In this Beyond the Basics webinar presented by the Center on Budget and Policy Priorities, in partnership with Foundation Communities, on October 5, 2021, Arianna Anaya covers strategies to help consumers understand how insurance works, evaluate and compare marketplace plans, and select the plan that best meets their families’ needs.

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Part I: Using the Enrollment Process to Explain Exchange Plans

• The Marketplace Enrollment Checklist
• Estimating Total Annual Cost
• Choosing the Amount of PTC to Use
• Checking Network & Rx Coverage
• Choosing a Health Plan

Part II: Plan Comparison Strategy

• Talking About Cost & Network
• Essential Health Benefits
• Comparing Plans Based on Cost
• Comparing Plans Based on Network
• Narrowing Plan Selection
• Cost-Sharing & Metal Tiers

Part III: Plan Selection Tips & Tools for Assisters

• Building a Network Overview Cheat Sheet

Additional Resources

OE9 Webinar: Part V Health Insurance Plan Design

Plan Comparison Worksheet

Key Facts About Cost-Sharing Reductions

Key Facts About Cost-Sharing Charges

In this Beyond the Basics webinar presented by the Center on Budget and Policy Priorities on September 30, 2021, Inna Rubin covers the ins and outs of how health insurance plans work. She also provides an overview of the different types of cost-sharing charges consumers may encounter and how subsidies on the health insurance marketplace can reduce those costs.

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Elements of Qualified Health Plans (QHPs)

• Overview of QHPs
• Essential health benefits
• Overview of plan networks
• Overview of formularies
• Premiums & cost-sharing charges

Overview of Cost-Sharing Charges

• Types of cost-sharing charges
• Maximum out-of-pocket limit
• Summary of benefits & coverage
• Overview of family cost-sharing charges
• Surprise billing protections

Actuarial Value

• Overview of actuarial value
• Cost-sharing differences between metal tiers
• Impact of actuarial value on cost-sharing charges

Cost-Sharing Reductions

• Overview of cost-sharing reductions
• Examples of how cost-sharing reductions impact cost

Skimpy Plans

• Overview of skimpy plans
• Risks associated with skimpy plans
• Coverage restrictions and exclusions in short-term plans

Additional Resources

OE9 Webinar: Part VI Plan Selection Strategies

Plan Comparison Worksheet

Key Facts About Cost-Sharing Reductions

Key Facts About Cost-Sharing Charges

In this Health Reform: Beyond the Basics webinar presented on October 6, 2020, Dave Chandrasekaran, a health policy consultant and volunteer Certified Application Counselor, provided strategies to support consumers in understanding how commercial insurance works, evaluating and comparing marketplace plans, and selecting the plan that best meets their families’ needs.

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Overview of Marketplace Plans

• Elements of Marketplace Health Plans
• Overview of Cost Sharing
• First Dollar Coverage
• Health Savings Accounts
• Carrier Negotiated Rates
• Health Plan Types

Trends in Marketplace Plans

• Partial Exemptions from the Deductible
• Deductible-only Plans
• Prescription Drug Tiers
• Tiered Provider Networks
• Inaccurate Provider Directories

Strategies to Help Consumers

• Preparing for Open Enrollment
• Tailoring Search Based on Consumer Needs
• Understanding Consumers Tradeoffs

Live Plan Selection Demonstration on HealthCare.gov

• Example Scenarios

Additional Resources

OE8 Webinar Part V: Plan Design

Key Facts About Cost-Sharing Charges

Key Facts About Cost-Sharing Reductions

In this Health Reform: Beyond the Basics webinar presented on October 1, 2020, Sarah Lueck, Senior Policy Analyst, provides an overview of health plan design, including cost-sharing charges in marketplace plans, eligibility for cost-sharing reductions, and how plan design affects consumers’ costs. She also covers the expansion and risks of skimpy plans.

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Elements of Plan Design

• Basic elements of marketplace plans
• Essential health benefits
• Types of cost-sharing charges
• Maximum out-of-pocket limit
• Actuarial value and metal tiers
• Examples

Cost-Sharing Reductions

• Levels of cost-sharing reductions
• Examples
• Cost-sharing for American Indians and Alaska Natives

Skimpy Plans

• Skimpy plans vs. AC-compliant plans
• Limitations of short-term plans
• Direct enrollment websites

Additional Resources

Key Facts About Cost-Sharing Reductions

Key Facts About Cost-Sharing Charges

Health Insurance Marketplaces (also called exchanges) provide a way for people to buy affordable health coverage on their own. The following Q&A explains the cost-sharing reductions that are available to low-income individuals and families via marketplace plans, to help them afford out-of-pocket costs when they get health care.

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What are cost-sharing reductions?

Some people receiving premium tax credits to help pay their premiums for marketplace plans also are eligible to receive cost-sharing reductions (CSR) to help them pay their cost-sharing charges. (For more information about the premium tax credit, see Key Facts: Premium Tax Credits.) CSR reduce the deductibles, co-payments, and other out-of-pocket charges that people eligible for them pay when they use benefits covered by their health plan.

Who is eligible for cost-sharing reductions?

