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- The Affordable Care Act limits the overall amount of out-of-pocket expenses
- The Affordable Care Act sets a limit per policy year for individual and family policies
- The family policy limit for out-of-pocket expenses in 2016 is $13,700
- The individual policy limit for out-of-pocket expenses in 2016 is $6,850
The Affordable Care Act Marketplace provides health insurance plans with an extensive range of deductible expenses, co-payments, and coinsurance requirements. Comparison shopping gives subscribers the full range of choices among a complicated set of alternatives. Insurance providers attempt to balance insurance coverage with consumer payments to bring costs within reach of as many customers as possible given the risks and expenses of medical care. The Act sets annual limits for out-of-pocket expenses and once consumers pass that limit, the insurance provider must pay all costs for essential benefits.
Out-of-pocket limits differ from deductible limits in this important way; they stop consumer payments and shift the burden to the insurance company.
Comparison shopping is an excellent method for determining the best combination of payments and benefits to meet the needs of the individual or family subscriber. Enter your zip code in our FREE tool to start comparing health insurance plans now!
Plans with HSAs
Silver plans and other plans eligible for health savings accounts have a different method for accounting the overall limits for out-of-pocket expenses. The IRS rules provide the formula used for HSA eligible plans, and the out-of-pocket limits are slightly lower with that method of computation.
Types of Plans
The four types of metal plans allocate the payment balance between the consumer and the insured, Some policies offer cost-sharing reductions, and Health Savings Accounts can reduce the overall costs. Deductibles are lower than the out-of-pocket limit. Deductibles are contract provisions that trigger insurance payments for covered benefits. The ratio of consumer-paid to insurance-paid expenses defines the actuarial value of the four types of plans in the Obamacare marketplace. The below-described plan descriptions offer meaningful choices for consumers.
- Bronze plans have a ratio of 40 percent consumer paid to 60 percent insurance paid benefits. These plans have high deductibles and low premiums.
- Silver plans require a thirty percent contribution from the insured and pays 70 percent through insurance. Consumers can pair these plans with cost saving reductions and health savings accounts. These policies offer the best opportunities to reduce out-of -pocket expenses, lower co-pays and coinsurance, and reduce the out-of-pocket limit.
- Gold plans divide the costs of benefits by paying 80 percent leaving 20 percent for the consumer. Gold plans have high premiums and moderate deductibles and co-pays.
- Platinum plans offer the most favorable balance of covered expenses and consumer paid benefits. Platinum subscribers pay as little as ten percent while insurance covers about 90 percent. Platinum programs offer the lowest level of deductibles so that insurance payments begin sooner than any other plan.
Saving on Out-of-Pocket Expenses
Out-of-pocket expenses represent consumer contributions to healthcare costs in addition to premiums. Silver plans offer tax credit subsidies to lower monthly premiums. They also have out-of-pocket savings that affect the total limit of consumer expenses, the amounts of co-pay and coinsurance, and a lower deductible. The program called cost-sharing reductions can benefit those who choose silver and with incomes in the range established by rules between 100 percent and 250 percent of the federal poverty guideline.
Cost Sharing Reduction Subsidies
Out-of-pocket costs can inhibit maximum benefits of health insurance coverage when expenses challenge the individual’s or family’s ability to pay. The Costs Sharing Reductions program focuses on persons with incomes at 250 percent of the federal poverty guideline or lower. The CSR reduces the threshold amount of the deductible. The Cost Sharing Reduction Subsidy serves two functions:
- It relieves the consumer from paying full expenses
- It increases the number of services a consumer can reasonably afford.
Cost sharing reductions lower the amounts of co-pays and coinsurance. For example, a series of doctor’s visits that could cost $40 per visit might only cost $20 in the CSR program.
Special CSR for Native Americans and Alaska Native Peoples
The ACA provides a number of significant benefits for Native Americans and Alaska Native peoples. Enrollment in a health care marketplace plan does not prohibit free or low-cost services from Indian health care agencies and providers. Enrollment in Marketplace programs increases options for access to service providers and services in other areas not served by Indian health service providers. The special cost reduction services include the below-listed items.
- There are year-round open enrollments for tribes and ANCSA shareholders
- They can change plans once per month
- They can participate in zero cost sharing programs to eliminate out of pocket expenses
- Limited cost sharing programs for services by Indian health care providers
- Simplified qualification for Medicaid or CHIP
- Simplified mandate penalty exemptions process
A question arose in the government interpretation of the out-of-pocket limit and family plans., namely, whether the individual or family out-of-pocket limit applies to family accounts. In a particular case, the family limit for the calendar year 2015 was $13,000, but the individual limit was $6,600. When one spouse in a family plan exceeded the individual limit by spending $10,000, the rule was that she was entitled to full insurance coverage. Her limit was the individual limit of $6,600. The spouse that had not reached the limit was still subject to co-payment until the family reached the overall $13,000.00 figure.
Health Savings Accounts
Health Savings Accounts have two important features that will benefit every subscriber. They create a pool of funds to pay out-of-pocket expenses and deductibles. They roll over into an ongoing asset. The earnings from unspent HSA funds grow without taxation. One can use the funds in the HSA with a penalty at any time and without penalty after joining Medicare.
The HSA is a way to protect physical and economic health. HSAs have limits.
For 2016, the limit is $3350 for individuals and $6750 for families. Those aged 55 or older can add an additional $1,000 per person to each account for a total of $4350 for individuals. Funds assigned to HSAs are tax-free as are the earnings and accumulations in the account.
Maximum Out-of-Pocket Expenses
The ACA protects consumers by placing limits on out-of-pocket expenses per policy year. Before the Act, insurers were free to charge and to discriminate based on gender, pre-existing conditions, and other individual characteristics. Comparison shopping provides guidance for making selections among health policies. Consumers can help themselves by using comparison shopping tools, and taking deductions for medical expenses and premiums where applicable. Co-pays for doctor visits can build to significant levels and discourage going to the doctor. The limit on out-of-pocket expenses creates an economic framework for marketplace plans. Qualified plans must offer effective levels of the essential benefits within the boundaries of the out-of-pocket expense limits. Start comparing health insurance rates now by using our FREE tool below!