For the 2016 coverage year, individuals in 38 states can use HealthCare.gov to shop for plans; individuals in the remaining 12 states plus the District of Columbia can use their State-based Marketplaces. As with most health insurance options, plans offered through a Marketplace require individuals to pay a monthly premium as well as a portion of the costs of the health care services they receive (called "cost-sharing”). Cost-sharing includes the deductible, co-payments and/or co-insurance, but not the premium. The Affordable Care Act (ACA) limits the maximum amount that a plan can require an individual to pay for cost-sharing each year, known as the "out-of-pocket maximum".
The Spotlight also provides an example of what it might cost an individual if s/he opts out of having coverage. The example illustrates both the cost of the penalty and the charges for a major medical emergency requiring hospitalization.
See the Background section for more details about cost-sharing and the Methodology section for more information on the data used.
The ACA established HealthCare.gov as a resource for people in states that do not have a State-based Marketplace to purchase and enroll in plans. Like with most health insurance options, in addition to a monthly premium, plans offered through the Marketplaces require individuals to also pay for a portion of the costs of health care services they receive, which is called “cost-sharing.” Generally, individuals will pay higher premiums for plans that require less cost-sharing, and lower premiums for plans that require more cost-sharing.
The out-of-pocket maximum for a plan caps what the individual has to pay for cost-sharing. After an individual reaches this amount, the plan will pay the entire cost of covered services for the rest of the policy period, as long as the health care services are covered by the plan, are provided by in-network providers, and take place during a plan’s policy period (usually one year). Costs the individual pays include deductible expenses and may also include cost-sharing expenses that occur after the deductible is met, like co-payment and co-insurance expenses. For 2016 plans offered through the Marketplaces, the maximum out-of-pocket limit a plan may have is $6,850 for an individual plan and $13,700 for a family plan.
The specific out-of-pocket costs an individual will pay under any plan will depend not only on the plan’s cost-sharing rules, but also on the health care services the individual uses in a year. For example, many individuals may use health care services infrequently, so their cost-sharing expenses may never reach the out-of-pocket maximum. However, others may have chronic conditions that require them to use health care services frequently and/or to use a higher cost mix of services. These individuals may reach their out-of-pocket maximum before the end of the policy period. Or still others may not expect to use their insurance much, but then experience an emergency requiring costly health care services that quickly make them spend their out-of-pocket maximum. Therefore, the figures in this Spotlight help to illustrate the upper bounds of individuals’ possible total costs (premiums plus out-of-pocket maximums) across plan categories, rather than actual costs an individual would face based on specific health care services used.
The ACA also requires people to either have coverage or pay a penalty. Some people opt not to have coverage and instead pay the penalty. For 2016, the penalty was either $695 or 2.5% of the household income, whichever is more. (If there are no affordable coverage options available to an individual, s/he may be eligible for an exemption from the penalty.) However, if the uninsured individual needs health care services, s/he would have to pay the full cost of those health care services.) For example, the Spotlight shows the average charge for hospitalization for appendicitis, which is $37,097 for an individual without coverage. This is much more than the individual would spend on premiums and out-of-pocket maximum costs of a plan if s/he chose to buy a plan through a Marketplace.
The infographics in this ACA Spotlight consist of a bar graph that for each plan category displays the total annual net premium cost plus the out-of-pocket maximum for the lowest cost plan (by premium, before any savings from a Premium Tax Credit are applied) based on the entered age, number of people in the household, zip code, and total annual household income. For each displayed plan, the monthly premium cost (after applying any savings from a Premium Tax Credit, if applicable) is multiplied by 12 to get the annual premium amount. Additionally, for the displayed silver plan, if a Cost Sharing Reduction is applicable and it lowers the out-of-pocket maximum, the Cost Sharing Reduction savings are applied to and included in the displayed silver plan’s out-of-pocket maximum.
Each infographic also includes an option to “SHOW THE RISKS OF HAVING NO COVERAGE.” This feature illustrates how much an individual without coverage might pay for an unexpected hospitalization for appendicitis. This amount is based on two things:
- The tax penalty the individual would pay for not having coverage (also known as the “individual mandate”). The tax penalty amount is the greater of $695 or 2.5% of the individual’s household income for tax year 2016.
- The mean charges for an uninsured individual who is hospitalized for appendicitis as provided by the Agency for Healthcare Research and Quality’s Healthcare Cost and Utilization Project (HCUP) 2013 National Inpatient Sample Dataset.
Social Interest Solutions (SIS) produced the data and infographics using the MAGI Cloud platform. The MAGI Cloud platform includes a comprehensive rules engine that can generate ACA eligibility results across all states and across the full spectrum of health insurance options, including Medicaid, CHIP, and Qualified Health Plans (QHPs) with and without premium tax credits and cost-sharing reduction subsidies. To learn more about the MAGI Cloud platform, click here.
Social Interest Solutions thanks Young Invincibles for their collaboration on this Spotlight. To learn more about Young Invincibles, click here.
The MAGI Cloud platform uses HealthCare.gov 2016 plan data to determine the lowest cost plan by premium for each plan category and the out-of-pocket maximum for each of those plans. Please note that in the data sources used, in certain zip codes some plans are missing premium data. For these zip codes, these plans with missing premium data are skipped for consideration as the lowest cost plan by premium for a plan category; the lowest premium amount in a plan that is not missing its premium data is selected instead.
Please also note that for certain infographics, catastrophic and/or platinum plans are not displayed because the entered age is over the age criteria for automatic eligibility or because such plans are not offered in the entered zip code.
Data used in this Spotlight are available upon request. Please email requests to firstname.lastname@example.org.
- The Commonwealth Fund
- Consumers Union
- Georgetown University Health Policy Institute’s Center for Children and Families
- The Henry J. Kaiser Family Foundation
- Robert Wood Johnson Foundation
- Social Interest Solutions