Individuals and families with incomes up to 250 percent of the poverty line are eligible for cost-sharing reductions if they are eligible for a premium tax credit and purchase a silver plan through the Health Insurance Marketplace in their state. People with lower incomes receive the most assistance.

How are the cost-sharing reductions provided?

People eligible for cost-sharing reductions who enroll in a silver plan will automatically receive a version of the plan with reduced cost-sharing charges, such as lower deductibles, out-of-pocket maximums and co-payments. Unlike the premium subsidies, cost-sharing reductions are not provided as a tax credit and they do not have to be “reconciled” when people file their taxes for the year they received cost-sharing reductions.

What is a silver plan?

A silver plan is one type of plan available through both the state’s marketplace and individual market outside the marketplace. Plans offered in the individual market inside and outside the marketplace generally must fit within one of four metal tiers: bronze, silver, gold, and platinum. These tiers are defined by what’s known as actuarial value.

What is actuarial value?

In general, actuarial value percentages represent how much of a typical population’s medical spending a health insurance plan would cover. The actuarial value is 60 percent for bronze plans, 70 percent for silver plans, 80 percent for gold plans, and 90 percent for platinum plans. The higher the actuarial value, the more the plan covers of a typical population’s costs (and thus the typical population would pay less out-of-pocket). A lower actuarial value means the plan covers less of the costs (and the population pays more). The actuarial value calculation focuses mainly on cost-sharing charges. This means that a bronze plan generally would have higher overall enrollee cost sharing than a gold plan would. (For more information about actuarial value and the metal tiers, see Key Facts: Cost-Sharing Charges.)

Will the cost-sharing reductions lower the out-of-pocket charges under a plan by a specific amount?

No, the cost-sharing reductions increase the actuarial value of a standard silver plan, which results in lower out-of-pocket charges. Specific cost-sharing charges will vary from silver plan to silver plan with the same actuarial value; in most states, insurers have significant flexibility to set these charges.

Table 1 shows an example of how various cost-sharing charges in a sample silver plan could be reduced to meet each of the cost-sharing reduction levels. For example, a person with annual income of 182 percent of the federal poverty line enrolled in a silver plan would be subject to a $800 deductible under the sample silver plan. (The deductible is the amount that the person must pay each year before the plan starts to pay for most covered services. (For more information on different types of cost-sharing charges, please see Key Facts: Cost-Sharing Charges.)

Does a person eligible for a cost-sharing reduction have to keep track of spending on health care services to get reimbursed by the health plan or the federal government?

No. The cost-sharing charges for the silver plan are automatically reduced for someone who is eligible for a cost-sharing reduction. For example, consider the situation of Jane, a single woman buying her own health insurance. If Jane is not eligible for CSR and enrolls in the standard silver plan shown in Table 1, she would have a $7,150 annual deductible, with a 30% coinsurance for many services after meeting that deductible, and a $70 co-payment for each physician visit (that would apply before the deductible is met). She could be charged no more than $7,350 in out-of-pocket charges (deductibles, co-payments, and coinsurance) for in-network covered benefits for the year. However, if Jane has income equal to 200 percent of the federal poverty line, she would face lower cost-sharing charges, as shown in the column of Table 1 for the plan with an 87 percent actuarial value. For example, she would have a $800 deductible instead of the $7,150 deductible under the standard silver plan. She would pay $10 for each doctor visit instead of $70.

Will people who have the same income spend the same amount of money out-of-pocket if they qualify for a cost-sharing reduction?

No. How much anyone spends out-of-pocket depends on what health care they use and the details of the specific health insurance plan they select. As Figure 1 shows, two people in the same silver plan with the same cost-sharing reduction will pay different amounts because they use different medical services.

FIGURE 1: Two People, One Silver Plan
Silver Plan: 87 percent AV, $800 deductible, $1,700 out-of-pocket maximum, 10% coinsurance for hospital admission (after deductible), $10 co-payment for physician office visit
Example: John
	Health Care:	3 non-preventive physician visits
	Total Cost:	$300
	John’s share of cost:	= $30 ($10 co-payment for each physician visit)
Example: Jane
	Health Care:	Hospitalized, 3 physician visits, 15 physical therapy visits
	Total Cost:	$7,300
	Jane’s share of cost:	= $1,630 ($250 hospital co-payment + $800 deductible + 10% coinsurance of $4,000 hospital admission + $10 for each of 18 office visits)

Are there any requirements for how insurers must design their cost-sharing reduction plans?

Yes. Insurers offering coverage in the marketplaces must offer variations of each standard silver plan that corresponds to the different cost-sharing reduction levels. A standard silver plan has an actuarial value of 70 percent. Insurers will provide several variants of each silver plan: one with a 73 percent actuarial value for people with incomes between 201 percent and 250 percent of the poverty line, one with an 87 percent actuarial value for those with incomes between 151 percent and 200 percent of the poverty line, and one with a 94 percent actuarial value for those with incomes up to 150 percent of the poverty line. Each silver plan variation will cover the same benefits and include the same health care providers in its network as the standard silver plan on which it is based.

Federal rules also specify how cost-sharing charges under a standard silver plan should be adjusted to increase their actuarial values. First, the out-of-pocket maximum — the maximum amount that an enrollee would pay out of pocket each year for in-network items and services covered by the plan — is reduced.

