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By Jenn Nowicki
October 4, 2013
Caption : The Affordable Care Act includes five health care plan options from which Americans can choose, and each one includes a different payment plan.     

Although the Affordable Care Act’s open enrollment period began this week, many Americans are still struggling to grasp the full extent of the expansive law’s logistics. In fact, misperceptions are so rampant that many people even believe that the ACA and “Obamacare” are two separate laws. Out of all the law’s components, premiums have been quoted as the most confusing, however they play a critical role in the cost of care.

Premiums are the amount of money per month that an individual will pay for a health care plan, and the scale varies depending on a number of different factors.

In general, the out-of-pocket cost for medical expenses is inversely related to the amount of premiums paid—that is, the higher your premium, the lower the upfront cost for medical care. Plans with lower premiums, therefore, carry a higher degree of risk—though the monthly expense will be less, these plans will also cover a lower percentage of the costs for an unexpected health ailment or accident.

Here are the five plan options from which an individual can select, and each has its own premium costs:

Catastrophic

  • This is the plan with the lowest premiums per month, and is only available for individuals under the age of 30 with limited incomes.
  • This plan requires individuals to pay all medical costs up to a predetermined amount. Additional costs beyond this amount are usually absorbed by insurance companies. This plan covers three primary care visits per year at no cost to the policy holder, and also provides preventive benefits for free.

(The following four plans—Bronze, Silver, Gold, and Platinum— provide the same set of health benefits. Differences between categories include premiums and the percentage of medical cost coverage. These plans are available for individuals of all ages.)

Bronze

  • A standard plan that generally covers 60 percent of a person’s medical expenses, meaning the person is liable for the remaining 40 percent.
  • Despite having the lowest premium per month (excluding the catastrophic plan), the out-of-pocket expenses are much higher, and therefore might be considered a good fit by individuals with very few current health conditions or anticipated doctors visits.

Silver

  • Carries relatively low premiums, though they are higher than the Bronze plan’s. This plan covers more costs with 70 percent of an individual’s expenses.
  • Individuals with few to a moderate number of current or anticipated health conditions might find this premium to coverage ratio a good fit.

Gold

  • The gold plan has the second highest premiums, and generally covers 80 percent of medical expenses.
  • Individuals with numerous current or anticipated health expenses might select this plan due to its higher medical care coverage.

Platinum

  • This plan has the highest premiums, but it also comes with the highest coverage percentage at 90 percent.
  • If an individual anticipates a large number of doctor/hospital visits, major operations, or frequent prescriptions, this plan will offer the most comprehensive coverage.

On average, the cost of premiums will be less under the ACA than they were before the law was passed; however, the exact cost per household may vary depending on income, family size, and other factors. Further information about the ACA can be found at www.healthcare.gov.

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