Today more and more people are purchasing health insurance plans because of rising cases of diseases like diabetes and hypertension along with the constant rise in the medical inflation rate. In addition to this, the last one and a half years were severely affected by COVID-19 and its implications that made people more cautious toward purchasing health insurance. People have started investing in health insurance to make sure that not only their health is protected but also their financial well-being. Thus, maximum people are purchasing health insurance plans to cover themselves and their loved ones.
Though people have started to invest in health insurance in higher numbers, it has become more important for them to buy the right health insurance plan to make sure they have the right coverage and the best protection. The primary reason to purchase health insurance stands defeated if people do not invest in the right plan depending upon their medical needs. Therefore, people are advised to know well in advance all the basic factors of their health insurance coverage.
While shopping for health insurance the biggest confusion for people is choosing between Obamacare and job-based health insurance. To decide between these two people need to figure out which gives them more benefits for the amount spend. In most cases, it is observed that employer-sponsored health insurance proves out to be the best option, especially for people who are not eligible for a premium subsidy that offsets the cost of an individual or a family plan.
However, people who are facing difficulty in selecting between the ACA-compliant plans and employer-sponsored plans can take the following steps to decide:
Know the Actuarial value of the Employer-Sponsored Health Plan
Comparing the benefits offered by ACA plans and employer-sponsored plans is pretty difficult, so people are advised to first compare actuarial values. The actuarial value of a health plan tells about the yearly healthcare expenses percentage on average the health plan pays for its members. The health insurance plan with a higher actuarial value number offers more valuable benefits.
For instance, a health plan with an actuarial value of 80% will approximately pay 80% of all the covered health expenses for the member while members will be required to pay the remaining 20% of their covered healthcare expenses through deductibles, copays, and coinsurance. To find the actuarial value of the employer-sponsored health plan, people need to ask their HR department or they can call the customer service number of the carrier offering a job-based health plan to know the actuarial value.
Compare the actuarial value of job-based health plan and ACA-Plan
After determining the actuarial value of the job-based health plan offered by their employers, people must pick one or two health plans of similar actuarial value from the health insurance exchange. Obamacare plan’s actuarial value depends on its metal-tier, Bronze plans have an actuarial value of 60%, Silver plans have 70%, Gold plans have 80%, and Platinum plans have 90% actuarial value.
Thus, if their job-based health insurance plan has an actuarial value of 70% then they should pick a couple of Silver ACA-plan to compare it with their employer-sponsored plan. Comparing the plan will give them a fair idea to choose the best between the two.
Determine the costs of ACA-plan and job-based health insurance
Job-based health insurance comes with a premium subsidy from the employers who pay a part of the monthly cost of their employees’ health insurance and another part is paid by the employees. The employee’s part is taken out of their paycheck pre-tax and so they don’t have to pay income taxes on it. On average employers pay 83% of the insurance cost of an employee and 74% of the cost of family coverage. On choosing job-based health insurance, people must ask their HR department about the amount they have to contribute toward their health insurance premium each month.
To determine the cost of ACA plans, people will have to visit health insurance exchanges to obtain the pricing information. Since the cost of exchange-based health plans depend upon an individual’s age, place, and whether they smoke or not, people will need to provide such information into the exchange portal to obtain pricing information. Though ACA plans are subsidized for most enrollees but they may not be subsidized for an individual.
Individuals need to check their subsidy eligibility from the exchange. People receiving health insurance through their employers are not eligible for an Obamacare subsidy unless the plan offered by them is exceptionally unaffordable and has an actuarial value of less than 60%. Employer-based health insurance is considered unaffordable if the employee’s share of the cost for coverage just for them costs more than 9.83% of their household income in 2021.
Individuals buying health insurance plans from health insurance exchange will qualify for the premium tax credit subsidy if their income is at least 100% of the federal poverty level or more than 138% of the poverty level if they live in a state that has expanded Medicaid. To determine the cost for the Obamacare plan which the individual is considering buying, the individual will need to create an account with the exchange and apply for the subsidy.
However, creating an account and applying for financial assistance does not obligate the individual to buy health insurance or accept financial aid. The individual will still have the option to choose their employer’s health plan if they find that their employer plan will be more beneficial. Individuals who are not eligible for an Obamacare subsidy must check the full price of the health plan that they are considering buying either from the exchange or directly from an insurance company.
Compare the Cost of Obamacare Plan and Job-based Health Insurance
After knowing the exact cost of both the Obamacare plan as well as job-based plan, individuals should compare the prices. The plan that is less expensive is the one that will give the best value of their price. Though, people need to keep in mind the other factors like the provider network, covered drugs because a more expensive plan will provide the best value.
If the cost for all the plans is similar then people can make decisions based on factors like the type of health plan, the way cost-sharing is structured, the plan’s provider network, the plan’s drug formulary, plan quality, and satisfaction ratings. People who like to have the freedom to go out-of-network healthcare providers and are willing to pay more for it can opt for PPO or a POS plan and people who wish to stay in-network to keep costs low can opt for HMO or EPO plan.
Individuals who are unable to afford to pay a large deductible can opt for a plan with a lower deductible but these plans have higher copayments. People who wish to stick to their current primary care physician or specialist should check the plan’s healthcare provider network to make sure that their preferred provider is in the network of the plan that they have opted for. Individuals taking prescription medications should check the plan’s drug formulary to ensure that the drugs taken by them are covered under the plan.
Lastly and importantly individuals should check the quality and satisfaction ratings for the health plans they are considering buying. People can check the report card of the plan on the National Committee for Quality Assurance’s website. The plan with a higher rating will surely be better compared to a plan with a lower rating.