The 2021 out-of-pocket maximum amounts for the income levels of people receiving cost-sharing reductions appear in Table 2.^[1]

For example, a person with income at 140 percent of the poverty level will receive a silver plan with an out-of-pocket limit no greater than $2,850. The enrollee would not have to spend more than the maximum annual out-of-pocket limit on deductibles, co-payments, and coinsurance for in-network, covered items and services during the course of the year.

After the insurer reduces the maximum out-of-pocket limit for a plan to an amount no greater than the amount in the Table 2 below, further adjustments may be needed so that the plan reaches the actuarial value target for the specific cost-sharing reduction level. In general, insurers can make these reductions in the deductible and/or the co-payments or coinsurance for each silver plan variation. However, some states have set specific standards for the cost-sharing charges insurers may establish under the cost-sharing reduction plans.

How are insurers paid for providing the cost-sharing reductions?

Until late 2017, the federal government reimbursed each health insurer over the course of the year for the estimated costs of reducing the cost-sharing that would otherwise be charged under their standard silver plans for all the plan enrollees eligible for cost-sharing reductions. Later, the federal government compared the upfront payments to the costs the insurer actually incurred to provide cost-sharing reductions to eligible people, and make adjustments needed to account for any under- or over-payments. In October 2017, the Trump Administration decided to stop making CSR payments to insurers, amid a long-running court case over the payments. In response, insurers in most states responded by charging higher silver plan premiums, a practice known as silver loading. People eligible for premium tax credits are largely shielded from these increases, even when they enroll in a silver plan, because the amount of the credit they receive is tied to the (now higher) sticker price of a silver plan. People who are not eligible for subsidies can generally avoid the premium increase related to “silver loading” by enrolling in a silver plan outside of the marketplace, or in a bronze or gold plan.

How will someone eligible for cost-sharing reductions select a plan?

The marketplace website is likely to be the easiest place to compare all marketplace plans. Once a person has applied and received a determination that they are eligible for both premium credits and cost-sharing reductions, the website will display the silver plan variations (with lower deductibles and other cost sharing) that correspond to the individual’s cost-sharing reduction level. In other words, the plans that the individual sees will have the cost-sharing reductions built in. Most people will have multiple silver plan options to choose from in each state, meaning that people eligible for cost-sharing reductions will also have multiple plan options. Each of the standard silver plans may have differences in benefits, visit limits, provider networks, and drug formularies. One insurer may offer different silver plan options, each with its own set of cost-sharing reduction variations that may differ substantially in terms of the specific deductibles and co-payments charged to enrollees.

Does it matter which silver plan someone getting the cost-sharing reductions selects?

Yes. Silver plans are going to be different in various ways, as noted above, in addition to the cost-sharing charges. For example, one silver plan may include the doctor or hospital a person now sees in its network, while another may not, and plans will have different formularies, or lists of covered prescription medications. It will be important for people, including those receiving cost-sharing reductions, to be aware of such differences as they decide which plan to choose.

Would it ever make sense for someone eligible for cost-sharing reductions to buy a bronze plan instead of a silver plan?

If a person with income below 250 percent of the poverty line enrolls in a bronze plan instead of a silver plan, he would not be eligible for cost-sharing reductions. He would have to pay whatever out-of-pocket charges are required under the bronze plan. In most cases, it will make the most sense for people at the lower end of the income scale to pick a silver plan and receive cost-sharing reductions. But the choice will depend on an individual’s situation and preferences. Consider the example in Figure 2:

• John has income equal to 200 percent of the federal poverty line and is eligible for a premium credit of $3,476 per year to help him purchase coverage. He is also eligible for a cost-sharing reduction if he enrolls in a silver plan. With the premium credit, he could get a silver plan by paying $127 per month of his own money, with the credit taking care of the remaining cost of getting the health insurance. With the cost-sharing reduction, he is able to get a plan with a deductible of $800. The plan also caps his out of pocket costs for in-network, covered benefits at $1,700 for the year.
• If John picks a bronze plan, he would pay nothing toward the premium because his premium credit covers the entire cost. But the cost-sharing charges he could face should he need health care services would be significantly greater in the bronze plan than in the silver plan with a cost-sharing reduction. He would face a $6,400 annual deductible in the bronze plan, and up to $7,350 in out-of-pocket costs if he ends up having very high medical expenses.
• If John does not expect to use much health care, he may choose to buy the bronze plan and forgo the cost-sharing reduction. If he does that, he would be taking a risk that he may have to pay high out of pocket charges if he gets sick, but he may decide the risk is worth taking because he would pay nothing in premiums (because of the premium tax credit) in order to purchase the bronze plan.

FIGURE 2: Comparing Different Plan Tiers
John Age: 24 PTC: $3,476 Income: 200% FPL	Example 1: Silver Plan Total Premium: $5,000 John’s Premium Contribution: $127/month Plan AV with CSR: 87%	Example 2: Bronze Plan Total Premium: $3,000 John’s Premium Contribution: $0 / month Plan AV without CSR: 60%
	Sample Silver-CSR Plan (enrollee pays)	Sample Bronze Plan (enrollee pays)
Deductible	$800	$6,400
OOP Maximum	$1,700	$7,350
Inpatient Hospital	10% of the charge (after deductible)	50% of the charge (after deductible)
Physician Visit	$10	50% of the charge (after deductible)

Might someone eligible for a cost-sharing reduction be better off getting a gold or platinum plan instead of a silver plan?

