ACA insurance. what you need to know about forced shit insurance

[Ms. Toad]

40. I happen to be an attorney, well versed in this particular law -

Last edited Tue Feb 25, 2014, 06:58 AM - Edit history (1)

As well as a very experienced insurance consumer. You do not understand how insurance - or this law works.

In most insurance, there is a different deductible than out of pocket maximum. That is why there are different plans. In many marketplace plans there isn't a difference.

(***See the correction, and excellent examples, in post 74 - I was crunching numbers too late at night and made a silly mistake in these numbers***)

But let's start with an example of the norm:

If, for example, both plans have a $3000 deductible, and a $6350 out of pocket maximum, here is the difference:

$10,000 expenses in a year -

Under the bronze plan, you pay the first $3000. You pay 40% of everything else until your out of pocket costs hit $6350. 40% of $10,000 is $4000, but that would be more than $6350. So you would only pay $3000 + $3350 (a total of $6350), and the insurance company would pick up the remaining 650 of "your" 40% share (and NO, you do not have to pay the $650 back the next year. Every year in insurance you start with a clean slate).

Under the silver plan, you pay the first $3000. You pay 20% of everything else until your out of pocket costs hit $6350. 20% of $10,000 is $2000. So you would pay $3000 + $2000 = $5000.

In that example, if the bronze plan cost more than $112.50 less a month ((6350-5000)/12), it would be the better deal. If not, the silver plan would be.

In many marketplace plans (and the last plan I had) the deductible and the out of pocket maximum are identical - which means that the insurance company pays nothing until you hit the deductible, and since once you hit the deductible you have also hit the out of pocket maximum and it immediately starts paying 100% (making the plan distinction between silver and bronze meaningless). In that case, pick the one with the cheaper premium.

What a smart consumer does is look at their medical bills for the past few years, and calculate which plan is likely to cost them less - premiums + out of pocket expenses. (like the $10,000 example above).