How to pick a plan in the health insurance marketplace

Thanks to the Affordable Care Act (ACA), many Americans have more health insurance options than they used to. But the variety of options—and even the vocabulary you need to know—can be confusing. Here are some of the basics to help you shop for coverage.

What types of health insurance plans are available?

Whether you’re looking for insurance in the federal government’s marketplace (aka, the Health Insurance Marketplace, found at HealthCare.gov) or you live in a state that runs its own marketplace, you may see these kinds of plans:

Health maintenance organization (HMO): These plans generally pay for non-emergency care only from a specified network of healthcare providers (HCPs), hospitals, pharmacies, and other providers who have an agreement with the HMO. In most cases, you need to see your primary care provider (PCP) before you can go to a specialist.

Preferred provider organization (PPO): These plans cost more than HMOs, but you have more flexibility. In a PPO, you can see any provider you wish, though you will pay more for those who are outside of the preferred network. You don’t have to get a referral from your primary provider before seeing a specialist.

Point-of-service plan (POS): This type of plan has some features of an HMO combined with features of a PPO. As with an HMO, you have a PCP who refers you to in-network providers and to specialists. A POS typically covers some out-of-network providers, but if you decide to see one, you’ll usually have to pay more than if you saw an in-network provider.

Exclusive provider organization (EPO): This type of plan is similar to an HMO in that your care will only be covered if you use HCPs, specialists, and hospitals within the plan’s network, but you generally have more flexibility to see any network provider you choose. (In emergency situations, care is typically covered whether in-network or out-of-network.)

“Catastrophic” health plan: These plans are the least expensive up-front, but you’ll have much higher out-of-pocket costs if you need medical care. You may have to pay thousands of dollars before your coverage begins. These plans also cover less preventive care than other plans. In the Health Insurance Marketplace, they are available only to people under age 30 and those with other special circumstances.

How much do the plans cost?

Across the various types of health insurance plans, there are also four pricing categories: bronze, silver, gold, and platinum. These categories are arranged on a spectrum based on up-front costs versus insurance benefits.

Bronze plans charge the lowest monthly premiums (more on those below) but cover the least when you need to pay for health care. Bronze plans tend to be the best for people who want basic, low-cost coverage but anticipate they won’t make heavy use of their plan.

On the other side of the spectrum, platinum plans charge the highest monthly premiums, but they pay more when you actually have healthcare costs. These plans tend to be best for people who anticipate making heavy use of health care and are willing and able to pay more each month for that benefit.

What will I have to pay for under my coverage?

One mistake many insurance shoppers make is looking only at each plan’s monthly premiums. The fact is, there are other costs you’ll probably face, too, and they can add up. As you compare your health plan options, make sure to look at the following:

Premium: This is the monthly fee that you pay to keep your insurance, whether you’re using it or not. For most healthcare plans, the ACA requires insurance companies to publicly justify any increases in premium prices of more than 15 percent per year.

Deductible: This is the amount you have to pay for healthcare services out of your own pocket before your health insurance starts to pay. Once you have paid the amount of your deductible in a year, you have “met” or “reached” your deductible.

As a rule of thumb, the higher your deductible, the lower the cost of your monthly premium. Plans with high deductibles may be fine for people who don’t expect to have high healthcare costs in a given year.

For 2024, the Internal Revenue Service (IRS) defines a high-deductible health plan as one with a yearly deductible that's at least $1,600 for an individual or $3,200 for a family.

If you have healthcare expenses while using a high-deductible plan, you’ll probably have to pay more than you would with a lower-deductible plan, since you are responsible for paying all costs until you reach the deductible. Once you reach that deductible, you still have to pay co-pays and coinsurance for covered services (more on those below), but the insurer pays the rest. You can receive some services for free even before you’ve met your deductible. These include HCP visits for preventive care, like routine checkups.

Coinsurance: This is your share of the cost of a healthcare service, after you’ve met your deductible. For instance, if you’ve met your deductible and have 20 percent coinsurance, on your next $100 healthcare bill, you’d owe $20 and your insurer would pay $80. A lower coinsurance means you would have to pay less of each bill. If you pay a high monthly premium, it usually means you have lower coinsurance payments. Lower monthly premiums typically have higher coinsurance rates.

Copayment (or copay): This is a fee you pay for a healthcare service, usually at the time of service. For instance, you may have a co-pay of $35 to see your primary care doctor or $15 for a prescription medication. These amounts are often listed on your insurance card. Typically, co-pays are lower for generic medications and providers who are in your network. They’re higher for brand-name medications and providers who are out of your network.

Out-of-pocket maximum: Most health plans place a limit on the amount you have to spend for covered healthcare services in a given year. Once you spend that amount, the insurance plan will pay 100 percent of any remaining covered services you need.

The term can be misleading, though, because it doesn’t include monthly premiums, anything that isn’t covered, out-of-network care, or costs that exceed the amount that the plan allows for a service.

Out-of-pocket costs for the year consist of several parts including:

• Your deductibles
• Your coinsurance costs
• Any co-payments for services that are covered
• Anything else that isn’t covered

For 2024, the IRS limits total yearly out-of-pocket expenses for people with high-deductible plans to $8,050 for an individual or $16,100 for a family. The out-of-pocket limit for plans on the Health Insurance Marketplace is $9,450 for an individual and $18,900 for a family.

What is a health savings account?

People who have high-deductible plans may be eligible to create a health savings account (HSA). This lets you save money to pay for certain medical expenses, such as deductibles, copays, or coinsurance.

One nice benefit of HSAs is that you aren’t taxed on the money you put into them. Many HSAs also allow you to invest your savings, so you can enjoy interest or other earnings on the funds you save up. You can keep the amounts you save even if you don’t use up all your funds on medical expenses in a given year.

Where can I get insurance?

If you do not currently have insurance, you can go to the Health Insurance Marketplace to see a wide range of choices, including private and government-offered insurance. To help you sort through your options, the plans are organized by the level of coverage they provide. You can also find out if you’re eligible for any discounts. If you need help, an ACA Insurance Navigator can guide you through the process at no charge.

Note that there are certain times of the year when you may enroll in a healthcare plan. This period of time, called open enrollment, typically runs from November into January. In some cases, you may enroll in a healthcare plan outside of open enrollment. These cases include:

• You’ve had changes in your life, such as getting married, having a baby, moving homes, losing health coverage, or if your income falls below a certain amount.
• You qualify for Medicaid or the Children's Health Insurance Program (CHIP).

There are other ways to get insurance

The Health Insurance Marketplace isn’t the only way to get insurance. You may also be able to get coverage through:

Your employer: Your company may offer health insurance as a benefit.

COBRA: Short for Consolidated Omnibus Budget Reconciliation Act, COBRA is a way to buy health insurance temporarily (typically, for up to 18 months) after your employment ends or you lose coverage. COBRA is expensive, though: You typically have to pay the full retail price of the monthly premium, plus a fee. But COBRA can be a way to stay insured for a while if an employer no longer covers you.

Medicare or Medicaid: Medicare covers people aged 65 or older and people younger than 65 with permanent kidney failure or ALS (also known as Lou Gehrig’s disease). Medicaid provides health coverage for eligible low-income individuals and families, pregnant people, and people with disabilities.

Your parents: Through the ACA, you can stay on your parents’ plan until you turn 26.

An insurance company or broker: You can buy insurance on your own outside the Health Insurance Marketplace and the plans will generally include the same benefits and protections. But you won’t be able to get discounts for which you may qualify.