In general, a person with income at or below 200 percent of the poverty line would be better off enrolling in a silver plan and taking advantage of the cost-sharing reduction. For example, if John (who has income equal to 200 percent of the poverty line) used his premium tax credit to purchase a gold plan, he would pay more for his share of the premium — a total of over $200 per month if the gold plan costs $6,000 per year — than he would pay for the silver plan with a cost-sharing reduction. Moreover, under the cost-sharing reduction variation of the standard silver plan John is eligible to receive, the cost-sharing charges would also be lower compared to a gold plan. The gold plan has an actuarial value of 80 percent (with, say, a $900 deductible and $25 physician-visit copayments), while the cost-sharing reduction John can get would make an 87 percent actuarial value plan available to him (with a $800 deductible and $10 physician copayments in our example). So, in this case, John would clearly be better off from a pure cost perspective buying a silver plan and taking advantage of the cost-sharing reduction because it would mean paying less toward the premium and paying less out-of-pocket when he uses health care services.

If John’s income were at 225 percent of the poverty line, the decision may not be as clear. He would be eligible for a 73 percent actuarial value version of the silver plan, but the difference between cost-sharing charges under that plan and the 70 percent standard silver plan are not likely to be dramatic. If John wants more generous coverage and can manage to pay a higher premium, he might decide to choose an 80 percent gold plan.

Does someone have to take the premium tax credit in advance in order to receive the cost-sharing reduction?

No. To get the cost-sharing reductions, a person only needs to be eligible for the premium tax credit. The person can still get the cost-sharing reductions if they choose to wait until they file their taxes to receive the premium tax credits.

What happens if someone receiving a cost-sharing reduction experiences a change (such as a change in income) during the course of the year?

A change in circumstances during the year may result in a change in eligibility for cost-sharing reductions. A person could no longer be eligible and move to a standard silver plan without a cost-sharing reduction, or a person could become eligible for a lesser or more generous cost-sharing reduction level. Unlike with the premium credits, no reconciliation or repayment of cost-sharing reduction amounts occurs in these situations; nor can the person generally receive a refund of any prior cost-sharing charges a person paid that he or she wouldn’t have had to pay if enrolled in a cost-sharing reduction plan with a higher actuarial value. But in some cases, the person can get credit for cost-sharing charges already paid that year.

Consider an example: John anticipates an annual income of 200% of the federal poverty line ($25,520 for 2020), enrolls in a silver plan, and automatically is placed in a cost-sharing reduction plan (a silver plan variation) with an 87 percent actuarial value. During January and February, John spends a total of $300 out of pocket, lower than the amount of the deductible in the 87 percent plan. Then, he loses his job and gets a new one with lower pay. His new total expected income for the year is $19,140 (150% of the poverty line in 2020). He informs the exchange and gets a redetermination of his eligibility, resulting in John being enrolled in a different cost-sharing reduction variation of the silver plan he is in. This new variation has an actuarial value of 94 percent. The deductible under this cost-sharing reduction plan is $250. John is able to get credit for the $300 he already paid out of pocket toward the deductible and out-of-pocket limit in the cost-sharing reduction version he newly enrolls in, but he would not receive a refund of the amounts he paid toward his deductible.

John would receive “credit” for his prior out-of-pocket costs only if he remains enrolled in the same silver plan offered by the same health insurer when his cost-sharing reduction level changes. He can enroll in a different silver plan, but if he does that, any out-of-pocket amounts he already spent during the year would not count toward the deductible or out-of-pocket maximum.

^[1] These amounts are indexed and will change each enrollment year. For yearly guidelines, see Reference Chart: Yearly Guidelines and Thresholds. 

View all key facts

Health Insurance Marketplaces (also called exchanges) provide a way for people to buy affordable health coverage on their own. Health insurance plans available through the marketplace have to meet standards for the charges that people enrolled in the plan pay when they use medical care, which are known as cost-sharing charges. The following Q&A describes the different kinds of cost-sharing charges that plans may impose and provides details on the standards that plans available to individuals and families through the marketplace must meet.

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What is a cost-sharing charge?

A cost-sharing charge is the amount an individual has to pay for a medical item or service (e.g., hospital stay, physician visit, or prescription) covered by his health insurance plan. Plans typically have three different types of cost-sharing charges: a deductible, copayments and coinsurance, although not all plans feature each of these three types of cost sharing.

What is a deductible?

A deductible is the amount that a health insurance plan enrollee must pay before the plan starts to pay for most covered items and services. The deductible is set on a yearly basis. For example, if a plan has a $1,000 deductible, an enrollee will generally have to pay the full charge (or total cost) for most medical services until she has spent $1,000. Once the deductible has been met, if the enrollee receives additional medical care during the same year, she would not have to pay the full charge for those additional items and services. The health insurance plan would pay a portion, and the enrollee would pay a portion based on the copayments and coinsurance that apply to the service.

Are all covered benefits subject to a deductible?

