How can I choose the best health insurance for me?

If you have preferred medical providers and/or take any prescription medications, those factors will likely be among the first that you should consider when you’re shopping for health coverage.

Each health plan creates its own provider network and drug formulary (covered drug list). And even if two plans both have the same drug in their formulary, they may cover it differently (in a different tier, for example, with different out-of-pocket costs).

If you’re transitioning from an employer-sponsored health plan to the individual market, keep in mind that the provider networks and drug formularies can be very different in the two markets, even if the same health insurance company offers the plans. Don’t assume that a plan will cover your drugs and include your doctors in its network just because of the experience you’ve had with another plan from that same insurer in the recent past.

The worst-case scenario is pretty easy to determine. Just add the total annual premiums plus the maximum out-of-pocket for each plan, and see how they stack up. If you qualify for a premium subsidy (keeping in mind that they’re larger and more widely available due to the ARP and IRA), be sure to use the after-subsidy premium for each plan when you’re calculating how much the coverage will cost.

You can find this even before you create an account with the exchange, by using the exchange’s plan browsing tool. It only takes a minute or two and doesn’t need any identifying data.

The ACA’s limit on out-of-pocket maximums makes this sort of financial comparison easier than it was in the past. In 2024, ACA-compliant plans will have a maximum out-of-pocket of no more than $9,450 for an individual or $18,900 for a family. And as has been the case since 2016, all family plans are required to have embedded individual out-of-pocket maximums. That means no single individual on a family plan will be required to pay more than $9,450 in out-of-pocket costs for in-network care, even if the family deductible has not yet been met.

But some plans – especially at the Gold and Platinum levels, plus Silver-level plans for people who qualify for cost-sharing reductions – have maximum out-of-pocket limits that are significantly lower than those amounts. And they also cover more expenses before the out-of-pocket maximum is reached. Those factors are important to consider when you’re comparing the overall cost of various plans.

Let’s look at a hypothetical example for Kelly, a single 35-year-old applicant who doesn’t qualify for subsidies (even under the ARP and Inflation Reduction Act, this is possible; it depends on the cost of the benchmark plan relative to household income; although more people qualify for subsidies now, some still do not). She’s considering three different plans – one Bronze, one Silver, and one Gold. All of them cover preventive care at no charge, as required by the ACA.

For this comparison, we’re assuming the Gold plan is more expensive than the Silver plan. But since 2018, that hasn’t always been the case, due to the cost of cost-sharing reductions (CSR) being added to Silver plan premiums in many states.

The following plan descriptions are overly simplified in order to make the math easy. Although Bronze, Silver, and Gold plans pay an average of 60, 70, and 80% of average total healthcare costs, respectively, their plan structure varies significantly from one policy to another, even within the same metal level.

Some state-run exchanges offer standardized plans, and California’s exchange requires all plans to be standardized. But in most states, it can be challenging to make an apples-to-apples comparison of plans, even within the same metal level. Some plans have separate deductibles for services like hospitalizations and prescription drugs, some have copays for office visits while others count office visits towards the deductible. There’s no way to really compare plans without reading at least some of the fine print. But for the sake of our back-of-the-envelope comparison, we’ll just look at deductibles, coinsurance, and maximum out-of-pocket exposure.

• The Bronze plan is $300/month, and has a $9,000 deductible with all claims applied to the deductible. After the deductible, Kelly would pay 40% of her claims until she reaches a $9,450 maximum out-of-pocket.
• The Silver plan is $400/month, has a $3,500 deductible, and Kelly will be responsible for 30% of the claim after the deductible, until she reaches a $9,000 maximum out-of-pocket.
• The Gold plan is $480/month, has a $1,000 deductible, and Kelly will pay 20% of her claims after the deductible until she reaches the maximum out-of-pocket of $8,000.

(Note that these are just examples; in the real world, pricing and coverage vary significantly depending on the plan, the area, and the person’s age, and most people do qualify for subsidies that offset some of the cost.)

We can easily calculate the worst-case scenario for the three plans: Multiply the premium by 12 months, and add it to the maximum out-of-pocket to see the total financial exposure for each plan:

• Bronze: $3,600 + $9,450 = $13,050
• Silver: $4,800 + $9,000 = $13,800
• Gold: $5,760 + $8,000 = $13,760

But for most people, large claims don’t happen very often. And although some people may not use their coverage at all during the year, most people fall somewhere in the middle. Especially if you have a pre-existing condition, you can be relatively sure that you’ll incur at least some claims during the coming year. That’s where it’s helpful to judge each plan based on how it would perform in the event of relatively minor – but still expensive – claims.

