Open enrollment starts in a few days for health insurance policies sold through the ACA Exchange, and Texans are evaluating their options. One of the more confusing aspects that is often overlooked during these evaluations for Texas Health Insurance is the costs to the insured beyond the premium. Everyone fixates what it costs them per month, but they never consider how much they can be out of pocket if a hospitalization occurs. So how much can I really be out of pocket in costs and does it have a maximum?
What Do You Mean By Out-Of-Pocket Costs?
When you sign up for Texas Health Insurance you are hit with myriad of numbers. Most Texans are fixated on co-pays, pharmacy costs, and deductibles. And they are a major part of the story. But there is more to costs that come out of our pockets. Out-of-pocket costs are those items which you will be required to pay to use the insurance that you pay for with your monthly premium. Out-of-pocket costs can include, but are not necessarily limited to, the following list.
- Co-Pays for office visits
- Co-Pays for emergency rooms, urgent care centers, or other ancillary providers
- Deductibles
- Co-Pays for pharmacy benefits
- Co-Insurance
That list can become expensive if you end up using the emergency room or need a surgery. Going to the room can incur the base co-pay of $500 or $1,000 along with then pushing you into paying your deductible. But it doesn't end there.
Once you have satisfied an individual deductible, many policies include a co-insurance provision that you will be required to pay beyond the deductible. Co-insurance is a sharing of the bill remaining after that deductible and is usually expressed as a percentage that can range from 0% to 30%. You, the insured, are responsible for that percentage of your remaining bill. That means after you have satisfied that $5,000 deductible, you could still be responsible for that percentage of the remaining bill. YIKES!
Is There A Limit To The Amount Of Co-Insurance Due?
The good news for Texas consumers is that most Texas Health Insurance plans have what is known as a Maximum Out-Of-Pocket expense. The Affordable Care Act puts the maximum individual deductible at $7,900 and Maximum Out-Of-Pocket per individual at $15,800 for health insurance plans that are compliant with the law. Since some health insurance policies are sold in Texas that are not compliant with the ACA mandates, it's vitally important to understand what your policy has under it's co-insurance provisions as well as the Maximum Out-Of-Pocket. The good news is that your deductible counts towards your Maximum Out-Of-Pocket costs for the year.
How Do I Decide Which Health Insurance Policy Is Best?
If you take a real world look at health insurance policies being sold today, there are ways to evaluate which one is right for you. One of the biggest items that we stress is what your potential costs are over a year. The premium is a component, but there are actually several factors that can help you decide which health insurance policy is right for your family. Which of these three plans would you say is best?
Example 1: Joe's ACA Exchange Bronze Level Plan
- Family of Three
- Individual Deductible: $2,500
- Family Deductible: $7,500
- Co-Insurance: 20%
- Individual Maximum Out-Of-Pocket: $5,000
- Family Maximum Out-Of-Pocket: $12,500
- Monthly Premium: $1,400
Example 2: Martha's Short Term Medical Plan
- Family of Three
- Individual Deductible: $5,000
- Family Deductible: $15,000
- Co-Insurance: 0%
- Individual Maximum Out-Of-Pocket: $5,000
- Family Maximum Out-Of-Pocket: $15,000
- Monthly Premium: $1,100
Example 3: Francisco's ACA Exchange Gold Level Plan
- Family of Three
- Individual Deductible: $3,500
- Family Deductible: $10,500
- Co-Insurance: 20%
- Individual Maximum Out-Of-Pocket: $7,000
- Family Maximum Out-Of-Pocket: $15,500
- Monthly Premium: $1,800
To do a true comparison of these three examples of Texas Health Insurance plans, we need to look at Guaranteed costs, Maximum Costs, and Middle Level Costs. Guaranteed costs are premiums that have to be paid to keep the policy in force assuming nothing else has to be spent. Maximum costs would be paying premiums while also having everyone family member hit their maximums. Middle costs would be paying premiums and having a family member hit their Maximum Out-Of-Pocket.
Example 1: Joe
- Guaranteed Costs: $16,800
- Middle Costs: $21,800
- Maximum Costs: $31,800
Example 2: Martha
- Guaranteed Costs: $13,200
- Middle Costs: $18,200
- Maximum Costs: $33,200
Example 1: Francisco
- Guaranteed Costs: $21,600
- Middle Costs: $28,600
- Maximum Costs: $37,100
Which one would you choose?
It is difficult for us to recommend a Gold level plan like Francisco unless there is some overwhelming need like prescription benefits for a pre-existing condition. It's incredibly difficult to say one size fits all, but the cost monthly cost of Marths's plan is very advantageous with a very similar Maximum Out-Of-Pocket cost to the Bronze level plan.
If you've never considered evaluating these health insurance plans in this manner, it make sense to speak with an adviser like Insurance For Texans. We can show you the economic impact of the options that are available. Even far beyond the three examples listed here. We work with you to determine what your needs are as well as fitting it to your budget. Schedule a time to talk today.