No. Under the health reform law, health insurance plans sold in the marketplaces have to pay the full charge for certain preventive care services delivered through the physicians’ offices, hospitals, pharmacies and other health care providers that are part of the plan’s network (in-network and out-of-network benefits are discussed below). Even if a plan has a deductible, the enrollee would be able to get these preventive services without having to pay a share of the cost.

In addition, some health insurance plans may decide to exempt other items or services, such as prescription drugs or a certain number of physician visits, from the deductible. In the case of prescription drugs, for example, the plan may pick up a portion of the cost of the drugs (rather than requiring an enrollee to pay the full charge) even if the enrollee has not yet met their deductible for that year.

What is a copayment?

A copayment is a fixed dollar amount that enrollees must pay toward the cost of a medical item or service that they use and that the health insurance plan covers. Copayments are common for prescription drugs and seeing a physician. An example of a copayment is when the enrollee pays $10 for a prescription drug and the plan pays the rest of the cost.

What is coinsurance?

Coinsurance is a fixed percentage of the allowed amount for a covered item or service that an enrollee must contribute (see below for a definition of what is an allowed amount). For example, a plan may require a plan enrollee to pay 30 percent of the allowed amount for lab tests. The plan would pay the remaining 70 percent of the charge.

For an explanation of common health insurance terms and an example of how cost-sharing charges work, see the Department of Health and Human Services’ (HHS) glossary.

What is the difference between in-network and out-of-network benefits?

Health insurance plans usually have a network of health care providers, with whom they negotiate prices for certain services. These doctors, hospitals, and other providers may be called “in network,” “preferred,” or “participating.” If a plan enrollee uses a provider that is in the plan network, the plan will pay some or all of the costs of the care delivered by the provider depending on whether the enrollee has met his deductible and the type of service.

Health insurance plans may also provide some coverage for services received “out of network” but may require enrollees to pay a higher share of the costs for these services. For example, a higher deductible, copayments and/or coinsurance may apply to out-of-network care than for care provided by the plan’s network of providers. In addition, the full charge (or total cost) of the service may be higher, because the out-of-network provider can charge more than the amount the plan has negotiated with providers in the network. For example, if an enrollee sees a physician who is outside of her insurance plan’s network, and the physician charges $150 for the visit, but the plan’s allowed amount (discussed below) is $125, then the insurer will pay only $125 minus any cost-sharing charges that apply. In addition to the cost-sharing charges, the enrollee would be responsible for the $25 difference between the allowed amount and the full amount charged for the service.

What is the “allowed amount” for a medical service?

As noted above, insurers usually negotiate how much they will pay for the costs of covered health care services with physicians, hospitals, and other health care providers in the health insurance plan’s network of health care providers. These negotiated amounts are known as the “allowed amount,” and sometimes the “eligible expense,” or “negotiated rate.” Health care providers participating in a plan’s network agree to accept these payment amounts when a person covered by the plan uses their services. The cost-sharing charges the enrollee owes (for example, a 20% coinsurance rate) are based on this allowed amount. If an enrollee uses a provider that is not in the plan’s network, the overall charge could be higher than the allowed amount. And the enrollee may be required to pay the excess, a practice known as “balance billing.” A provider participating in the enrollee’s plan network cannot balance bill the enrollee.

Is there any limit on the total amount of cost-sharing charges that an enrollee in a marketplace health insurance plan has to pay?

Yes, there is a “maximum annual limitation on cost sharing,” or a maximum out-of-pocket limit, that applies to all marketplace health insurance plans. This is the maximum amount that an enrollee is required to pay for all cost-sharing charges (including the deductible, copayments and/or coinsurance) during the course of a year. The health law requires each plan to have a maximum out-of-pocket amount that applies to covered essential health benefits delivered by in-network providers. Insurers may set out-of-pocket limits that are lower than these maximum amounts, and out-of-pocket limits for a family plan are limited to twice as high as the maximum amount for an individual plan. For 2021, the maximum out-of-pocket limits are $8,550 for individual coverage and $17,100 for family coverage. In a family plan, each individual enrollee must be protected by the maximum individual annual out-of-pocket cap, even if the overall limit for the family is higher. For example:

• William, Paula and their son, Sammy, are enrolled in a family plan with an out-of-pocket limit of $12,000. William incurs $10,000 in cost-sharing charges due to a hospitalization in May. However, because William is protected by the individual maximum out-of-pocket limit, he will only pay the maximum allowed out-of-pocket amount for an individual ($8,550 is the limit in 2021), and for the remainder of the year, he will pay no cost sharing. If Paula and Sammy have additional medical expenses and spend $4,100 on cost-sharing charges during the year, the family will reach their health plan’s $12,000 out-of-pocket limit and will pay no cost sharing for the rest of the year.

Will the maximum out-of-pocket limit change from year to year?

The amount of the maximum out-of-pocket limit for a health insurance plan covering an individual will be adjusted to account for changes in the cost of private health insurance. HHS announces the maximum amount for each new enrollment year in an annual notice. For 2021, HHS has announced that the maximum out-of-pocket limits are $8,550 for individual coverage and $17,100 for family coverage. The amount of the maximum out-of-pocket limit for a family plan will always be double the amount set for an individual plan, though the individual limit of $8,550 also applies to each person enrolled in the family plan.