What if Kelly breaks her arm and incurs a claim that totals $4,200 after the network-negotiated discount? Here’s her total expense for the year (premiums + out-of-pocket costs) with each plan:

• Bronze: $3,600 + $4,200 (total claim applied to the deductible) = $7,800
• Silver: $4,800 + $3,500 (deductible) + $210 (30% of the remaining $700) = $8,510
• Gold: $5,760 + $1,000 (deductible) + $640 (20% of the remaining $3,200) = $7,400

If the only health insurance claims you make are for preventive care, a Bronze plan is going to end up being the least expensive option, because the premiums are lowest and preventive care is covered 100% on all plans. But if you have other claims, a plan with a higher metal level might save you money over the course of the year, even though the premiums are higher. So even if price is the most significant factor in your decision, it’s important to remember to include the cost of a claim as well as the cost of the plan itself.

On the other hand, don’t let yourself get so enamored with the low out-of-pocket expenses on the more robust plans that you inadvertently end up paying more than you need to. We often see plan comparisons where the difference in premium is greater than the difference in potential out-of-pocket savings.

For example: a plan with a deductible that is $1,000 lower than a competing plan, but that costs $100 more per month and offers similar coverage after the deductible. Buying it would mean that you’d spend an extra $1,200 in premiums, to possibly save $1,000 if you have a significant claim. That’s why it’s important to spend a little time crunching numbers before you select a plan.

And if one of the plans you’re considering is HSA-qualified, don’t forget to account for the tax savings you’d get if you were to contribute to an HSA during the year. Assuming you’d be willing and able to make contributions to an HSA, you’d want to subtract the tax savings from the total amount that each plan is going to cost you, so that you can get an accurate overall picture of how each plan would affect your finances.

It’s also important to be aware that some plans have tiered networks, which have lower copays and deductibles as long as you go to doctors and hospitals in the top tier. There’s some controversy around tiered network plans, but they tend to be popular with consumers, as they offer a good combination of low cost-sharing (assuming the patient sticks with top-tier providers) and affordable premiums.

If you’re considering a plan with a tiered network, pay attention to the out-of-pocket costs for both the preferred and non-preferred provider tiers, and crunch the numbers both ways. If you pick a plan with a tiered network, your best bet will be to use doctors and hospitals in the top tier. But it’s important to also understand what your costs will be if you end up needing to see in-network providers who aren’t in the top tier.

Silver plans have proven to be by far the most popular choice in the exchanges, accounting for well over half of all enrollments in the first nine years of ACA implementation.

• In 2014, 65% of people who enrolled through HealthCare.gov (the federally-run exchange) selected Silver plans.
• In 2015, Silver plans accounted for 69% of HealthCare.gov enrollees.
• 71% of HealthCare.gov enrollees picked Silver plans for 2016, along with 59% of enrollees in states with their own enrollment platforms.
• 71% of exchange enrollees picked Silver plans in 2017.
• 63% of exchange enrollees picked Silver plans in 2018.
• 59% of exchange enrollees picked Silver plans in 2019.
• 57% of exchange enrollees picked Silver plans in 2020.
• 55% of exchange enrollees picked Silver plans in 2021.
• 56% of exchange enrollees picked Silver plans in 2022.
• 54% of exchange enrollees picked Silver plans in 2023.

One reason for the popularity of Silver plans – and the high percentage of Silver plan enrollees who received premium subsidies – is cost-sharing reductions, or CSR (also known as cost-sharing subsidies). If your household income does not exceed 250% of poverty, you’re eligible for cost-sharing subsidies in addition to premium subsidies (in case you have questions about income rules, here’s how household income is calculated under the ACA).

During the open enrollment period for 2023 health plans, nearly 16.4 million people enrolled in plans through the exchanges nationwide, and more than 7.8 million of them enrolled in plans with built-in CSR benefits.

For 2024 coverage, 250% of the poverty level will be $36,450 for a single individual in the continental US, and $75,000 for a family of four. The CSR benefits are strongest, however, for people with income that doesn’t exceed 200% of the poverty level, which is $29,160 for a single person, and $60,000 for a family of four (this is all based on the 2023 poverty level numbers, which will be used to determine Marketplace subsidy eligibility for 2024 coverage).

Although the Trump administration discontinued funding for cost-sharing subsidies in the fall of 2017, the cost-sharing subsidies themselves continue to be available.

The cost-sharing subsidies are automatically included in Silver plans for enrollees whose income makes them eligible to receive cost-sharing subsidies. Cost-sharing subsidies are not available at the other metal levels, and do not show up among the available plan selections for people with income too high for CSR eligibility. These plans have lower out-of-pocket maximums and higher actuarial value than a regular Silver plan – they’ll save you money when you need to use your health coverage. And you can apply your premium subsidy towards their purchase price.

Cost-sharing subsidies are generally not as well understood as premium subsidies, but as long as applicants are actively comparing the nuts and bolts of each available plan – as opposed to just looking at premiums – the Silver plans that include cost-sharing subsidies will stand out as options that offer exceptional value. For most applicants, they will be more expensive than Bronze plans, but will provide significantly better coverage. Their out-of-pocket maximums will be lower than that of comparably priced plans, and they will also cover more medical expenses before the out-of-pocket maximum is reached.

