Under the Affordable Care Act, the designation of qualified health plan (QHP) is given to health insurance plans that are sold in the government-run marketplace (exchange). Basic rules apply to plans sold in the exchanges, they must:
- Be guaranteed issue (not impose pre-existing condition restrictions)
- Follow the ACA’s cost-sharing guidelines
- Cover “essential health benefits” with no lifetime or annual maximums for coverage.
Qualified health plans sold on the exchange must also be certified by the exchange. Since 2013, health insurance companies in each state have submitted plan designs and pricing to the exchanges for approval. These approved plans are labeled qualified health plans or QHPs. A qualified health plan is also eligible to be purchased with an advanced premium tax credit, also known as an Obamacare subsidy.
Plans sold off the exchange as ACA-compliant medical insurance follow the same basic rules as qualified health plans, but they are not certified by an exchange nor are they eligible to be purchased with a premium tax credit subsidy.
Mandatory health benefits
When Obamacare was originally put in place, most people had to have a qualified plan with minimum essential benefits or else face a fine. At the end of 2017, the individual mandate was repealed, so as of 2019, there are no longer federal-level fines for not having an Obamacare qualified health insurance plan. However, several states impose tax penalties for not having health insurance:
- Massachusetts
- New Jersey
- California
- Rhode Island
- Vermont
- District of Columbia (Washington D.C.)
Qualified health plans vs. other health plans
Under the Affordable Care Act, the designation of qualified health plan (QHP) is given to health insurance plans that are sold in the government-run marketplace (exchange). Basic rules apply to plans sold in the exchanges, they must:
- Be guaranteed issue (not impose pre-existing condition restrictions)
- Follow the ACA’s cost-sharing guidelines
- Cover “essential health benefits” with no lifetime or annual maximums for coverage.
Qualified health plans sold on the exchange must also be certified by the exchange. Since 2013, health insurance companies in each state have submitted plan designs and pricing to the exchanges for approval. These approved plans are labeled qualified health plans or QHPs. A qualified health plan is also eligible to be purchased with an advanced premium tax credit, also known as an Obamacare subsidy.
Plans sold off the exchange as ACA-compliant medical insurance follow the same basic rules as qualified health plans, but they are not certified by an exchange nor are they eligible to be purchased with a premium tax credit subsidy.
Are qualified or non-qualified health plans better?
A non-qualified health plan is defined as any medical plan that fails to meet the requirements of the HDHP. Coverage under one of these plans will render the person ineligible for an HSA plan. It is typically the choice of the provider not to be in compliance with the Affordable Care Act, also known as the ACA or Obamacare.
On the other hand, qualified health plans are those that do comply with the requirements of the ACA, including providing minimum essential coverage. While that might sound like the obvious choice, getting a qualified health plan isn’t always the best course of action for everyone.
A non-qualified health plan could be more affordable for a person who has a very low income. This is especially true if that person has a family. Although the ACA contains subsidy programs to try to help people in these circ*mstances, there are times when a non-qualified plan can still cost less than a QHP. However, it is important not to note that it’s not usually advisable to go this route if you have pre-existing conditions.
Cost of qualified health plans:
A recent study conducted by eHealth of customers purchasing qualified health plans through eHealth’s exchange access provides insight into the average premium costs and trends in plan choice during the 2021 open enrollment period. The average premiums reported below are non-subsidy costs.
- Premiums for individual coverage averaged $450 per month, while premiums for family plans averaged $1,157 per month.
- For a family of four in 2021, the potential liability for combined average premiums and deductibles over the course of the year was over $25,000.
What are the four types of qualified health plans?
Known to many in the industry as “metal levels,” all qualified health plans fall under one of four tiers. Each level provides qualified health coverage elements. The difference is in the amount of coverage the insured person pays for.
In the following sections, we explain what each level means. You will need to know this information before starting the health insurance application process.
Bronze
Here’s what you can generally expect with plans that fall into the bronze tier of healthcare coverage:
- Features the lowest monthly premium
- Has the highest costs whenever you require care
- Moderate to high deductible
This is a good choice if you want to pay as little as possible every month. However, if you need medical care frequently, it can add up quickly since you’ll usually pay a higher portion of those costs plus the deductible.
Silver
With plans that fall into the silver tier, you can usually expect:
- You pay a moderate amount in monthly premiums
- Your costs for medical care are moderately expensive
- You will typically pay less for your medical care than you would with a bronze level plan
This may be an option to consider if your priority is extra savings on routine medical care and you’re okay with paying a little higher of a monthly fee.
Gold
Characteristics of a gold tier plan usually include:
- Higher monthly premium
- Lower costs when you require medical care
- Lower deductibles for medical care before your insurance kicks in
If you want to avoid costly medical bills when the unexpected happens but are willing to pay more each month for your premium, a gold tier plan may be right for you.
Platinum
With a platinum health insurance plan, you can expect:
- This is the highest monthly premium you will pay out
- Results in the lowest costs to you when you need medical care
- Your deductible will be very low
This may be the best choice if you anticipate needing a lot of ongoing medical care. You will usually pay far less for that care if you are willing to pay more for a monthly premium.
For help with understanding qualified health plan options and other private health insurance matters, speak with an eHealth licensed insurance agent today.
Average monthly premiums for individual plans
Understanding the average monthly premiums for individual health plans can help you get a foundation for what to expect when shopping for health insurance. In 2021 they were:
- Average premiums for HMO plans: $420
- Average premiums for PPO plans: $518
- Average premiums for EPO plans: $449
Checklist to apply for a Qualified Health Plan
If you’re enrolling in a plan through the federal or state exchange, you’re going to need to have this information on hand for each person you want to enroll:
- Name, address, email address, social securitynumber, birthday, and citizenship status. (Proof of lawful residency status maybe required).
- Household size and income (if you’re planning toapply for premium subsidies or cost-sharing reductions). A wide range ofdocumentation can be used to prove your income, including pay stubs, W2s, yourmost recent tax return, etc.
- Insurance coverage details for anyemployer-sponsored plan that’s available to your household (regardless ofwhether you’re enrolled in that plan or have declined it).
- Hardship exemption notice if you want topurchase a catastrophic plan and you’re age 30 or older (note: premiumsubsidies cannot be used with catastrophic plans).
To learn more about applying for a Qualified Health Plan through the exchange, see All About Open Enrollment: Qualified Health Plan Checklist.
Find a qualified health plan that meets your needs
eHealth is here to help you make these important coverage decisions. We are certified to offer qualified health plans on the exchange.
When you use eHealth’s tools to review qualified health plans, we’ll take the information you give us about your expected household income to determine if you are eligible for tax credit subsidies and apply that estimate in showing premiums for each plan.
In addition, we offer ACA-compliant plans off exchange and other insurance products. Our licensed insurance agents and brokers are available to answer your questions and make recommendations about plans that best meet your needs. To explore health insurance options, browse individual and family health insurance plans.
This article is for general information and may not be updated after publication. Consult your own tax, accounting, or legal advisor instead of relying on this article as tax, accounting, or legal advice.
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