What happens if an enrollee gets care from providers that are not in the health insurance plan’s network?

If an enrollee receives a significant amount of health care from providers outside of a health insurance plan’s network, she could pay more in total deductibles, coinsurance and copayments than the out-of-pocket limit, because the limit does not apply to cost-sharing charges related to out-of-network health care services.

What if someone gets a health care service that the marketplace health insurance plan doesn’t cover?

If an enrollee uses medical services that the health insurance plan does not cover at all, she would have to pay all of the costs out of pocket, and those costs would not be subject to the health law’s out-of-pocket maximum. This would be the case even if she got the care from an in-network provider.

Are people enrolled in a marketplace plan required to spend the full amount of the out-of-pocket limit each year?

No. Only a very small portion of people will have such large medical expenses that their cost-sharing charges will reach the out-of-pocket limit. But, the out-of-pocket limit provides critical financial protection for people with serious illness or injury and particularly for unexpected or catastrophic health care needs.

For example, if a marketplace health insurance plan enrollee gets sick just once in a year and goes to the doctor once and fills one prescription, she might spend $50 out of pocket in that year, depending on the charges for her care and the details of her coverage. But in the case of a very expensive illness requiring hospitalization, total deductibles, copayments and coinsurance could reach into the tens or hundreds of thousands of dollars if there was not a limit.

Who pays for health care services after a person’s total out-of-pocket costs reach the out-of-pocket limit?

After an enrollee spends the amount of the plan’s out-of-pocket limit in deductibles, copayments and coinsurance for in-network, covered benefits, the plan pays the full costs of any covered health care services that the individual receives from in-network providers.

Besides the out-of-pocket maximum, are there other standards related to cost-sharing charges that marketplace health insurance plans have to meet?

Yes. Most marketplace health insurance plans must be organized into coverage levels or tiers named for precious metals: bronze, silver, gold, and platinum. Plans are sorted into levels based on their actuarial value, which is a way to estimate and compare the overall generosity of different plans. (Actuarial value is explained below.) The more precious the metal, the higher the actuarial value of the plan, and the lower the cost-sharing charges, such as deductibles and copayments, that enrollees have to pay. For example, a gold plan generally has substantially lower cost-sharing charges than a bronze plan, which means that the insurance plan pays a larger share of costs when someone uses medical services (see Figure 1).

FIGURE 1: QHPs Must Provide Plan Designs Consistent with Actuarial Value

Are health insurance plans other than those offered through the marketplace — such as a plan offered by a large employer — subject to any cost-sharing requirements under the Affordable Care Act?

Yes. The out-of-pocket maximum applies generally to employer plans as well as plans in the individual market both inside and outside of the insurance marketplace. (Grandfathered plans — those that existed prior to passage of health care law and have not changed significantly since — are exempt.)

As for the requirements for exchange plans to be in metal tiers, they only apply in the individual and small-group markets and do not apply to plans offered by large employers.

Do all health insurance plans in the marketplace have to be in one of the metal tiers?

Marketplace health insurance plans either have to fit within one of the “metal” tiers or be a “catastrophic” plan. Catastrophic plans were created as an option for younger people. The plans have a very high deductible (equal to the out-of-pocket maximum, so $8,550 for an individual in 2021). This means that, with the exception of preventive services that have to be provided without any cost-sharing charges and at least three primary care physician visits per year (with enrollee cost-sharing allowed for all care that’s non-preventive), enrollees would generally pay the full cost of any medical care they might need until they spend $8,550. The catastrophic plans also are not eligible for purchase with premium tax credits.

Catastrophic health insurance plans may be attractive to people who want to pay as low a premium as possible, do not expect to need much health care, and are not eligible for premium tax credits. People younger than 30 are eligible to enroll in a catastrophic plan. People 30 and older are eligible to enroll in a catastrophic plans if they qualify for a marketplace coverage exemption because they lack access to affordable coverage or have experienced a hardship.

What is the purpose of the metal levels?

Organizing health insurance plans into levels based on the level of coverage they provide can help enrollees compare different plan options and decide which one is best for them. The metal levels also ensure that a basic level of coverage will be available. Federal standards require insurers participating in the marketplace or exchange to offer plans in at least the silver and gold levels.

What is actuarial value?

In general, the actuarial value percentages that apply to the metal levels represent how much of a typical population’s medical spending the health insurance plans in that metal level would cover.

Percentages (60 percent for bronze, 70 percent for silver, 80 for gold, and 90 for platinum) represent the actuarial value of plans at each level. A higher percentage means the plan covers more of a typical population’s costs (and the population pays less out-of-pocket). A lower percentage means the plan covers less (and the population pays more). The actuarial value calculation focuses mainly on cost-sharing charges, so that a bronze plan generally would have higher enrollee cost-sharing amounts compared to a gold plan. There also may be differences in how benefits are covered, such as differences in the prescription drugs that are covered or how many physical therapy visits the plan covers. The law requires all the metal level plans to cover a set of essential health benefits.

How is actuarial value calculated?