We’ll get into the details in a moment, but the takeaway point for this section is that you might find that there are some Gold plans in your area that cost less than Silver plans. In some areas, we’ve even seen $0-premium Gold plans for some enrollees over the last few years. If you’re not eligible for cost-sharing reductions (CSR, aka cost-sharing subsidies) and there are low-priced Gold plans available in your area, these might present the best value.

Now for the how and why: Although the Trump administration eliminated funding for CSR in late 2017, CSR benefits continue to be available to eligible enrollees. The Congressional Budget Office estimated that the elimination of CSR funding would increase average Silver plan premiums by about 20% in 2018, and most insurers did add the cost of CSR to their premiums (this is referred to as “silver loading”). Indiana and Mississippi are the only states where Silver-loading isn’t allowed as of 2023 (in those two states, the cost of CSR is spread across all plans instead of only being added to Silver plan premiums).

Because premium subsidies are based on the cost of Silver plans (specifically, the benchmark plan in each area), the majority of the premium increase to cover the cost of CSR is ultimately still being paid by the federal government, in the form of larger premium subsidies.

But due to the CSR funding cut, Silver plans in some areas now actually cost more than Gold plans, and some enrollees can qualify for premium-free Gold plans after their subsidy is applied. For people with income below 200% of the poverty level (about $29,160 for a single individual in 2024; note that the prior year’s poverty level numbers are used for these calculations), the best choice is probably a Silver plan for 2024, as the out-of-pocket costs are much lower due to CSR, and the ARP/Inflation Reduction Act’s enhanced premium subsidies will offset much of the higher premiums.

But people with income above 200% of the poverty level might be better off with a Gold plan instead of a Silver plan if the premiums are quite similar (CSR is available up to 250% of the poverty level, but its effects are much less significant once you exceed 200% of the poverty level, unless you’re in a state that has its own additional CSR benefits).

Because the cost of CSR is now being added to Silver plan premiums in most areas, there continue to be Gold plans that are less expensive than Silver plans in some areas. Consumers should shop carefully and look at all of the available options before making a decision — don’t assume that pricing will follow the patterns we saw pre-2018, when premiums generally rose consistently from one metal level to the next.

Although premium subsidies offset the increased cost of Silver plans for most people, Silver plans are disproportionately expensive in most areas for people who aren’t eligible for premium subsidies. If they buy a Silver plan, they’re paying not only for the regular cost of the coverage, but also for the cost of CSR, since that cost is baked into the premiums for Silver plans in most areas.

This is a part of the reason Silver plan selections have dropped off since 2017; people who don’t get premium subsidies are generally better off with a plan at a different metal level. But again, subsidy eligibility has been expanded under the ARP and Inflation Reduction Act, so there aren’t as many people who don’t qualify for subsidies.

After you’ve narrowed down the options based on premiums, out-of-pocket costs, how the available plans will cover your prescriptions, and which plans have your preferred medical providers in-network, you might also want to consider Quality Ratings. Many of the marketplace plans available in your area will have star ratings under the Quality Rating System.

This is another piece of the puzzle, but for most people, it should be a way to narrow down the options after you’ve considered the other points described above, rather than a starting point.

Keep in mind that not all plans have star ratings; if a plan is too new or doesn’t have a large enrollment, it may just say that it’s not rated. That’s not a reason to avoid a plan, as it may be an excellent plan that’s simply new to the market.

If your household income doesn’t exceed 200% of poverty (this amounts to $49,720 for a family of three enrolling in 2024 coverage), a Silver plan with integrated cost-sharing subsidies will likely be the best choice for you, and will likely provide a better overall value than the Bronze, Gold, or Platinum plans.

This might also be true for people with income between 200 and 250% of the poverty level, but as noted above, a Gold plan might be a better value in some areas, due to the way some states and insurers are adding the cost of CSR to premiums.

People who have moderate pre-existing conditions and expect to file claims during the upcoming year will probably be better served by a higher-level plan (or a cost-sharing Silver plan if they qualify for it), regardless of premiums.

But very healthy applicants may find that they prefer the lower premiums of a Bronze plan, despite the potential for higher costs if they do need to file a claim. And enrollees with very serious medical conditions, who know they will meet their plan’s maximum out-of-pocket no matter what plan they select, might find that they’re also better off with a lower-cost Bronze plan (or an HSA-qualified plan at any metal level), since the combined total cost of the premiums and out-of-pocket exposure might end up being lower.

There’s no one-size-fits-all when it comes to health coverage; each person’s health history, risk tolerance, and budget have to be taken into consideration when selecting a plan.

Personal assistance from a navigator or broker will be invaluable if you’re struggling to compare the various options available to you. (You can call one of healthinsurance.org’s partners at (866) 683-3949 to talk with a licensed, exchange-certified broker who can enroll you in an ACA-compliant plan.)