready to purchase.
Who runs the Marketplace?
Depending on the state in which you live, your exchange may be run by your state government or by the federal government. If you live in a state with its own exchange, you will purchase insurance through that. If your state has not created its own exchange, you will use one that has been created by the federal government.
What types of insurance are available in the Marketplace?
The Exchange has a variety of insurance options. You should be able to find one that closely matches your needs. Here, the types of insurance you may be able to purchase through the Health Insurance Marketplace:
Health Maintenance Organizations (HMOs)
HMOs can limit your network of health care providers to a particular list of doctors and hospitals. When seeking out medical care, you will have to pick within that network or pay the full cost of the services you receive. Most HMOs establish a primary care doctor for each person or family. In order to receive treatment from another doctor or specialist, HMOs typically require a referral from your primary care doctor.
Exclusive Provider Organizations (EPOs)
Like HMOs, EPOs can limit your network of health care providers to a list of preferred doctors and hospitals. You also will have to pick within your network or pay the full cost of the services you receive. However, unlike HMOs, an EPO may not require you to have a primary care doctor. In that case, you can see health care specialists without referrals from your primary care doctor.
Preferred Provider Organizations (PPOs)
PPOs allow you to see doctors both within and outside your provider network. If you choose to see a doctor outside your network, you will not be responsible for the entire cost of the services you received, but you will be responsible for more of the cost than you would be if you used a health care provider that was in your PPO network. People with a PPO also do not have to have a referral to see a specialist.
Point-of-Service Plans (POS)
Like PPOs, a POS allows you to see both in-network and out-of-network health care providers. With a POS, you will need a referral from your primary health care doctor to see a health care provider who is out of your primary network.
High Deductible Health Plan (HDHP)
An HDHP has a lower premium and higher deductible than most other health insurance plans. By law, the minimum HDHP deductible for an individual is $1,250 and $2,500 for a family. To offset this larger deductible price, you can elect to participate in a health care savings account or a health reimbursement arrangement.
Catastrophic Health Insurance Plan
This type of health insurance plan has a very high deductible and carries only the essential health benefits. For most people who elect this type of insurance, it’s truly an emergency safety net in case of an accident or sudden illness. These plans rarely cover pharmacy costs. Under the Affordable Care Act, catastrophic insurance plans will be available only to people under age 30 and some low-income individuals who have been granted a hardship exemption.