Actuarial value calculations are based on spending on health care services associated with a “typical population.” A “typical population” is a large group of people with a mix of health care needs. To determine the actuarial value of a health insurance plan, it is assumed that the entire typical population is enrolled in that plan. Data on the health care services used by the typical population are then used to figure out how much of the typical population’s costs the plan covers. This process takes into account the plan’s specific cost-sharing charges, including the deductible, copayments, and coinsurance. The actuarial value is an estimate of what the plan would spend on the benefits covered by the plan that are used by the typical population. So, a silver plan covers about 70 percent of the costs of a typical population’s costs for covered benefits.

Does that mean that people enrolled in a health insurance plan with a 70 percent actuarial value level have 70 percent of the cost of their medical care covered? So an enrollee in that plan would pay 30 percent of the cost?

No. The actuarial value of a health insurance plan is determined using a large population, which includes people who use little or no health care services and others that have significant health spending. The value of a plan’s coverage to a particular enrollee depends primarily on the health care the enrollee uses.

As an example, consider two people, John and Jane, who are enrolled in the same silver plan, as shown in Figure 2. They have very different heath care needs during the year and therefore have different out-of-pocket costs under the plan.

FIGURE 2: Two People, One Silver Plan
Silver Plan: 70% AV, $2,000 deductible, $5,000 OOP limit, $1,500 copay for hospital admission after deductible, $30 copay for physician visit after deductible
Example: John
	3 physician vists	$300
	Insurer’s share of cost	– $0
	John’s share of cost	= $300
Example: Jane
	Hospitalized, 3 physician visits, and 20 physical therapy visits	$7,300
	Insurer’s share of cost	– $3,110
	Jane’s share of cost	= $4,190
	Deductible Hospital copay Office visits	$2,000 $1,500 $690

What will the cost-sharing charges be in the various health insurance plan levels?

In most states, insurers can decide what cost- sharing amounts they will charge enrollees, as long as the health insurance plan applies the required maximum out-of-pocket limit and designs the cost-sharing charges so that the plan meets one of the actuarial values associated with a metal level. In some states, such as California and New York, however, the marketplace requires insurers to offer certain standard plan designs. Table 1 shows some examples of cost-sharing charges that would allow four sample plans to meet the various actuarial value metal levels.

Are the cost-sharing charges in marketplace health insurance plans always going to simply involve a yearly deductible, a uniform copayment or coinsurance for services, and a maximum out-of-pocket limit?

No. While some health insurance plans may follow that simple structure, there is a significant amount of flexibility within the federal requirements for insurers to do things differently and in a more complex manner. For example, a plan might have two separate annual deductibles, one for prescription drugs and one for medical care. A plan may have cost-sharing charges that are quite low for some services (for example $10 co-payments for physician visits) but a different cost-sharing structure (such as 50 percent cost sharing) for other services. The same covered item or service may itself have different cost-sharing charges; for example, generic drugs may require a $10 copayment, preferred brand-name drugs a $25 copayment, and other high-cost drugs 50 percent coinsurance.

Can the provider network for health insurance plans offered by the same insurer vary from one metal tier to another?

Yes, except in states that are creating standard plan designs such as New York. As long as a health insurance plan meets the actuarial value target (60 percent, 70 percent, etc.) and limits in-network enrollee cost-sharing charges to no more than the federally established out-of-pocket maximum, insurers in most states can determine the specific cost-sharing charges for each item or service, as well as the specific amounts of the deductible and out-of-pocket limit. So two plans in the same metal level could have two different sets of cost-sharing charges for enrollees, even though the two plans have the same actuarial value. As an example, Table 2 shows how two sample plans that are both within the silver level can have different cost-sharing charges.

How can someone find out what the cost-sharing charges in the marketplace health insurance plans are?

Healthcare.gov and the web sites for the marketplace in each state displays final information about what the health insurance plans look like. This allows people to browse plans offered in their area and compare specific details such as cost-sharing charges under various plans. In addition, marketplace web sites must make available a form called the Summary of Benefits and Coverage (SBC) for each plan.

The form provides information about plan benefits and cost-sharing charges in a standard way to allow for comparison of the plans offered in the marketplace. The SBC also must be provided by insurers or employers for other health insurance plans.

View all key facts

In this Health Reform: Beyond the Basics webinar presented by the Center on Budget and Policy Priorities on October 17, 2019, Dave Chandrasekaran, a health policy consultant and volunteer Certified Application Counselor, joins us to provide strategies to support consumers in understanding how commercial insurance works, evaluating and comparing marketplace plans, and selecting the plan that best meets their families’ needs.

↓ View Presentation Slides (PDF)

Watch the Webinar

Additional Resources

Worksheet: Marketplace Plan Comparison Worksheet

Key Facts:

• Cost-Sharing Charges
• Cost-Sharing Reductions

Beyond the Basics Webinar Series | View all webinars

Key Facts About Health Reform | View all key facts

Tools and Resources | View all tools and resources

Frequently Asked Questions | View FAQs

In this Health Reform: Beyond the Basics webinar presented by the Center on Budget and Policy Priorities on October 15, 2019, Sarah Lueck, Senior Policy Analyst, provides an overview of health plan design, including cost-sharing charges in marketplace plans, eligibility for cost-sharing reductions, and how plan design affects consumers’ costs. She also covers the expansion and risks of skimpy plans.

