How to Pick a Plan in the Health Insurance Marketplace

Shopping around for new or different coverage? Learn about your options, plus key terms you need to know.

Medically reviewed in January 2022

Updated on January 18, 2022

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. So, let’s start with the basics.

What types of health insurance plans are available?
Whether you’re looking for insurance in the federal government’s marketplace (aka, the Marketplace, found at Healthcare.gov) or you live in a state that runs its own, you may see these kinds of plans:

  • Health maintenance organization (HMO): These plans generally pay for care only from a specified network of doctors, hospitals, pharmacies, and other providers who have an agreement with the HMO. You need to see your primary care provider 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): As with an HMO, you have a primary care provider (PCP) who refers you to in-network providers. If you decide to see specialists outside the network, you’ll have to pay most of the cost—unless your PCP refers you, in which case the POS pays.
  • “Catastrophic” health plan: These plans are the least expensive up-front, but you’ll have much higher out-of-pocket costs if something bad does happen. You may have to pay thousands of dollars before your coverage begins. These plans also cover less preventive care. In the Marketplace, they are available only to people under age 30 and those with other special circumstances.

What are the different kinds of insurance costs?
A 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: A 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 premium increases of more than 15 percent per year.

Deductible: How much you have to pay for healthcare services before your health insurance starts to kick in. As a rule of thumb, the higher your deductible, the lower your premium. Plans with high deductibles may be fine for people who don’t expect to run up high healthcare costs.

For 2022, the Internal Revenue Service (IRS) defines a high-deductible health plan as one requiring the plan holder to cover at least $1,400 for an individual or $2,800 for a family.

If you do wind up with a healthcare expense, then you’d have to pick up more of the tab than you would with a lower-deductible plan, since you are responsible for all costs until you reach the deductible. Once you reach your deductible, you still have to pay co-pays and coinsurance for covered services, but the insurer picks up the rest. You can receive some services, such as certain kinds of preventive care, for free even before you’ve met your deductible.

Co-payment (or co-pay): The fee you pay for a healthcare service, usually at the time of service, after you’ve met your deductible. 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, and higher for brand-name medications and providers who are out of your network.

Coinsurance: 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, for your next $100 healthcare bill, you’d owe $20. A lower coinsurance means you would have to pay less of each bill. A high monthly premium usually means lower coinsurance and lower monthly premiums have higher coinsurance.

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

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

For 2022, the IRS limits total yearly out-of-pocket expenses for people with high-deductible plans to $7,050 for an individual or $14,100 for a family. Beware, though: This limit doesn't include out-of-network services. If you go to out-of-network providers, you may face costs even higher than these limits.

Out-of-pocket maximum: This is the most you’ll have to pay for covered healthcare services in a plan year. The term can be misleading, though, because it doesn’t include monthly premiums, anything that isn’t covered, out-of-network care and services, or costs that exceed the allowed amount for a service that a provider may charge.

After you’ve spent your out-of-pocket maximum, your insurance will cover 100 percent of your covered healthcare services for the remainder of the year. Maximums vary by plan, and some plans don’t count co-pays, deductibles, or coinsurance toward the maximum, so check this closely. For 2022, the IRS limits the out-of-pocket maximum to $8,700 for an individual or $17,400 for a family.

Where can I get insurance?
If you do not currently have insurance, you can go to the 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.

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

  • Your employer: If your company offers insurance and you like the coverage, you can keep it or use the Marketplace to check if better prices or plans are available.
  • COBRA: Short for Consolidated Omnibus Budget Reconciliation Act, COBRA is a way to buy health insurance temporarily (typically, 18 months) after your employment ends or you lose coverage as a dependent. COBRA is pricey: You have to pay full retail on the monthly premium, plus a fee. But it 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, people with permanent kidney failure, and some people with disabilities. Medicaid is for eligible lower-income individuals, pregnant women, 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 Marketplace, and the plans will generally include the same guaranteed benefits and protections. But you won’t be able to get discounts for which you may qualify.
Article sources open article sources

Healthcare.gov. COBRA. Accessed Jan. 14, 2022.
Healthcare.gov. Catastrophic Health Plan. Accessed Jan. 14, 2022.
Healthcare.gov. Copayment. Accessed Jan. 14, 2022.
Healthcare.gov. Deductible. Accessed Jan. 14, 2022.
Healthcare.gov. Health Maintenance Organization (HMO). Accessed Jan. 14, 2022.
Healthcare.gov. High Deductible Health Plan (HDHP). Accessed Jan. 14, 2022.
Healthcare.gov. Out-of-pocket maximum/limit. Accessed Jan. 14, 2022.
Healthcare.gov. Out-of-pocket costs. Accessed Jan. 14, 2022.
Healthcare.gov. Point of Service (POS) Plans. Accessed Jan. 14, 2022.
Healthcare.gov. Premium. Accessed Jan. 14, 2022.
Healthcare.gov. Rate Review & the 80/20 Rule. Accessed Jan. 14, 2022.
Healthcoverageguide.org. Point-of-Service Plan (POS). Accessed Jan. 14, 2022.
Louise Norris. Health insurance marketplaces by state. Healthinsurance.org. Accessed Jan. 14, 2022.
Medicaid.gov. Medicaid. Accessed Jan. 14, 2022.
HHS.gov. Young Adult Coverage. Accessed Jan. 14, 2022.
U.S. Department of Labor. FAQs on COBRA Continuation Health Coverage for Workers. Accessed Jan. 14, 2022.

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