Choosing an insurance plan

Open enrollment under the new health insurance system continues until March 31, so now is the time to get enrolled if you need health insurance. After March 31 most people must wait to buy health insurance until November when they can purchase insurance for 2015. Note: If you experience a life event, such as a job loss or divorce, which causes you to lose health insurance, you will be eligible for a special enrollment period lasting 30-60 days.

In the new health insurance marketplace, consumers can choose from health insurance plans that are designated as bronze, silver, gold, or platinum plans. The best choice depends on your situation. Here’s how it works:

All health insurance plans in the marketplace cover the same ten essential health benefits hospitalization, prescriptions, mental health care, and more. All plans in the marketplace also offer free preventive care, with no co-payments or deductibles.

What’s different from one plan to another is how the cost is split between the consumer and the health insurance company. The insurance companies set up plans that have different cost-sharing elements these are the deductibles, co-payments, and out-of-pocket maximum limits which consumers pay when they use health care. And then they set appropriate premiums for each plan, based on all their statistics about costs and typical consumer use.

n With a bronze plan, the insurance company pays, on average, 60 percent of a consumer’s health care costs. The monthly premiums are lower than the other plans, but the consumer’s share of the cost of care is higher (i.e. deductibles, co-pays and out-of-pocket maximum amounts are higher).

n In order to be called a silver plan, the insurer must pay an average of 70 percent of consumers’ health care costs; therefore, the consumer’s share of cost (deductibles, etc) will be lower than bronze plans. And the premiums will be higher.

n Gold insurance plans pay an average of 80 percent of health care costs, so the consumer’s share averages 20 percent; consumers pay higher premiums for gold plans, compared to silver and bronze.

n And you guessed it platinum plans pay an average of 90 percent of health care cost, leaving the consumer paying only 10 percent of costs through deductibles and co-payments. Platinum plans will generally have the highest premiums.

You might be tempted to say that platinum plans are the best, because they cover more, and cost more. We’re accustomed to thinking that the best always costs the most.

But I suggest that the best choice for you is the plan that makes the most of your dollars. Why pay a high price for something you are unlikely to need? If you use a lot of health care, a gold or platinum plan may be the logical choice; sure, your premiums will be higher, but then your out-of-pocket costs throughout the year will be lower. On the other hand, if you don’t expect to need much health care, why spend extra money on a higher-premium gold or platinum plan, if you’ll hardly use any of the benefits?

The best plan for you depends on your expectation for health care needs in the coming year.

Here’s another piece of good news: you can change plans next year. The plan you choose now does not lock you into that plan for future years each year you can choose based on your current health care needs and finances. If you don’t have health insurance now, be sure to check out the health insurance marketplace (www.healthcare.gov) soon open enrollment continues until March 31.

For information on personal finance topics, search www.extension.org or contact me through your local office of ISU Extension (Hamilton County: 832-9597) or bwollan@iastate.edu). Subscribe to our blog at www.blogs.extension.iastate.edu/moneytips.