↓ View Presentation Slides (PDF)

Watch the Webinar

Additional Resources

Key Facts:

• Cost-Sharing Charges
• Cost-Sharing Reductions

Reference Guide: Yearly Guidelines and Thresholds

Beyond the Basics Webinar Series | View all webinars

Key Facts About Health Reform | View all key facts

Tools and Resources | View all tools and resources

Frequently Asked Questions | View FAQs

In this special Health Reform: Beyond the Basics webinar presented on September 18, 2018, Karl Cooper, Director of Public Health Programs at the American Association on Health and Disability (AAHD), addresses disability etiquette and basic accessibility considerations for anyone doing enrollment work, as well as provides an overview of questions a person with a disability needs to think about when considering their health care options in the marketplace. In addition, he provides an overview of the resources available through the National Disability Navigator Resource Collaborative (NDNRC).

Presentation Slides

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Overview of What’s Covered

Overview of AAHD

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• AAHD mission
• Health disparities for people with disabilities

Disability Etiquette

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• People with all types of disabilities
• People with mobility disabilities
• People who are blind or low vision
• People who are deaf or hard of hearing
• People with speech and language disorders
• People with cognitive or intellectual disabilities
• People with mental health or behavioral health disabilities
• Disability accessibility and accommodations

National Disability Navigator Resource Collaborative (NDNRC)

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• Overview of the Affordable Care Act’s impact on people with disabilities
• Overview of NDNRC and enrollment resources
• Resource: Guide to Disability for Health Insurance Navigators
• Resource: Topical and population-specific fact sheets
• Needs by disability category
• Resource: Community Outreach Collaboratives

Considerations When Assessing Health Plan Options

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Health Insurance Jeopardy: It’s not about the answer. It’s about asking the right question!

• Topical questions
• Population specific questions
• Accessibility and disability etiquette
• Resource: Health Insurance Jeopardy Series | View NDNRC YouTube channel

Ongoing Challenges

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• Limited provider networks
• Limited formularies
• Discriminatory pharmacy design
• Plan transparency
• High out-of-pocket costs
• Confusion on the definition of “rehabilitation” and “habilitation” services and supports
• Confusion on the coverage of prosthetic devices and durable medical equipment
• Confusion about coordinating exchange coverage with Medicare and Medicaid
• Delays in getting plan information once they are enrolled
• Communication issues for deaf and hard of hearing

Additional Resources

Resources | View resources links

American Association on Health and Disability (AAHD) | Find out more

AAHD | National Disability Navigator Resource Collaborative (NDNRC)

• Guide to Disability for Health Insurance Navigators
• Topical and population-specific fact sheets
• Community Outreach Collaboratives

AAHD | NDNRC: Health Insurance Jeopardy Series | NDNRC YouTube channel

Beyond the Basics Webinar Series | View all webinars

Key Facts About Health Reform | View all key facts

Tools and Resources | View all tools and resources

Frequently Asked Questions | View FAQs

In a special Health Reform: Beyond the Basics webinar presented by Dave Chandrasekaran, a training consultant and certified application counselor, on September 25, 2018, Part IV provides an in-depth lesson on effective strategies to support consumers with understanding how commercial insurance works, evaluating and comparing Marketplace plans, and selecting the plan that best meets their families’ needs.

This is Part IV in a 4-part series on core elements of eligibility and enrollment.

Presentation Slides

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Overview of What’s Covered

Overview of Marketplace Plans

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Overview of cost sharing

• Explaining cost-sharing terms
• First dollar coverage
• No cost sharing for preventive services
• Negotiated rates for services

Overview of covered benefits

• Other covered services
• Prescription drugs cost sharing and formularies

Provider networks

• Types of provider networks
• Searching for a provider

Trends in Marketplace Plans

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Partial exemptions from the deductible

Deductible-only plans

Additional prescription drug tiers

Narrow and/or tiered provider networks

• Inaccurate provider directories

Strategies to Help Consumers

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Preparing for open enrollment

• Tracking changes in the lowest-cost plan options
• Comparing differences in provider networks
• Studying all plans in your area

Tailoring search based on consumer needs

• Renewal or new applicant?
• Prescription drugs or current doctors?
• Major health needs or anticipated procedures?
• Finding options for first dollar coverage

Understanding consumer tradeoffs

• Bronze vs. silver plans
• Paying more to preserve access to providers or prescriptions
• Bronze plan + community-based coverage or other alternate sources of care
• Benefits of coverage vs. going uninsured

Live Plan Selection Demonstration via Healthcare.gov

Please note that this section of the webinar features a live web-browsing demonstration that is not reflected in the static slides.

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Scenario 1: General plan comparison (single adult)

Scenario 2: Weighing in-network doctors and current prescriptions (married couple)

Scenario 3: Comparing out-of-pocket costs (family of three)

Q&A

Additional Resources

Resources | View resources links

Worksheet: Marketplace Plan Comparison Worksheet

Webinar OE6: Plan Design

Key Facts:

• Cost-Sharing Charges
• Cost-Sharing Reductions

Beyond the Basics Webinar Series | View all webinars

Key Facts About Health Reform | View all key facts

Tools and Resources | View all tools and resources

Frequently Asked Questions | View FAQs